Chinese IT centre hit hard by earthquake

Chengdu, near the epicentre of a massive earthquake this week, is as wired into the global economy as any North American city. As soon as the massive earthquake struck, news from the capital city of the Sichuan province in China, traveled via Twitter and blogs, and into corporate e-mail accounts.

Chengdu may not be as widely known as the other major Chinese cities, but it’s IT services operations are on the radar of many U.S. firms. The 7.8 magnitude earthquake near Chengdu — as powerful as the earthquake that struck San Francisco in 1906 — affected a fast growing software development centre.

And the news of the quake, and its terrible human toll, is traveling quickly through the blog world. Robert Scoble, on his blog Scobleizer, describes how he learned of the quake and its aftermath in real time via Twitter.

Gothamist LLC’s Shanghaiist blog site has a number of links to videos as well as minute-by-minute accounts of how it all unfolded. The site also shows a photograph that purports to show a post-earthquake scene in the IT department of the IT Sichuan Bureau of the Xinhua News Agency.

Symbio Group , an IT development firm based on Rockville, Md., and Beijing, said that all of the 100 engineers working in its offices in Chengdu’s Tian Fu Software Park are safe, but added that many stores and restaurants in the city have been closed. Cellular service appeared to be out of service, but Internet connections are mostly working, said Keith Matsunami, executive director and vice-president at business development at Symbio, in an e-mail.

Cyrill Eltschinger, CEO of Softtek China, an IT services company, and author of Source Code China (Wiley, John & Sons, 2007), said Chengdu “is developing rapidly as a destination for outsourcing services.”

Eltschinger, reached by telephone in Beijing today, said that the Chinese government is working to develop a strong IT services presence in the city to take advantage of pool of technical graduates from nearby colleges. “It is attractive because of the high rate of annual graduates that are coming out of the academic sector,” he said.

Chengdu is currently considered a “second tier” IT services provider, behind other Chinese cities as Beijing and Shanghai.

China, overall, remains far behind India as a provider of software development services, added said Dean Davison, an analyst at NeoIT Inc., an outsourcing consulting firm in San Ramon, Calif. He said India accounts for about 70 per cent of global software development, versus less than 10 per cent in China.

Davison believes that China will become a major offshore centre in the years ahead, because of the amount of effort and development the government is putting into this industry. But its major obstacles remain political, differences in business law and cultural, he said.

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