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Chengdu turns into service outsourcing hub

By Zheng Yangpeng in Beijing and Li Yu in Chengdu  (China Daily)

13:06, April 12, 2013

A corner of Tianfu Software Park in Chengdu. The park has helped create a favorable "ecological environment" for local high-tech companies, which recorded offshore outsourcing contracts worth 44.5 billion yuan ($7.15 billion) in 2012. [Provided to China Daily]

When AAXIS Commerce, a US-based e-commerce consulting firm landed in Chengdu in 2007, they found no specialist in ATG, later acquired by Oracle into Oracle Commerce.

Attracted by the talent pool, strong support from government and the IT environment of Chengdu, which is home to several IT colleges and universities, AAXIS Commerce decided to set up.

Of the 46,000 graduates from Chengdu's information technology schools, most went to first-tier cities like Shanghai and Shenzhen to seek a job.

The following years have witnessed an explosive growth in the city's software industries. Now more than 35,000 software engineers work for 300 plus software and service outsourcing companies in the city.

Duc Hang, executive director of Global Delivery at AAXIS Commerce, and president of AAXIS China, said 80 percent of his 200 staff has a Sichuan back-ground. This means that they are either graduates from Chengdu colleges and universities, or born in Chengdu and surrounding areas, or have family connection here.

This composition provides precious stability to AAXIS Commerce, with a client base such as 21 Century Fox, Universal Cinema and Disney. Large movement of workers is a common com-plaint for many IT company bosses.

To Hang and his fellow staff, in addition to the city's strategic location, convenient international travel links, strong local government support, the cost of labor is also a major concern when they decided to move here.

"Chengdu produces 46,000 college graduates in IT every year. If only a half of them are harnessed, the power could be incredible, " Hang said.

The vision is exciting, but the reality could be tough. Hang and his team had to start from zero.

They started from a train-ing program in the e-commerce software field. The training spanned the past six years. They dispatched a number of people from United States to establish the training program and the ini-tial team.

For AAXIS, this meant millions of dollars in spend-ing each year and as of now, the Chengdu center has not yet made a profit for the par-ent company.

But Hang believed the money was worth it. Work-ers in his company became skilled engineers and project managers in the niche soft-ware market. From the Chengdu center, they can provide professional consult-ing service directly to AAXIS's global customers, according to Hang.

"For IT consulting firms, it's very difficult to deliver service to China and Asia-Pacific from a Europe or US based team, due to language and cultural fac-tors," Hang said.

"As of now, the best capa-bility in terms of Oracle Commerce technology in China exists in Chengdu,'' Hang said proudly.

When asked if he could catch the latest trend of his industry in Chengdu, he said he didn't have to because his company is the trend.

Expanding the domestic market is a proud priority.

In the fourth quarter of last year, his company signed a short-term contract with a multinational in UK with a presence in Shanghai. This January, they signed a multi-year project contract with a large project of an-other multinational in Suzhou. (He declined to specify the names of the multinationals). Inspired by these projects, he is planning to increase his staff by 20 percent this year, and moving his office to an-other building in Tianfu Software Park.

They are already talking about transforming the cost center into a self-sustained profit center.

"In the first five to six years, we focused on 'capability building'. Since last year, we began to expand our local business, and we expect more and more local clients in our business portfolio," Hang said.

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