South China's Shenzhen City said that some 1,000 software project managers will undergo training in India in a government scheme to turn the city into China's top software outsourcing destination, Thursday's China Daily reported.

"The companies are frustrated, not because they can't win deals, but because they're not sure how to run the projects successfully. The lack of qualified project managers is becoming a serious problem," Zeng Guozhong, director of the administration office of Shenzhen Software Park, told the China Daily.

After several months of negotiations with a veteran Indian outsourcing solution provider -- Zensar Technologies Ltd -- the local government yesterday signed a memorandum with the company on setting up the Center of Excellence (CoE), an organization to provide courses and work experience for China's software project managers, according to the paper.

The trainees will learn etiquette, communication and negotiation skills as well as international standards for the software outsourcing industry for three months, said Zeng, whose office selects candidates for the program.

They will then go to work for Zensar in dealing with US and European clients for their remaining time in India before their six month training period ends, said the paper.

"The project is significant since the human factor is becoming more and more crucial to the development of the city's software outsourcing industry," Zeng was quoted as saying, "without sufficient project managers with international experience, the software companies will become less attractive to foreign clients, especially from Europe, the United States and Japan. "

The government will subsidize 1,000 such trainees over three years with 15,000 yuan (US$1,812) each, or about one third of the total training fee. The rest will be paid by the companies and individuals, said the paper.

The scheme may be applied nationwide in three years, according to Zeng.

The software outsourcing business has grown rapidly in this IT-driven southern boom town riding a wave of foreign companies selecting China as an IT offshore (ITO) and business offshore destination (BPO).

It's estimated that the software outsourcing business generated an output of about US$100 million last year, doubling the figure of a year earlier, said Zeng, predicting that annual growth could be maintained at about 50 percent.

According to Gartner Group, China's ITO business is expected to grow at 44 percent annually, potentially becoming a US$2.5 billion industry by 2008, said the paper.

More industry insiders are starting to believe China will become India's strongest competitor, which currently has a 90 percent share of the US and European software outsourcing business.

A survey by AT Kearney, a leading consultancy company, suggested that China should improve management skills as well as better language proficiency and education to grab a larger stake in the market.

To take a bigger slice of the industry, the local government has also pledged to allocate more funds to improve infrastructure, said the paper.

"The municipal government and district government will invest at least 600 million yuan (US$72.5 million) this year to improve the infrastructure and working conditions of local software companies," Vice Mayor Liu Yingli was quoted as saying.

(China Daily January 27, 2005)