Yantai has made great headway in its software outsourcing services, thanks in no small part to its geographical proximity to Japan and South Korea—two powerhouses in the software business.

Located on the north coast of Shandong province, Yantai is home to more than 200 businesses in the software industry. About 60 of these companies provide outsourcing services in areas such as information technology and business management. They achieved more than $60 million worth of offshore business last year, according to the city’s commerce bureau.

Yantai’s outsourcing software development dates back to 2005, when local firms started producing software products worth a total of $1.6 million for Japanese companies. The city’s software industry moved a step further in 2008 as the local government initiated a number of favorable policies for the industry’s development.

More recently, Yantai has spent 1 billion yuan on industrial parks for software and animation development, with a focus on the outsourcing sector. One of these industrial parks, Yantai Software Park, is now home to more than 120 software companies.

These companies have developed more than 100 types of software for business management, systems integration, logistics, intelligent office systems, property management and network operations, 18 of which have been applied worldwide.

The 100,000-square-meter animation park is regarded by the General Administration of Press and Publication as a national animation base, and the Provincial Culture Bureau has declared it a provincial demonstration base for the culture industry. Six out of forty animation companies are now providing overseas outsourcing services there.

The city is also planning to spend at least 30 billion yuan ($4.6 billion) on an outsourcing park of 1,110 hectares.

Yantai’s government has been encouraging colleges and vocational training schools to educate more skilled talent for the city’s software outsourcing industry.

In 2010, 10,000 people took computer and software-related courses in Yantai’s 10 universities and colleges. More than ten other educational institutions also provided training programs for about 4,000 people. The outsourcing business of the city is expected to employ more than 50,000 people by 2015.

The city is expected to reach an outsourcing volume worth 20 billion yuan ($3.1 billion) by 2015, with the engagement of about 100 companies in offshore outsourcing services and revenues of more than $500 million, according to the city’s outsourcing service plan.

By Zhao Ruixue (China Daily Shandong Bureau)