Guangdong Sun Wah Tech Consulting Group, an information technology enterprise backed by the provincial government, is raising the ante for IT outsourcing in southern China under an agreement with India's Tech Mahindra to create the biggest domestic software enterprise in Guangzhou. The group, formed in May between privately held Hong Kong conglomerate Sun Wah and the Guangdong Software Outsourcing Council, signed an agreement last month to set up a software outsourcing services joint venture with Tech Mahindra, India's eighth-largest software exporter, at the Tianhe Software Park in Guangzhou. Financial terms were not disclosed. 'There will be 5,000 engineers and IT services professionals working at the joint venture by the fifth year of operation, which would make it the largest software company in southern China,' said Sun Wah Group president Jonathan Choi Koon-shum, who heads the Guangdong consulting firm and will serve as chairman of the new software outsourcing venture. That scale matches established multinational IT suppliers in China. Professional services group Deloitte Touche Tohmatsu, for example, has more than 5,000 staff in 10 offices across the mainland, Hong Kong and Macau. Microsoft has about 2,000 employees in the mainland. Mr Choi said the average number of staff at other Chinese software outsourcing firms was well under 500 people. 'We expect our joint venture to start early next year, when it will have about 600 staff, and focus on telecommunications projects in the US and Europe,' he said. The near-term plan includes a public listing of the new company's shares. Guangdong aimed to develop its IT outsourcing services industry into a world-class market similar to what is being accomplished by the car-manufacturing sector in Guangzhou, he said. The annual production of Guangzhou's car industry is expected to exceed 1.3 million vehicles, worth 200 billion yuan, by 2010. By contrast, software exports from Guangdong totalled US$1.54 billion last year, up 9.99 per cent from 2004, according to data from the Department of Science and Technology branch in the province. Guangdong software exports - based on the applications development outsourced to some 50 domestic IT services firms - grew 43 per cent last year. That was surpassed by outsourcing growth enjoyed in Liaoning, up 52 per cent, Shanghai, up 67.6 per cent, and Jiangsu, up 98.9 per cent. Pune-based partner Tech Mahindra is majority owned by Indian conglomerate Mahindra & Mahindra in partnership with European telecommunications services provider BT Group. Founded in 1988, Tech Mahindra grew its total worldwide staff to 15,080 in the third quarter this year, from 12,366 the previous quarter. China will provide the Indian firm with more skilled staff, Mr Choi said. The need for more staff stems from Tech Mahindra's comprehensive work with telecommunications companies including BT, Vodafone in Germany and Singapore's Starhub, on business support systems (BSS) and operations support systems (OSS). The global market for OSS alone - comprising the computing and software infrastructure that performs engineering, provisioning and management functions in telecommunications networks - will exceed US$30 billion this year, according to Boston-based Insight Research. Research firm Gartner has ranked Tech Mahindra as one of the world's top three providers of BSS, which includes systems integration, consulting and managed services used by telecommunications network operators to build new value-added offerings to customers. Mr Choi said Tech Mahindra was keen on the joint venture in Guangzhou 'to capitalise on business efficiencies, faster production and higher profit margins that an IT outsourcing setup in China can provide'. Sun Wah has been tasked to directly negotiate terms and oversee quality control with software outsourcing projects between member IT sub-contractors of the Guangdong Software Outsourcing Council and the Tech Mahindra joint venture. The council has about 20 local members to date, including Sinobest and Bamboo Network. 'The venture will focus on clients overseas, but the development of that outsourcing expertise in China should also benefit potential mainland customers,' Mr Choi said.