After establishing a state-of-the-art software development centre in the booming east Chinese metropolis of Shanghai, one of India's top information technology firms, Satyam Computer Services Ltd plans to expand its operations into smaller Chinese cities to meet the growing outsourcing requirements.

"We are now seriously considering further expanding our China operations by opening software development centres in smaller Chinese cities to cater to the company's outsourcing business," regional manager of Satyam Computer Services (Shanghai) Co Ltd, Raghavendra Tripathi said.

Tripathi said Satyam, a pioneer in offshore software development concept, is looking at smaller Chinese cities like Dalian in the northeast and Chengdu in the southwest to conduct its outsourcing businesses.

While establishing new software labs in smaller cities would be cost-effective, local governments are also providing incentives to foreign hi-tech companies to set up operations in cities like Dalian and Chengdu.

Satyam, which opened its over 10,000 sq. feet Shanghai Software Development Centre in 2002, is a wholly owned foreign enterprise and has invested over $1 million in China.

Located at the Shanghai Pudong software park, the software development centre is equipped with robust infrastructure linked via high-speed connectivity, video conferencing and IP telephony.

Shanghai has provided excellent infrastructure like wide roads, uninterrupted power and top quality telecommunication services to foreign enterprises that have set up operations in Pudong hi-tech area.

Currently, Satyam (Shanghai) has about 40 employees and the strength is expected to double by the end of the year, Tripathi said, adding that 39 of them were local Chinese.

Though Satyam has not yet targeted the huge Chinese domestic market, it hopes to so in future.

At present, Satyam is supporting multinational companies like General Motors and General Electric, who have huge operations in China.

Satyam (Shanghai) is also confident of getting good business from the Japanese market from China.

"We are aware that Japan is one of the largest investors in China and hence the number of Japanese companies operating in China are also very high," he noted.

China, he said is an excellent offshore site for many Japanese and Korean clients due to its close geographic proximity, excellent local talent and their proficiency of the Japanese language.

Satyam has over 100 people at its Japanese operations on the ground and many more are supporting them from the company's development centres in India, Singapore and Malaysia.