IT has long been a hot topic to compare China with India, the world largest factory versus the world biggest office. Interestingly, they are now striving to cross each other’s border. Facing increasingly pressure of environmental deterioration and resources constraint, China reckons that besides manufactured products, it can export more services. In other words, the world’s largest factory wants to be a big office as well.

To develop its offshore services outsourcing (including IT outsourcing and business process outsourcing), the Ministry of Commerce launched the “Thousand-Hundred-Ten” project in 2006, i.e. in the 11th Five-Year period (2006 to 2010), China will groom 1,000 domestic offshore services out­sourcing companies with international standard, attract 100 multinational corporations to outsource their business to China and form 10 services outsourcing bases in China.

Even though China has a large number of universities, and produces millions of graduates every year, a shortage of talented people is the single biggest threat for China to realize its goal. Unlike workers who are willing to accept low salary to meet their ends meet, China’s university graduates often ask for more. To add the woe, as English is a foreign language in China, proficiency in English or other foreign languages is a key skill. It means employers are hard to recruit them to do low-paid and a bit tedious jobs, which are often characterized as many outsourcing jobs.

Indeed, there is a mismatch between the theory they gained from schools and the practical skills required in their work. To mass produce a large arm of “grey collar” workers, who are between “blue collars” and “white collars,” therefore becomes the most challenging steps for China to turn itself to a big office.

At the same time, some inland cities calculate they might have an edge over coastal China. Unlike manufacturing, which is highly dependent to marine transport, sectors like information technology enabled services, or ITES, virtually make geographic locations less important. Indeed, employees in inland cities tend to be less selective in jobs. For example, compared to major cities, such as Beijing and Shanghai, for BPO business, the labor cost in Chengdu, the capital city of Sichuan province, is about 30 percent lower. In addition, the turnover rate, or attrition rate in these cities is more than 30 percent, while that in Chengdu is about 5 percent. To truly gain competitive advantages, however, those inland cities need to form a strong services talent training system.

To strengthen the cooperation between enterprises and training schools has been an important step, and some even goes further. One unique system has been invented by Neusoft, one of China’s biggest software companies and the leader of offshore BPO business. In 2003, Neusoft set up Chengdu Neusoft Institute, the third institutes in China. The Institute is located at the Qingcheng Mountain, one of the cradles of Taoism and listed as the world cultural heritages listed by Unesco. Neusoft also built a software park adjacent to the institute in 2006. While the design of courses is based on the requirement of Neu­soft’s business, the software park itself provides an internship-training base for students of the institute.

To further provide real working environment, the institute create a Student Office and Venture Office system. Students may voluntarily form a company to undertake some software development or other outsourcing work during their spare time. There is CEO, CFO, project managers in these companies, and the institute will provide office space and some subsidies. Currently, there are 20 such companies with 600 or 1/10 of students in the institute. The institute also encourages students to take some professional certificate exams. And besides equipping the students with technical and language skills, the institute also regards helping students form a good career development attitude as one important part of education in the institute.

The scenic campus environment and good training system also draw the attention of other universities. Neusoft Chengdu Institute has signed with 30 universities as their intern training bases. The institute plans to train 10,000 out­sourcing services talent annually for Chengdu.

With more universities and training schools adopt similar strategy like Neu­soft, Chengdu is poised to emerge as one of China’s offshore outsourcing hubs. In October 2006, Cheng­du was awarded as China Service Outsourcing Base, becoming one of the five pilot cities. The other four are Dalian, Shanghai, Shenzhen and Xi’an. The competition between India and China in offshore out­sourcing is expected to be more intensive. Again, the future lies on who can groom more needed talents.