Hong Kong's software companies are increasingly moving parts of their operations across the border, setting up development offices to take advantage of both the engineering talent and lower costs offered on the mainland. Hong Kong Computer Society president and Pacific Century CyberWorks business e-solutions president Thomas Siu Hon-wah said the trend was strong and would probably pick up in the near future. 'Most large software development companies or even users' organisations have part of their operations in China. I think percentage-wise, almost half of the larger-sized organisations would have something in China,' he said. Companies making the move include Hong Kong start-up We Software, which has about 14 staff based in Shenzhen, while a further 40 or so are in Hong Kong. According to We Software vice-president for sales and business development Ed Sindt, there are cost savings in moving engineering functions across the border, but clients are also asking the software testing and localisation firm to do more mainland projects. 'It's not so much that we have a push into China so much as we also have a pull into China,' he said. Other companies are doing much of their Web site development over the border, or outsourcing business-software projects to mainland-based companies. Even Hong Kong Polytechnic University's Multimedia Innovation Centre has branched out to the mainland, with a centre in Zhuhai housing developers and course instructors. Hong Kong Computer Society president and MTR Corp executive Daniel Lai said: 'We outsource to China, but I think it's still less than 10 per cent of development effort. But I know of a Hong Kong company that has the majority of their team - 60 per cent - in China.' While the trend of Hong Kong companies moving software development to the mainland is clear, industry sources emphasise that much of their project management and marketing functions remain in Hong Kong. 'If the requirements are coming from Hong Kong, for example, then obviously you need a certain amount of communication between the project manager and the ultimate users,' Mr Lai said. The trend of operating mainland development offices has been under way for several years. Large development centres have been opened on the mainland by Germany's Siemens, Taiwan's Soft-World, and Intel and Microsoft of the United States. It seems likely to grow at a faster pace, however, now that China is a member of the World Trade Organisation and continues to relax restrictions on telecommunications and information technology investment. Mr Sindt and Mr Siu both said Hong Kong would still have a role to play as the mainland became more attractive for software developers. On the intellectual property front, multinational firms were comfortable dealing with partners in Hong Kong and turning over source code but they usually only revealed binary code - or finished programmes - to mainland partners, Mr Sindt said. 'Frankly, most US companies feel very, very comfortable dealing with technology or IP [Internet protocol] with Hong Kong, but not quite so comfortable yet with China. So what we do here is we work with a lot of source code. Basically, a lot of what goes into China is binary code, so there's less risk.' It would also be a long time before the management and business savvy of China's software companies could catch up to Hong Kong levels, Mr Siu said. 'In Hong Kong, I think IT [information technology] people have a better understanding of business process, international exposure and also have better language skills and project management experience. So they can use their skills and work with development staff in China.'