Before his second year in college, Yang Qing majored in IT technology and knew nothing about finance. But now he is plugging away at financial courses including asset management.

Yang and his classmates at Hangzhou-based Zhejiang University have to finish financial training courses before their internships at Insigma Technology, a local IT provider focused on financial outsourcing service in Hangzhou.

Hangzhou, the capital of Zhejiang province, one of 16 national outsourcing bases, sees opportunities to boost its financial outsourcing industry amid the financial turmoil.

The recent financial crisis has enveloped much of the world, but for outsourcing industry it's not all bad news. Before it broke, many multinationals were transferring service industries to China to reduce costs and offered new opportunities to Hangzhou to become a global outsourcing industry base, says Cai Qi, mayor of Hangzhou.

"Hangzhou is boosting its financial outsourcing service industry beyond the traditional manufacturing to optimize and upgrade its industrial structure", he says.

Hangzhou is also a tourism city, so strengthening the high-level service industry is a suitable economic model for the city, he says.

He also says the Hangzhou government has allocated 100 million yuan to support the development of its outsourcing industry, and it will add to 200 million yuan next year.

Hangzhou's offshore outsourcing business has reached $160 million in the first nine months this year, up 89 percent from the same period last year, while financial outsourcing accounts for 43 percent of the total, according to statistics from Hangzhou External Economic and Trade Bureau (HEETB).

Local entrepreneurs also see a bright side for the industry amid the financial crisis.

"Many multinationals have dismissed their employees to cut costs which resulted in more opportunities for outsourcing services," says Gu Guoying, vice-president of Insigma.

But she also feels the challenges. "Outsourcing projects on a large-scale have shrunk as big merger and acquisition (M&A) cases in the US and EU have fallen due to the credit freeze."

Zhou Feng, vice-president of Handsome Electronics Co, a Hangzhou-based outsourcing service provider shares the same concern. "We have a big deal postponed with an American supplier because of the current financial turmoil," he says.

"I predict this year and the year after will not be very optimistic for outsourcing companies, but in 2010, it will recover and have more room to grow."

But he sees opportunities as some Japanese companies come to America for M&A, while 60 percent of Japanese outsource services go to China.

Li Ling, director of HEETB says Hangzhou has decided to snap up Wall Street and Silicon Valley professionals next year, as Hangzhou needs talents with international skills and backgrounds to boost its outsourcing industry to a higher level.

And salaries for Wall Street and Silicon Valley talents may fall due to the slack financial situation across the US, she says.

She believes Hangzhou can attract international talent because Hangzhou is a model of Chinese urban planning, mixing beautiful scenic attractions and modern commercial centers.

"That also attracts high-level professionals, especially their wives," she says.

She also regards Hangzhou's location as a big advantage apart from being a financial outsourcing service base.

"If you draw a circle pointing Hangzhou as the center, the circle will cover all the major cities in Yangzi River Delta Region within a two and half hour drive," she says. "The area with a population of 200 million people has an active economy and a strong purchasing ability."

Forbes magazine has ranked the city as the top place to conduct business on the mainland for five consecutive years, from 2004 to 2008.

For that reason, Ascendas, one of Asia's largest developers of business parks, was attracted to Hangzhou in 2007 to jointly develop a $458 million IT Park with the Hangzhou Economic Development Area.

The park, which will cover about 43 hectares when completely built, will position itself as a hub for service industries including financial services and IT outsourcing and IT.

The Singapore real estate developer will also help make Hangzhou a smaller version of Shanghai's financial sector.

"Because of Hangzhou's highly qualified financial environment and geographical location, it has the condition to become the back office of Shanghai," says Victor Kong, vice-president of Group Information Technology Department of Ascendas.

Another reason for Ascendas to choose the Hangzhou Economic Development Area is its cooperation with 14 universities. With 12,000 potential graduates annually, the schools are expected to be able to provide the necessary skilled workforce for over 30,000 jobs the park would generate.

And the low price of local talent also provides favorable terms, Kong says.

The government's support is also a key reason for Ascendas to develop the IT Park in Hangzhou, he says. In the project, Hangzhou government accounts for 20 percent of total investment.

Mayor of Hangzhou Cai Qi said earlier this year that the local government was eager to welcome venture capitalists to invest in Hangzhou to support the outsourcing service industry and would allocate funds in a proportion of 1:4, which meant Hangzhou government would invest one fourth of the funds to the project.

Juan Ramon Zarco, a legal professional based in Washington DC feels Hangzhou needs more time to be evaluated before it's clear that it could become a global outsourcing service industry base.

"Frankly, I think that the situation is more complicated than that," he says. "Companies make assessments for outsourcing based upon costs and the quality of resources available. And then the financial officers of the company make a comparison study to see where each opportunity lies. So I could not answer directly until such an evaluation has been made."