About 40 percent of the companies surveyed plan to shift some technology work to the mainland in the next three to five years, compared with 8 percent last year, according to Chicago-based management consulting firm DiamondCluster International's 2005 Global IT Outsourcing Study released Tuesday.

The mainland's largest draw is its labor cost, which is 20 to 50 percent below India's, said Tom Weakland, who leads the outsourcing advisory services practice at the firm. ``China is starting to look like India did 10 years ago,'' he said. ``The early adopters in China have shown some success. The risks are not overwhelmingly more than in some other countries.''

Despite lingering intellectual property problems, the mainland has become a strong exporter of software development services.

Major services providers such as Accenture, BearingPoint and India's Infosys are using the mainland to provide a hedge against India.

Countries that appear to have fallen out of favor include Israel and Russia, due to concerns over their stability.

The study also found that the number of buyers terminating an outsourcing deal before it expires has doubled to 51 percent, due to either poor vendor performance or a client's strategy change following a merger or the decision to bring work back in-house.

Satisfaction with offshore providers dropped below that of domestic ones for the first time, as the number of buyers happy with their offshore providers fell to 62 percent from 79 percent.

DiamondCluster's third annual study was the first in which any buyers reported that they are planning to reduce their outsourcing spending.