Students at Xi'an Jiaotong University celebrate at their graduation ceremony. Xi'an ranks third in higher-education resources, behind only Beijing and Shanghai. Many of the universities are strong in engineering disciplines. [Photo / China Daily]

High level of human capital, low cost of living put Xi'an on the business map

John Zhang became frustrated as his North American client suggested he recruit 700 more workers. "They said we could even hire up to 1,000," he said. "But we just can't."

Zhang is president of New Choice Ltd, a privately owned company in the Xi'an Hi-Tech Zone that works with US companies that outsource IT services.

"It's not like adding one desk here and another there. It is an operation demanding input from up to 60,000 people. Even with all the resources available in Asia, it still cannot be outsourced completely," he said.

"I can get a bigger share of the pie if I'm confident I can. But look," he said, pointing to the company's main office, filled with spectacled young workers staring at their computer screens. "This is all we got. I don't have space anymore. The whole software park (a section of the XHTZ) has run out of office space."

As Zhang was enjoying his business growth, exporters in coastal cities were complaining about their low margins and screaming for government bailouts. Proprietors of many brick-and-mortar companies were closing down their shops, complaining that it was getting increasingly difficult to make money.

How can Zhang, operating from a hinterland city more than 1,000 km from a seaport, be so fortunate as to be urged by his overseas clients to look for more workers?

In fact, Zhang's company was not even the first choice for his US partner. "They went for companies in some coastal cities first," he said. But as time went by, New Choice learned to do more, thanks to the IT engineers Zhang could find in the city and their ability to develop reliable solutions.

And the more the company learned, the more tasks it could perform, and the more orders it could clinch.

Education resources

"We have a good place to run our company," Zhang said. Of all cities in the Chinese mainland, Xi'an ranks third in higher-education resources, behind only Beijing and Shanghai. Many of the universities are strong in engineering disciplines.

In recent years, the city has developed China's largest cluster of new colleges of a non-State background by blending local private capital and its large number of retired educators.

None of the private capital-supported colleges can compete with the large State-owned ones for academic fame. But that actually helps them concentrate on developing so-called middle-skill people.

"Though called 'outsourcing services,' a trendy name, our task is just to help our partner with their household chores," Zhang said.

Here, on one hand, you need computers and broadband to function. But on the other, the job is by nature not suitable for the kind of talent required for more independent and creative work.

The job is to deliver - and to meet all the requirements as set forth by the clients. And that is typically the job for middle-skilled workers. With the abundant supply of college graduates it can find in Xi'an, the company can always manage to deliver - not only to meet those requirements, but with "a lower error rate".

A lower error rate is the key, Zhang said. "For clients, it means a guaranteed satisfaction rate. And for us, it means lower costs, too," because that saves the trouble from going over the process time and again to find out where the errors are. "We have good people to depend on here," he said.