With competition tightening among providers of IT outsourcing services due to higher labor costs, Chinese players in the industry are craIing ways to stay in the game.

"Our strategic plan is for revenue to reach 10 billion yuan ($1.6 billion) by the end of 2015," said Simon Chung, global chief operating officer for ChinaSoft International Ltd, which is part-owned by MicrosoI Corp.

Of that total, the company hopes 4 billion yuan will come from its information-technology outsourcing business, with 5 billion from other services and about 1 billion from new businesses, Chung told China Daily at ChinaSoft's office in Seattle.

ChinaSoft expanded its US business in 2005 and now has two offices in the country. The Seattle location mainly serves Microsoft, while the one in Princeton, New Jersey, is focused on clients including General Electric Co and pharmaceutical maker Pfizer Inc.

The company has offices in 25 cities around the world and derives 30 percent of its annual revenue from abroad. The United States is one of its biggest markets.

ChinaSoft is the first Chinese company to be awarded as a Microsoft Global Premier Vendor and as a top 10 IT supplier to the US-based giant.

Microsoft, which owns almost 6 percent of ChinaSoft's Hong Kongtraded shares, is the second-biggest customer of the company, accounting for 12 percent of annual sales.

"We provide comprehensive services including development, testing, localization and daily operation, with global delivery capability for Microsoft outsourcing in US, Europe and China," Chung said.

He said the two US locations enable ChinaSoft to fulfill customers' "onshore and offshore" needs while controlling costs.

The company expects expanded business opportunities to emerge, given priorities set forth by the Chinese government in its 12th Five-Year Plan (2011-15), Chung said.

"It is a good opportunity for us to expand market share while establishing a leading company in China and the world," he added.

Earlier this year, China's Ministry of Industry and Information Technology issued plans for developing the software and IT services industry, calling for revenue to pass 4 trillion yuan and software exports to reach $60 billion by 2015.

The current Five-Year Plan is focused on the sector's development of infrastructure software, industrial software and services, embedded software, data-security software and services, information systems integration services, IT consulting, digital-content processing, service outsourcing, services for emerging information technologies and integrated- circuitry design.

China's software-outsourcing industry dovetails with the government plan's emphasis on "inclusive growth", according to Chung.

"As the economy is recovering, overseas customers will increase IT services to support their business," he said. "China, with abundant domestic resources, a stable political and economic environment, and excellent IT infrastructure, is becoming an important alternative to India in offshore outsourcing."

The size of China's domestic IT outsourcing industry is expected to grow dramatically, as is the share of Chinese providers' offshore business. According to International Data Corp, an IT industry research firm, the "onshore" Chinese sector will see 19 percent growth overall by the end of 2015, while China-based IT outsourcing companies enjoy 37 percent expansion of work offshore.

"The revolution in information technology such as social networking, mobile Internet, data analysis and cloud computing is changing the traditional IT services business model, bringing new challenges as well as opportunities," Chung said.

ChinaSoft in 2011 implemented a strategy for breaking into these emerging areas while focusing on growth in "traditional" IT services.

In January of this year, the company signed an agreement with Shenzhen- based Huawei Technologies Co, the world's biggest maker of telecommunications equipment, to form a soIware-outsourcing joint venture.

The strategic partnership with a global tech leader follows investments by Microsoft and Beijing private-equity firm Hony Capital, which owns a 19.5 percent stake in ChinaSoft. Gaining access to Huawei products and expertise fits the company's approach of boosting competitiveness through collaboration.

On Oct 3, the company announced a cooperation pact with Alibaba Cloud Computing Ltd, an arm of Chinese e-commerce giant Alibaba Group, to develop a cloud-based platform for services.

Contact the writers at lindadeng@chinadailyusa.com and chenjia@chinadailyusa.com