With the rapidly growing in software and information services outsourcing industry, Beijing, Shanghai, Dalian, Shenzhen and other first-level cities have been difficult to meet the human resources demand of the whole industry development, accelerating the transfer to the second echelon cities, while Tianjin, Wuhan, Xi'an, Changsha, Chengdu, Chongqing and other cities, are expected to become the second echelon in outsourcing industry.
The most fundamental reason for the transfer of outsourcing industry is a great degree of cost savings, since the reason for formation of software and information services outsourcing industry is that enterprises want to do IT outsourcing of in order to save operating costs.
On one hand, outsourcing industry transfer is due to the low-cost manpower shortage of the frontline towns. Outsourcing industry's rapid growth requires a huge number of software talents, which is difficult to meet relying on the frontline town itself alone. Jishi Information predicted that in 2006, China's software and information services outsourcing industry growth rate will exceed 40 percent again, which is a good news for outsourcing frontlines such as Beijing, Shanghai, Dalian, Shenzhen and others, but it will also further aggravate local competition for low-cost software outsourcing talents. For example, it's expected that in Beijing, by the end of 2006, the outsourcing industry practitioners will increase by nearly 10,000 people compared to that in the previous year, most of which are software engineers and software test engineers, and it will be an embarrassing burden of Beijing, which is already in a shortage of software talents. Therefore, many large outsourcing enterprises in Beijing have opened new branches in second-tier cities.
On the other hand, the transfer of outsourcing industry is also needed by second echelon cities for urban development. Software and information services outsourcing industry, and "manufacturing outsourcing" have some similarities, the great demand for qualified personnel is a panacea to solve the employment of local talents. On the other hand, the introduction of software and information services outsourcing industry can also optimize local industrial structure. Therefore, many second-tier cities have introduced various preferential policies to attract software outsourcing enterprises to local software parks, and set up branch offices. For example, Chengdu has created a favorable policy environment for the development of software and information services outsourcing industry, unveiled "Policy Advice on Encouraging the Development of Chengdu Software Industry", " Support Policies to Encourage Software Enterprises to Gather in the Tianfu Software Park of Chengdu High-tech Park", and waive some taxes, reduce rent of outsourcing companies.
