Service and cultural exposure are part of the package at Shanghai's international schools

----By Kevin Martin

Over recent years, Chengdu, the capital of Sichuan province, has made full use of its competitive intellectual resources and regional environment to become the capital of west China's information technology industry. In 2005 Chengdu's information industry output ranked sixth in China. At present, over 60 famous domestic IT companies and more than 20 internationally known companies have production or research and development facilities in Chengdu, including Intel, Siemens, IBM and Microsoft.

According to the municipal government's statistics, Chengdu has maintained a 30-40 percent growth in the R&D and software industries over the last seven years with its software industry reaching sales of US$2.6 billion (?1.9 billion) and software exports of more than US$100 million in 2006. In order to keep its industry growing, Chengdu relies heavily on its advantages in qualified personnel. With its 10 million inhabitants, 40 universities and huge number of students, of which 514,355 are enrolled in information technology majors, Chengdu has traditionally had an abundance of human resources. But now, even the city of plenty is struck with a shortage of qualified labour for the IT industry.

Put simply, Chengdu's human resources have been unable to keep pace with its IT industry's rapid development. Recently, the Chengdu Software Industry Association published a report on the supply and demand of Chengdu's IT talents. The report shows that Chengdu's software industry will have over 8,000 more positions than professionals in 2007. This is most apparent among companies seeking highly qualified personnel, as only 1 percent of suitable candidates hold an IT-related PhD. Thus, IT and R&D enterprises in Chengdu and across China will have to face fierce competition for human resources and bear increasing labour costs. A survey of the European Union Chamber of Commerce in China, conducted among more than 250 European enterprises in the country, shows that 77 percent of the companies questioned consider the recruiting or retaining of staff as "sometimes a problem". More than 15 percent see it as a "very big problem".

Paying for scarcity

Currently, neither the companies that can't find staff nor the ones who found suitable staff feel satisfied. Some enterprises could just not fill their positions. Mr Wang, a senior HR executive of a software developing company in Chengdu puts it like this: "There are often more than 100 applicants for one administrative position in our company, but just 10 for one IT position. After the selection of suitable applicants, often only a couple of them are left. Sometimes we leave jobs unfilled." However, companies that have solved this problem are no better off. They need to pay higher wages for professionals to prevent job-hopping. Experienced and skilled workers are scarce all over China and salaries are continually breaking annual records. A newly published survey by Xinhua News Agency on the salary of IT staff shows that salaries of China's IT professionals are growing faster than its IT economy, with annual wages ranging from RMB11,884 (?1,149) for a skilled IT newcomer to RMB94,000 for a chief technology officer position. This high price for the shortage of personnel is made worse by aggressive recruiting strategies by competitors and job-hopping.

There are many ways to solve the shortage. As Chengdu Economic News suggests, multinationals could train and upgrade their staff in cooperation with universities or private training institutes. A recent example of this approach was Intel's help to establish a Dalian-based semiconductor training site to support its planned US$2.5 billion wafer plant. This concept might be a solution for multinationals, which usually have more financial power and influence. But, as statistics show, most of China's IT staff are employed in small and medium-sized companies, which normally cannot afford investments of that scale.

Consequently, the Chengdu office of the European Chamber has worked out a proposal which could be a step towards solving the HR shortage in a comprehensive way. First, it was proposed to establish an IT Industry League, calling for the companies' self-discipline to avoid the mutual drain of core staff and safeguard intellectual property. Such a league could also be helpful to develop criteria and standards for IT professionals. Strict classification and detailed requirements for perspective staff would not only help universities to better understand foreign enterprises' needs, but could also push for payment in compliance with certain skills, putting an end to the ever-increasing wage spiral. This view was also shared by Mr Xu, vice-director of the service department of the Ministry of Information Industry's E-training and Test Centre at the EU-China Information Society Forum on Emergency Response Systems and Human Resources at ChinaSoft 2007: "We should develop new criteria to decide if somebody could fulfil the job's needs, such as experience, application ability, communication skills, morals and ethics."

On-the-job training

It is recognised that China's university graduates are not well prepared for their careers and lacking essential skills such as problem-solving, foreign languages, presentation, and the ability to apply and use their theoretical knowledge in practice. According to the Chengdu Economic News report, most graduates need about one year on the job training before they could be of full use to any company. According to Zen Chen, general manager of European Chamber's Chengdu office, a new internship system in reference to the successful experiences in Europe should be pushed forward. "Internships should be included in university curricula and universities should cooperate closer with companies and together design coursework and teaching materials. This could not only enrich the students' practical work experience but could also lower the companies' training and recruiting costs."

Chengdu's city government has recognised that rising labour costs and malign job-hopping are two sides of the same coin and will take new measures to encounter the bottleneck of Chengdu's IT industry. Yong Liu, vice-president of the Chengdu High-Tech Industrial Development Zone Committee, said in an interview that "Chengdu has the responsibility to initiate the construction of a talent platform." Even if it is not clear if all sides could fully agree to form an industry league per the Chamber's suggestion, there is no doubt that a new internship system is easy to establish and could be a model for the whole of China and other industries, and a new way to apply learned knowledge.

Kevin Martin is a graduate student at University of Trier, Germany. He is studying international economic news at Southwestern University of Finance and Economics Chengdu on a Chinese Government Scholarship.