An employee on the phone as she works at an SPi Global call center in Manila, capital of the Philippines. Manila-based SPi Global's 18,000 workers handle customer support, technical problems and other tasks for overseas clients. India, the Philippines and some other Asian economies are known for their business process outsourcing industry thanks to their English language advantages. Now the trend is also taking place in the inland cities of China. [Photo/Provided to China Daily]

The establishment of call centers and the development of the BPO industry in Hefei is in line with the local government's call for an industrial transformation.

"The place where most of the call centers now stand used to be industrial parks that became outdated and were torn down. The local government planned to renovate the area into a modern industrial park that combines urban life with industry. The service industry was the best solution," said Wu.

Hefei Suntek Lianchuang Investment Management Co, which is mainly responsible for the investment promotion of the call centers, met with little resistance, largely because there was a clear-cut plan for the entire project.

"The decision was not made by only one person. It was a top-down process. We spent at least eight months in discussing the plans for the call centers with the Hefei government. We emerged with large-scale plans for the Lakeshore District as well as the entire industry. Everything then operated according to the market," said Wu Ruoyun, general manager of Suntek.

When there is a detailed plan, everything tends to go smoothly. Within three years, the Lakeshore district was in full swing. The 28-story office building in which Suntek is now based was fully built within 10 months.

Of course, Hefei does not provide the lowest prices in terms of labor. But the local government seized the right timing for an industrial transformation to BPO in 2000, Wu explained. "While the more developed coastal cities are now engaging in businesses requiring many more techniques, it was the best time for Hefei take over their previous business", she said.

As the call centers develop rapidly in Hefei, the next question to ask is, "What should come next?" Song Wenming, founder and director of Anhui Yide Human Resources Management Ltd, said it is high time much attention is paid to the rising labor costs here.

"A worker who speaks fluent English is paid around 6,000 yuan ($979) a month in Hefei, which is comparatively quite a lot. We conducted research in the Philippines in February this year. A worker at a call center in Manila is paid 4,500 yuan a month. In this sense, China has already lost its competitive edge in terms of lower labor costs to Southeastern Asian countries," said Song.

There is a long-standing myth in China that people are obsessed with the astronomical numbers of exports. In the BPO industry, people are still working hard on offshore businesses. But, according to Song, it is the domestic market that BPO industries should really keep an eye on.

"We cannot stay at the preliminary stage when everybody is still in cheaply paid work such as writing software code. We are at a stage when overseas companies are setting up Chinese branches when they enter this market. When we have made the best of the domestic market, the company will grow big enough to merge with and acquire overseas companies. This is the right path that BPO companies should take," he said.