Chinese capital Beijing is encouraging Indian software and service companies to set up operations in the city. Zhang Gong, vice-director of Beijing Municipal Development and Reform, said, "We welcome Indian IT heavyweights to set up a base in Beijing or build joint ventures with Chinese software companies."

Qu Lingnian, Deputy Chief of Beijing Software Industry Promotion Center, stated that Beijing is an ideal location for Indian software and service firms. In 2004, the city was a leader in China's IT industry boom. It accounted for one-third of IT industry volume and 40 percent of software exports. Additionally, the Sino-Indian Cooperative Office was established in Beijing to attract Indian IT companies.

At present, India is a major player in global outsourcing. Last year, the country accounted for 50 to 60 percent of the United States' $20 billion software outsourcing. Meanwhile, China is catching up with its substantial computer technology and growing communication infrastructure.

Qu said, "It is estimated that by 2007, US offshore software outsourcing will reach $70 billion a year. Given the massive potential of this market, Indian IT companies also want to find a partner from potential competitors to ensure they get a slice of the action, and their most attractive candidate is China."