November 19, 2007 -- EDS, an information technology (IT) services company, announced the official opening of its Wuhan Global Service Centre (GSC) November 8, 2007. The new GSC is located in Wuhan Optic Valley Software Park and is the company's fourth global service center.

Wuhan is located in Hubei, a province in northeast China. EDS chose to set up the new GSC in Wuhan for its competitive labor rates and the strong support from local government.

"The Wuhan government has been able to assist EDS in securing a facility in what we believe will be a world class IT park - purpose built and managed by the Dalian Software Park Co., Ltd. They will also assist in campus recruiting and subsidize training of new employees," David Wirt, vice president and managing director for EDS Greater China and Korea, told Emerging China.

Government subsidies for training will offset costly expenses EDS will have to pay to bring Chinese recruits up to the company's employment standards. The service center will also benefit from lower costs of operating in Wuhan itself.

"Wuhan Global Service Center will drag down operating costs of EDS' overall global operations," Yu Xia, an analyst at Analysys, a global telecoms consultancy and research company, told Emerging China. "At the same time, they will expand their China and Asian market share."

Once fully completed, the Wuhan GSC will serve China as well as other parts of Asia. Large numbers of orders currently handled by EDS' India GSC will be moved to the Wuhan center, covering customers in Europe, America, Japan, and South Korea.

EDS also cited Wuhan's burgeoning pool of labor as a big draw for setting up the GSC in the city. Wuhan is located in Hubei province, which produces 30,000 – 35,000 IT and engineering graduates per year. Around the software park alone, there are 28 colleges and universities, and Wuhan ranks second for number of students on campus in China (Beijing is ranked first). Industry analysts, however, believe there will be a limited supply of labor to the Wuhan outsourcing market.

"Loss of talent will become the EDS Global Service Center's biggest obstacle in the future. Beijing, Shanghai, Guangzhou and other big cities require the same levels of technical staff and offer higher pay levels than those of Wuhan," said Xia.

Representatives from Wuhan Optical Software Valley Park disagree. They view the current talent pool as not only large, but increasing in size, as Wuhan itself lures people back from the big cities.

"Several years ago, a lot of recent graduates went to large cities like Beijing and Shanghai, because there were more development opportunities there," Cathy Yang, who works with the software park's Business Solution Center, told Emerging. "But now Wuhan has advantages that Beijing and Shanghai do not. First of all, it is a lot of [IT and outsourcing] employees' hometown. As large companies expand to other cities, those employees will push their respective companies to set up branches in Wuhan. Another reason is the city is a second-tier city; it has low living costs but still has convenient access to many major cities."

The Wuhan EDS center currently employs 300 people and plans to expand to 1,400 by next year. In 2010, it will be a 5000-scale outsourcing delivery center. Their arrival was ominous for some companies already established in Wuhan Optical Valley Software Park.

"EDS is a large scale company," said Yang. "The government gave them a lot of preferential treatment to come here. They are big competition to small and medium-sized local companies. Those companies are afraid of the human resource competition from EDS, who can offer better packages for employees. Other companies are aware of that."

Wuhan is one of ten cities identified as an Outsource Service Base by the Chinese Ministry of Commerce. The other nine are Beijing, Dalian, Xi'an, Shenzhen, Chengdu, Tianjin, Nanjing, Shanghai, and Jinan. EDS is currently the largest IT services provider in Wuhan.