unisys_logo.gifWe hear a lot about the rise of China as the centre for offshore software development and other IT services. But a reality check from Unisys shows that some western IT firms remain cautious about shifting too much work to China in the immediate future.

Unisys, one of the top ten IT outsourcing firms, has launched a new outsourcing centre in Shanghai and says it will expand its Chinese outsourcing operations over the next three years to eventually employ 1,000 people.

Sounds impressive until you realise that the new centre, in Shanghai ZhangJiang Hi-Tech Park, currently employs just 10 people and its capacity will be initially limited to 250 seats. By contrast Unisys currently has 10,000 people working worldwide on outsourcing engagements. For Unisys at least, China is today just a drop in its outsourcing ocean.

Unusually, the services giant also feels the need to caution investors about the challenges facing its fledgling China business in the “forward looking statements” section at the end of the press release.

In particular, it cautions against reading too much into its predictions of either the number of the number of personnel to be hired, and the level of future spending by Unisys in China.

“These assumptions could be affected by a number of factors, including customer demand for services performed in China, cost considerations, availability of resources elsewhere and business activity levels generally. “

Perhaps, its just the peculiarities of Unisys' outsourcing business, which traditionally has hinged heavily on US federal work and data centre outsourcing for big US corporations.

Other players in the outsourcing industry do see big potential in China. For example, India's Genpact, the largest player in India's fast-growing business process outsourcing industry, plans to triple its staff in China by recruiting up to 3,500 people.

Genpact, formerly the in-house BPO arm of of US giant General Electric, already employs 1,800 mostly Chinese staff in Dalian. It is expanding its Chinese presence in anticipation of stronger demand for offshore services from Japan and more outsourcing by Chinese businesses.

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