Industry lacks stability but there are many opportunities, say observers

Will Yang has drawn the curtains on his days of working the night shift, with its anti-social hours and difficulties with sleep patterns.

The money for the IT worker was good, especially with overtime thrown in, and there were frequent moments of downtime during which he could indulge his passion for playing games.

But he worked for an outsourcing company, telling staff at other businesses globally how to solve computer software problems and, as he now realizes, it's an industry still very much in its infancy and lacking in stability.

After working two years with Vanceinfo Technologies Inc, the largest Chinese offshore-outsourcing vendor in the United States and European markets, the 28-year-old quit his job as a senior global technical support engineer, at which he earned approximately 15,000 yuan ($2,400) a month.

His work involved providing remote maintenance services to the users of Tibco middleware, which is widely used by offices worldwide. He answered emails and took telephone calls from angry customers just about everywhere on the planet.

"The pay may sound OK but I just didn't like being yelled at at 3 am in the morning, 30 night shifts in a row and, most importantly, the feeling of insecurity," he said.

Yang's salary may seem attractive for a normal Chinese office worker but his work conditions were out of the ordinary.

For the graduate from a renowned university in Beijing, being assigned to the Tibco project, one of the best in Vanceinfo, was a privilege, he said.

For the majority of Yang's former colleagues, most of whom were serving domestic clients, the average pay was no more than 7,000 yuan, taking into account all the overtime. "Those 'in the pool', meaning not on any specific projects, have to rely on 2,000 yuan basic salary a month," he said.

Although he had to work night shifts, Yang was grateful his job kept him in his own office in Beijing. Most of his colleagues were transferred between different clients. "They do the their client's job, wear their client's access card but are never recognized as a member of the client's company," he said.

"I had no idea whether that situation would happen to me some day so I said to myself, 'I have to find a place where I actually belong'," said Yang, who is now on a long-term contract with a European communications giant, even though the new job doesn't offer much more money.

Yang's case is typical of the outsourcing industry in China, which is now at a crossroads after years of rapid development.

According to data released by the Ministry of Commerce, the annual revenue of offshore-outsourcing businesses for Chinese vendors has been growing at more than 50 percent annually over the last three years, from $10.1 billion in 2009 to $23.8 billion in 2011.

End of linear growth

By May this year, there were nearly 17,000 outsourcing companies in China employing about 3.5 million staff, among which 70 percent had an educational background of junior college level or above.

The boom in both the revenue and the number of employees, as well as the profits, used to be directly related in that if the staff doubled in size, the revenue and profits would also double accordingly.

The phenomenon was a result of a staffing model widely adopted in the outsourcing industry typical of which were the lower-paid workers sent to the client company by Yang's former employer.

Under this model, employees of outsourcing companies would work on-site with their clients, with their employer being paid monthly on a head-count basis. It is supported by millions of graduates from second- and third-tier colleges hungry for work. Many outsourcing companies exploited their need, hiring more employees because "the more people you send out, the more money would come in."

Those times now appear to be over as increasing labor costs and tougher competition squeeze profits.

"Over the past 10 years, the cost of a software engineer has risen four-fold but the clients' bid price has less than tripled," said Liu Jiren, chairman and chief executive officer of Neusoft Corp, another key player in China's outsourcing industry.

Chinese IT solution and service supplier Neusoft shows its company logo at a technology fair in Beijing. The annual revenue from offshore-outsourcing businesses for Chinese vendors has been growing at more than 50 percent annually over the last three years, according to data released by the Ministry of Commerce. [Photo/China Daily]