The Current State of the IT Talent Pool and Outsourcing China

Core competencies:

Low-end, PC-based application development, application maintenance, QA testing, systems integration, data processing, product development

Annual salaries:

Entry-level

$5,460

Team lead (2-3 years of experience)

$8,799

Manager (5-8 years of experience)

$13,732

Educational system:

More than 1,000 higher-education institutions have programs related to software and IT, and universities produce approximately 50,000 new graduates each year. However, many graduates migrate to Western pastures.

English proficiency:

Low. However, the Chinese government has taken proactive steps to improve English skills, including investing more than $5.4 billion in English-language education at universities.

Indirect cost advantages:

China has the lowest real estate and power costs of all offshore destinations.

Labor pool:

More than 200,000 IT professionals work in China.

Process maturity/quality:

China’s manufacturing quality has not yet influenced the IT sector. ISO certifications have seen the greatest adoptions with close to 58,000 certifications. A number of companies have been certified CMM Level 3, but only one has reached Level 5.

Cultural compatibility:

Isolation and censorship has limited Western influence and knowledge, and there is no strong affinity for Western culture.

Infrastructure:

Infrastructure is very good in major IT centers such as Beijing and Shanghai. Second-tier cities are in the process of significant infrastructure build out.

Time/distance:

China’s boundaries span five time zones, but the entire country operates on a single time zone, 12 hours ahead of EST.

Government support:

Industry growth efforts have been held back because of trade policies, regulations and censorship, but those issues should disappear as China assimilates with the governing rules of the WTO.

Geopolitical environment:

Tight political control exists because of a former communist regime. But recently the government has taken up relaxed economic initiatives and identified the IT industry as a major support for the future.

Economic environment:

China’s GDP is about $6 trillion and the domestic market is stable. Even with this large base, the economy has been booming for the past two years.

Trade association:

China Software Industry Association

Government resource:

Ministry of Information Industry

Major clients:

BEA, GE and other large multinationals.

Sources: “NeoIT Offshore Insights White Paper,” June 2004, and “NeoIT Offshore & Nearshore ITO Salary Report 2004,” May 2005