"It is becoming a city that is a good alternative to the major software outsourcing cities," said Conrad Chang, an analyst for the consulting firm IDC.

Private investment is also on the rise, as more than 1,700 Chinese companies have sprung up in Dalian to produce software or sell support to foreign companies doing business here. Investors from Singapore and Hong Kong plan two more technology parks. And it's not just outsourcing but high-tech manufacturing - as at Intel's planned factory - that is fueling Dalian's boom.

SAP looked at Japan, Southeast Asia and the city of Shanghai when it set out in 2003 to open an Asian support center, Reuther said.

"In Dalian, we find people with an IT background who can be 'skilled up', and you can find people who speak reasonable English, good Japanese and even Korean," he said.

HP, which opened in Dalian in 2004, now has 2,500 employees there doing business and technology work for clients in Japan, South Korea, Taiwan and elsewhere, according to general manager Chen Sheng.

Dalian's biggest weakness, company officials said, is a shortage of talent to fill the new jobs, when 70,000 city residents already are employed in high-tech enterprises here. The government plans to double the annual number of high-tech graduates from the area's 40 colleges and universities to 80,000 by 2010. It also sends recruiters to job fairs in Tokyo and in Germany and the United States to lure Chinese-born experts with foreign experience.

Dalian's graduates are equal in quality to those of the United States or Ireland and "maybe a bit better," said Kirby Jefferson, the Intel plant's general manager and a veteran of facilities in Ireland and the United States.

And India's lead in English skills is shrinking as more people in China take language classes and deal with foreign customers, said Loh Tiak Koon, chief executive of software contractor hiSoft Corp, which has 3,000 employees in Dalian and elsewhere in China.

"My prediction is that in three to five years, the language issue is going to go away," said Loh, a Singaporean.

Despite its late start, Dalian's outsourcing revenues could catch up to Bangalore in as little as a decade, Chang said.

"It has the potential," he said, "because it has built up the necessary ingredients, while Bangalore has rested on its laurels a bit and not invested in infrastructure."