As ranked by outsourcing consultants Brown-Wilson. The consultant's fourth quarter 2006 report pegs China's software outsourcing revenue at 2.97 billion Yuan, up 17 percent on the fourth quarter in 2005 and up 6.8 percent on the third quarter in 2006.
Neusoft
Achievo
FreeBorders
BroadenGate
Augmentum
Cathay
SoftStone IT
Bleum
Appson
I.T. United
CARLSBAD, Calif., April 23 /PRNewswire/ -- Objectiva Software Solutions today announced its inclusion in a recent CIO Magazine article entitled Outsourcing Lessons Learned in China. This article is a follow-up article to an article which appeared in the September 30, 2005 issue of the publication entitled It's Cheaper in China. The article addresses how the initial push for offshore outsourcing is for cost savings, yet over time organizations realize that in order to make the engagement successful, they've got to focus on quality.
"This has been a three year process for us -- we started with a very US centric operation, with China back office resources and have now migrated to a 100% China solution, including requirements gathering for mission critical technical programs", explains Jay Leader, CIO, Nypro. Nypro emphasized building quality from the beginning of the product and relied on internal US staff like Jim Sugarman, Manager Web Applications, Nypro, teamed with Objectiva US resources to achieve critical technical advances in custom software development for the Nypro contract manufacturing operations.
"We have built long-term relationships with our clients because of our unique onshore/offshore business model," says Douglas Winter, Objectiva's CEO. Winter further says "It is the very foundation of Objectiva -- we began our business developing sophisticated enterprise-level software applications -- from discovery to delivery, our iterative life cycles and simultaneous QA ensure the delivery of high quality results to our clients."
About Nypro, Inc.:
Nypro, Inc. is a global precision molder, providing world-class services to a variety of markets needing precision plastics molding including electronics, telecommunications, packaging, healthcare, automotive, industrial, and contract manufacturing industries. Nypro operates 52 separate businesses in 17 countries that design plastic products, build molds used to mold plastics, and perform the plastics injection molding. For further information visit Nypro, Inc. at http://www.nypro.com/.
About Objectiva Software Solutions:
Objectiva Software Solutions, a division of Document Sciences Corporation is a leading provider of software outsourcing services. With offices in San Diego, San Francisco, Boston, Toronto, Frankfurt, Paris, Beijing, and Xi'an, Objectiva helps its clients develop customized enterprise software solutions (J2EE, COM+ and MS.NET), web-based and client-server applications and software for the wireless Internet. Objectiva's teams are run by US-based technical leaders with years of experience managing global software development efforts to take the burden off the client. Objectiva reduces the cost of software services without sacrificing quality, on-time delivery and time-to-market.
For further information, visit us at http://www.objectivasoftware.com/ or contact us at information@objectivasoftware.com.
Statements included herein that state the Company's or Management's intentions, hopes, beliefs, expectations or predictions of the future are "forward-looking" statements that involve known and unknown risks and uncertainties. The Company's actual results, performance or achievements could differ materially from those expressed as implied by such statements.
Objectiva Software SolutionsCONTACT: Beverly Waite of Objectiva Software, +1-760-602-1747,
bwaite@objectivasoftware.com
Web site: http://www.objectivasoftware.com/
http://www.nypro.com/
http://www.docscience.com/
The world leader in hardware, China now gets 30 % of its IT business from software and the Chinese government is going full throttle to build on this. This has got the Indian tech companies a bit worried reports CNBC-TV.
After hardware, China is now fuelling its software industry. Though 70% of china's IT business still comes from hardware manufacturing, you cannot ignore the 40% year on year growth, which its software industry is witnessing. The Chinese government is pumping in billions of dollars annually to mobilise growth. Infact, it has set up Hi-tech and industrial parks focusing on software development.
Suzhou, on the outskirts of Shanghai is one such industrial park. This Region has 50 software companies, exporting software worth 12 billion dollars annually. The Local government here looks after administration and policy-making, with central government only being the guiding power. Provincial governments in China are eager to build relations with Indian software giants to help their regions grow faster.
“Suzhou municipal govt would like to invite Indian IT companies here. We would like to extend our support to them to set up their base here,” says Zhou Wie Qiang, VC Mayor, Suzhou
English being a handicap, many local companies here are currently developing software for Japanese companies and also catering to domestic demand. Apart from encouraging their employees to learn Japanese, companies are recruiting fresh English speaking talent. Local companies here strongly believe that setting up BPOs is the next natural progression for them and they would like to learn from the India story.
We want to learn about outsourcing from India. But instead of them setting up a base in China, we would want to establish JVs and business relations with Indian companies” feels Xie Jin Ming, Director, SDS-IT Corp
China has over 15000 software companies and it is now aiming to build its outsourcing skills and invest significantly in research and development. This has led the govt to set up incubators to help small and new software companies
Companies that operate in incubators are judged on their performance and the best ones are given financial support, like reduced rentals, subsidies and at times the govt may provide with some capital. Indian software companies are growing at scorching 40%, however the hardware market lags behind at about 25-30%.
Duke University Study Reports China Well-Positioned for Future Science and Technology
SHANGHAI, China and FOSTER CITY, Calif., April 23 /Xinhua-PRNewswire/ -- According to the report recently released in National Academy of Sciences Magazine, based on a Duke University study (http://www.issues.org/23.3/wadhwa.html), China is unique in its rates of graduating engineering and technology Ph.D.s and its ability to perform critical research and development.
Augmentum, a leading provider of value-added software development services, headquartered in Shanghai, China and Foster City, California with additional facilities in Beijing, is living proof of the China success story described in this study. With the ability to select the best and brightest candidates from a huge Chinese talent pool, Augmentum delivers superior business value to enterprise customers. Augmentum's Fortune 500 and rapidly growing startup clients experience higher quality and faster delivery at the lowest realized total costs. Augmentum offers the entire scope of outsourced software services, ranging from full cycle software development and business application development, to complex system integration and solution implementation. Augmentum is committed to becoming the best software services provider in the world. Fortune 500 companies, including Intel, Motorola, and Microsoft, have relied on Augmentum to develop and test their complex software. Augmentum was recently acknowledged for outsourcing leadership in the Booz Allen Hamilton book, Outsourcing Thought Leaders: Managing Business without Borders (http://www.strategy-business.com/oasreader).
"Given the wealth of talented programmers in China, Augmentum has created a Silicon Valley start-up culture that allows employees to embrace projects requiring technical know-how coupled with creativity and innovation," said Frank Yu, President and COO of Augmentum. "Throughout 2006, more than 10,000 people applied for the 500 positions at Augmentum, giving us the chance to choose the most innovative talents for our worldwide developer team. Built on differentiating factors including managerial style, problem-solving skills, customer focus, and an extremely disciplined culture and development process, Augmentum's success is evident in the company's rapid growth and world class customer list."
Augmentum is a sponsor of the Gartner Symposium/ITxpo: Emerging Trends, in San Francisco, CA, April 23-25, located in booth #421.
About Augmentum
Augmentum provides Outsourcing Leadership for Innovation. Augmentum engineers augment their clients' teams as an extension, utilizing leading edge development tools and technologies, as well as proven processes, to create commercial-quality software. The management team has decades of collective experience outsourcing commercial software and solutions. Augmentum, Inc. is headquartered in Shanghai and Beijing in China and in Foster City, California. The company has grown to 800 people in China out of 850 worldwide in three years since its founding and won the inaugural Red Herring Asia Top 100 award in 2005, and the Risk Management award at the China Outsourcing Summit in 2006. For more information, please visit http://www.augmentum.com/ or call (650) 578-9221 x104.
About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the IT industry's largest and most strategic conference, providing business leaders with a look at the future of IT. For more than 10,000 IT professionals from the world's leading enterprises, Gartner's annual Symposium/ITxpo events are key components of their annual planning efforts. Attendees rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use technology to address business challenges and improve operational efficiency. For more information, please visit http://www.gartner.com/us/symposiumwest.com
AugmentumCONTACT: Melisa GlasbergTerpin of Communications Group 1-310-821-6100,
Ext. 116, melisa@terpin.com, for Augmentum
Web site: http://www.augmentum.com/
http://www.issues.org/23.3/wadhwa.html
http://www.strategy-business.com/oasreader
http://www.gartner.com/us/symposiumwest.com
Manufacturing process outsourcing brings outsourcing in-house.
By Jim Holland, President and CEO, The Holland Group
April 25, 2007 -- It is no secret that the manufacturing industry is constantly looking for innovative ways to cut costs. Pressures from OEM's to their suppliers are constant. This struggle to save money is taking a toll on manufacturing throughout the country.
While manufacturers continue to search for an answer, one global manufacturer found an innovative concept. It provided them not only substantial cost savings, but solved their concern with co-employment issues while improving their processes. They took a concept, called Manufacturing Process Outsourcing (MPO), and spread it throughout seven manufacturing facilities in the
Manufacturing Process Outsourcing may surprise many who are familiar with the term, 'outsourcing.' The concept is quite different. While most would assume outsourcing company functions involve an outside vendor operating in a different location, the intent of MPO is to 'run a business within a business.' It involves outsourcing manufacturing functions to a vendor who actually operates inside the company's facility, while guaranteeing the quality and cost of output." What makes this manufacturer's success story so unique is that not only was MPO and the production of their product under their own roofs, but MPO was flexible enough to adapt to each facility's unique needs.
Implementation In An Entire Facility
In one facility, the manufacturer had successfully produced a prototype product and was ready to begin full production. Since the assembly production was self-contained in a single facility, the company outsourced the entire process to the MPO provider. From the planning and ordering of materials to shipment of the finished product, the process was in the hands of the outsourced provider. This included labor, supervision, management and technical support. The billing was based on shipments instead of an hourly bill rate, allowing the outsourced provider to be efficiency and quality driven.
Multiple Facilities On A Campus With Multiple Vendors
Another way MPO was incorporated involved multiple plants in one location. Looking to avoid co-employment issues, cut costs and reduce the number of vendors, one MPO provider manufactured and managed product in both plants. While the two plants' operations varied greatly from different shifts to size of workforce, MPO was able to leverage shared management and resources while maintaining quality.
Ensured Transfer Of Knowledge To Outsourced Employees
At another facility, the manufacturer selected a very large plant with over 2000 employees and designated approximately 15 processes involving over 200 employees for MPO. However, the manufacturer was concerned about loss of production skills and tribal knowledge if the processes were outsourced. To eliminate this concern the MPO provider developed standardized and certified work instructions which were implemented and monitored by MPO trainers. The manufacturer and MPO provider instituted periodic audits of training records to ensure all employees received the same quality throughout.
With change at this magnitude comes obvious hesitation and concern. Will the manufacturer's product maintain its high quality standards? What influences a manufacturer's willingness to allow another company to manage and produce its product?
After evaluating the risks associated with outsourcing versus the rewards MPO provided, the decision for this manufacturer became clear. Not only did MPO allow total visibility by being in-house, but it guaranteed product standards while improving processes. The decision allowed them increased focus on core competencies so efforts could be spent on growing the company.
The results that that manufacturing process outsourcing brought to this manufacturer were as follows:
* Savings of 40% in labor costs
* An In-house outsourcing model
* Continuous process improvements
* Avoidance of co-employment issues
* Maintained quality of output
* Flexibility of implementation in several locations
* The ability to focus on core competencies
By TIGER TONG
AS industrial growth in
Software development is one of its targets. In 2006,
In addition, the IT industry is moving from providing products to a service-oriented one. With a huge talent pool and competitive price,
At the 2007 China International Software Summit last week, five of the seven enterprise representatives were talking about outsourcing in
An attractive talent pool, strong government support, low attrition rates, and a strong presence of foreign companies in
While language remains a big hurdle for
With
At the same time, compared to manufacturing, the services industry is less constrained by geographic distance and might provide chances for cities in the
Intel, the world largest chipmaker has invested US$525 million in two assembly and testing facilities in
Cension Semiconductor Manufacturing Corporation, the first 200mm wafer fab in Central and
Encouraged by the quick development of the IT manufacturing industry, the
The city's rich human resources is certainly the most important factor. There are 40 universities and colleges in
Compared to major cities, such as
'Compared to Beijing and Shanghai, people in Chengdu pursue a more relaxing lifestyle and are less willing to job-hop, unlike their counterparts in the coastal cities,' commented Jade Zhang, president and founder of Sofmit Co. Ms Zhang sees Chengdu carving out a niche in the BPO market.
'There is no doubt that
Ms Zhang, a
To some companies, talent itself has become reason enough for them to set up a branch in
At the same time, Neusoft also became the first Chinese software company with more than 10,000 staff. To focus more on the BPO business, Mr Liu plans to have more than 30,000 staff within a few years. To hire the additional talent, Mr Liu has shifted his focus from
The booming BPO industry in
While
Compared to pure software development, people for BPO will require good language proficiency and communication skills. As fast growth is expected in the future,
Thirty-to-Sixty Percent Savings over India, with Assurances of U.S. Controls, Drives Largest Chinese BPO Deal to Date
WAKEFIELD — DarwinSuzsoft, the American IT outsourcing services leader in China, has introduced a full suite of IT Business Process Outsourcing (BPO) services, linking demand for sustainable savings and better satisfaction levels to China’s deep pool of IT talent. It has also signed the largest BPO services deal in China to date, with India-based Datamatics.
DarwinSuzsoft’s China-based IT BPO capabilities are among the most scalable in the world, with engagements ranging from a dedicated staff of 50, upwards to 1,500 – the scope of the Datamatics collaboration. Its clients enjoy fully integrated U.S.-China project and process management, and 30-60 percent savings over comparable pricing in India.
“The global outsourcing landscape has dramatically shifted, and so have the measures of success,” said Dan Ross, CEO of DarwinSuzsoft. “China meets the new standards – technical competence, ability to deliver, workforce stability, and long-term sustainable savings. We’re the fast-track gateway to this irresistible advantage.”
DarwinSuzsoft’s BPO clients gain faster processes, improved service and product quality, and significant cost savings – coordinated with other IT consulting and development services – through a single point of control and accountability. Through its unique “smart-shoring” strategy, DarwinSuzsoft taps key regions in China like Suzhou, Nanjing and Dalian, which are ideally suited for these BPO services because of their strong university systems and loyal, inexpensive workforce.
As a full-service IT outsourcing partner, DarwinSuzsoft helps global CIOs align business objectives with sophisticated services – from application development and re-platforming, enterprise architecture design, quality assurance and testing, and commercial software development and maintenance, to cost-effective BPO offerings. Its customers include more than 300 of the world’s top financial institutions, software firms, insurance providers, healthcare companies and telecommunications firms.
DarwinSuzsoft Guides Datamatics into China
Datamatics, an IT consulting and services firm headquartered in India, is tapping DarwinSuzsoft to establish a 1,500-person BPO offshore development center (ODC), gaining trusted guidance on Chinese market entry, an accelerated ramp-up, immediate cost savings and a risk-adjusted offshoring portfolio.
With this deal, DarwinSuzsoft has become the largest BPO service provider in China – three times larger than its closest competitor. The firm’s established presence across six regions in China ensures clients receive world-class service without the complexity that undermines many outsourcing relationships.
DarwinSuzsoft’s BPO services include: data entry, capture, conversion and verification; data reconciliation and cleansing; document coding and indexing; processing of forms, claims, credit cards or stock trades; and call center and data center support operations.
About DarwinSuzsoft
DarwinSuzsoft is a leading provider of information technology (IT) and communication services, combining 20 years of consulting experience with a deep engineering presence in China. IT services clients gain local accountability, highly skilled IT professionals and high-quality outsourced development capabilities, at 30-60 percent savings over most Indian firms. Communications clients stay ahead of rapidly changing market demands with nimble design, deployment and optimization services. With more than 1,000 employees in Boston, San Francisco, Shanghai, Beijing, Hong Kong, Suzhou and Dalian, China, DarwinSuzsoft serves many of the world’s largest companies in financial services, software, insurance, healthcare and telecommunications industries. For more information, visit www.darwinsuzsoft.com.
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Additionally, China and India are producing some of the world's best-trained computer-science and electrical-engineering graduates. Both countries will soon compete favorably for global business not simply in terms of price, as India's IT-service providers have already done, but based on competence and capability. Even more crucial to their increasing global predominance is the rapid growth of domestic markets for technology and consumer goods in China and India. Soon, both nations will have spending power equaling that of the United States and Western Europe combined. |
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With its challenging logistics, stifling bureaucracy, corrupted officials, and leftist political influences, many ask if India is still worth the effort. The consensus from the vast majority of global Fortune 1,000 companies is that it does indeed pay to pursue India's opportunities. We agree. In fact, we estimate that the largest IT-service providers will add an average of 15,000 to 30,000 employees annually for the next several years in anticipation of continued rapid growth in global demand.
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Whether your organization delivers or buys IT products and services globally, you'll find that the economies of China and India pose unprecedented threats and opportunities. Here are eight priorities to help prepare your enterprise for developments in those countries over the next five years.
BEIJING, April 18 /Xinhua-PRNewswire/ -- With the continued growth of world economy, the global information industry witnessed stable development in 2006 while facing both challenges and opportunities. The global IT industry has been getting more mature. It has accelerated its collaboration with other industries and significantly driven the development of the world economy.
CCID Consulting Views the Status of the World Information Industry.
The scale of the world information industry reached $4245.7 billion in 2006, up 9.1% over 2005. Among all industrial segments, digital content ranked No.1 with growth rate of 40.1%; telecommunications was ranked last, with a growth rate was 6.2%; software & IT services grew faster than the communications industry with a growth rate of 6.3%.
For "Size and Growth Rates of World Information Industry, 2001 - 2006", please refer to http://www.ccidconsulting.com/upload/11435.gif .
For "Annual Growth Rate of Each Segment of World Information Industry, 2002-2005", please refer to http://www.ccidconsulting.com/upload/11436.gif .
In 2006, the global information industry witnessed clear structural change. While the electronic information product manufacturing industry still ranked No.1 in the whole industry, its ratio has decreased from 36.4% in 2005 to 35.7% in 2006. This is also the case in the telecommunications industry with its proportion to the whole industry declining from 34.6% in 2005 to 33.7% in 2006. Such a decline is due to the upsurge of the digital content industry, whose proportion to the whole industry has increased from 7.8% in 2005 to 10.0% in 2006. However, the proportion of the software & IT service industry is not large at all, remaining at about 21%. This number was 20.6% in 2006 and 21.2% in 2005.
For "Industrial Structure of Global Information Industry in 2006", please refer to http://www.ccidconsulting.com/upload/11437.gif .
Traditional electronic information industries, such as computer, communications, semiconductor and consumer electronics industries, have entered their maturation period gradually, all of which had seen single-digit growth in 2006 with their growth rates at 8.2%, 6.6%, 9.4% and 8.4% respectively. The software industry started to grow faster again in 2006 with one percentage point higher over 2005. Though the industry creating new types of displays started early in 1990s, it has maintained rapid growth until now. In 2006, the production value of this global industry reached $85.28 billion, up 15.2% year-on-year. The rapid popularization of broadband and gradual maturation of wireless networks have driven the fast expansion of the digital content industry, whose sales revenues increase year-on-year, reaching $424.8 billion, up 40.1% year-on-year.
The information industry has witnessed fast growth in countries all over the world. The United States was the clear overlord in terms of the market share of its information industry. In 2006, value-added size of the US information industry was $1027.7 billion, up 6.1% over 2005. The production value of the Japanese electronic information product manufacturing industry was $214.45 billion in 2006, up 6.0% over 2005 year-on-year and the sales revenue of its information service industry was $127.41 billion, up 4.2% year- on-year. The size of the information industry in the EU reached $864.17 billion, up 3.8% over the same period of the last year. Driven by its policies including the IT839 strategy, the information industry in South Korea maintained fast growing momentum in 2006, with its total yearly industrial scale being 248.4 trillion Korean Won, up 7.5% year-on-year. The production value of Taiwan ranked No. 4 in the world, which just followed the US, Japan and Mainland China. In 2006, Taiwan's yearly sales revenue was about 3.95 trillion TWD. In 2006, the information industry in China continued to grow fast with its sales revenue at 4.75 trillion Yuan, up 23.6% year-on-year. The total national communications turnover was 1532.1 billion Yuan, up 25.6% year- on-year.
CCID Consulting Views the Developing Tendency and Hot-Spots of the World Information Industry.
New technologies and services need urgent breakthroughs in terms of both service quality and mode:
Technical experts lay more emphasis on the overturning capability of technologies. The emergence of a new era of technology lies on the trinity of technology, product and market. In 2006, the rapid growth expected of new technologies, such as mobile video and Web2.0, had not been seen.
Constant emergence of new products and technologies:
Microsoft officially launched its next generation Windows operating system, Windows Vista Enterprise. The popularization of dual-core processors and the Intel's recent announcement concerning dual-core processors indicates that the era of the multi-core processor will soon be here. Breakthroughs have been made for larger capacities and higher-speed storage. Products with new storage technologies, such as MRAM and FRAM, are launching one after another. Great achievements have been made with phase-change memory R & D. The $100 computer made its public debut. It is expected that this may take an active role in narrowing the digital gap across the whole world. South Korea's WiBro, the first mobile business using the WIMAX network in the world, has been officially put into operation, which opens a new chapter for the official application of WiMAX for business use.
The Power of Asia is great with the upsurge of both China and India:
In 2006, the market size of Asian-Pacific IT products increased by 8.9%, reaching $116.7 billion, accounting for 40% of the world market. The market size of IT products in China (including Hong Kong and Taiwan) accounted for 44% in the Asian-Pacific region, up 12.4% year-over-year. The proportion of India was 24%, up 23.9%. The global IT industry develops in a fairly unbalanced way. However, with the rise of some developing countries including China and India, the scale of the information industry continues to grow.
By the end of 2006, the production value of India's software industry had reached $24.5 billion, accounting for 76.5% of the production value of its total IT industry. Software export covers 20.4% of the total export value in India. India has also developed a number of software giants with world brand recognition and competitive strength, which include Tata, Infosys and Wipro, et al.
In China, the information industry has become a guiding industry, a pillar that acts as the foundation for other developing industries. From January to December of 2006, China's electronic information industry witnessed sales revenues of 4.75 trillion Yuan, up 23.6% year-on-year. Its manufacturing industry produced sales revenues of 4270 billion Yuan with an increase of 23.7% year-on-year. The software industry has seen a total income of 480 billion Yuan, up 22.9% year-on-year. The total national communications turnover was 1532.1 billion Yuan, up 25.6% over the same period of the last year, of which the total turnover of telecommunications services was 1459.21 billion Yuan, up 26.1% year-on-year. The total turnover of postal services exceeded 72.89 billion Yuan, up 16.9%.
M&As reached its unprecedented climax in 2006 across the world:
It is estimated that in 2006, the total M&As value jumped to $3.5 trillion, surpassing $3.33 trillion, which was the historical record made during the Internet bubble in 2000. Constantly changing demand stimulates the M&As in network, chip and enterprise software markets. The IT industry is the area where the fiercest fights for M&As have been seen. What is worth noting includes AT&T's acquisition of Bell South. Google spent $1.65 billion on purchasing YouTube. The France-based Alcatel merged with the US-based Lucent.
Industry Forecast
CCID Consulting predicts that the global information industry will grow by 9.5% in 2007, with its total industrial size reaching $4649.7 billion. By the year of 2011, its annual growth rate will increase to 11.9%. By then, the total industrial size will reach $7306.8 billion. In 2007, the pattern of global information industry will not change much. However, the position of digital content industry will be enhanced further. It will cover 12.7% of the total industry, which will lead to the decrease of the ratios of both the electronic information product manufacturing industry and the telecommunications industry, which will go down by 33.7% and 32.7% respectively. The ratio of the software industry will remain unchanged. By the year of 2011, the proportion and structure of the world information industry will undergo significant change. Ratios of the electronic information product manufacturing industry and the telecommunications industry are predicted to decrease while those of software and digital content industries will increase. The total developing tendency of the global information industry is that the software industry will continue to play the key role in the future.
For "Sizes and Growth Rates of Global Information Industry, 2007-2011", please refer to http://www.ccidconsulting.com/upload/11438.gif .
For "Structure of Global Information Industry in 2011", please refer to http://www.ccidconsulting.com/upload/11439.gif .
About CCID Consulting
CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.
Based on four major competitive areas of the powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.
CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research.
For more information, please contact: Grace Gao CCID Consulting Co., Ltd. Tel: +86-10-8855-9020 Email: gaojie@ccidconsulting.com
CCID Consulting Co., Ltd.CONTACT: Grace Gao of CCID Consulting Co., Ltd., +86-10-8855-9020, or
gaojie@ccidconsulting.com
That's music to Baidu's ears as the company prepares to launch a Japanese website this year, an event eagerly awaited by Enomoto.
Robin Li, chairman and CEO of NASDAQ-listed Baidu.com Inc, said in February that his company has developed the necessary technology to start a Japanese website and will spend $15 million to log into the Japanese market.
Meanwhile, Alibaba.com, China's largest business-to-business (B2B) e-commerce company, will also reportedly start offering Japanese services in the second half of 2007.
Baidu and Alibaba aren't exactly blazing a trail. Chinese technology companies like Lenovo Group, Neusoft Group and Kingsoft have already made significant inroads into Japan.
As Chinese tech companies get bigger and look for more room to grow in overseas markets, Japan has become a must-tap.
A suitable market
Lu Bowang, a senior Internet industry analyst in Beijing, says an enhanced capability and a competitive domestic market along with a similar language and culture are the main reasons for Chinese dotcoms' yen for Japan.
Since the Internet bubble burst in 2000, many Chinese companies have given up business models aping United States counterparts, and have developed their own, which have helped them beat global giants like Google, MSN, Yahoo! and eBay in the Chinese market.
Companies like Baidu and Alibaba, with hundreds of millions of dollars in hand and pushed by investors to find new growth engines, are thus turning to Japan.
Japan is the world's second-largest economy and also the second-largest technology market More importantly, it's blissfully devoid of strong local players, dominated as it is by US conglomerates like Yahoo! and Microsoft. The growth of local leaders has also been hindered by the practice of outsourcing that many Japanese companies resort to.
The fact that both Chinese and Japanese are two-byte languages, which means high similarities in computerspeak, is seen by Chinese firms as an added advantage.
Beijing-based Kingsoft, which competes with Microsoft in China's office automation software market, established a Japanese venture in 2005. "We started probing the Japanese market, whose office software segment is 20 times that of China. But we have been waiting for an internationally competitive product," says Lei Jun, CEO of Kingsoft.
In September, the company started to charge on its anti-virus software Duba, after a year of free service. In four months, Kingsoft broke even. Buoyed, in February, it released office software WPS in the Japanese market.
In January, Japanese venture capital heavyweight JAFCO invested 2.5 billion yen ($21.02 million) in Kingsoft's Japanese arm eight times Kingsoft's original investment. Neusoft Group, the largest Chinese technology service outsourcing firm, last year generated 60 percent of its offshore revenue from Japanese customers and every week, hundreds of its Chinese and Japanese employees shuttle between its Shenyang headquarters and Tokyo.
Its chairman and CEO Liu Jiren, who started the company with a contract from Japanese firm Alpine, flies to Japan every month to meet customers and oversee the operations there.
Go local
Many US dotcoms in China are criticized for being slow in localizing. As Chinese companies swarm into Japan, they are also facing similar issues.
Internet analyst Lu warns the Chinese and Japanese markets are vastly different.
The business community in Japan is highly interconnected and it is difficult for a foreign company to integrate into it. The legal environment is also very different from that in China.
In addition to good products and services, the key to the success for companies like Neusoft and Kingsoft largely lies in local partnerships.
When Neusoft was founded in 1991, it sailed through with the help of Alpine, with which formed a joint venture. Later, Neusoft also has Toshiba as a strategic investor.
Neusoft's Liu says his company will seek more investment from Japanese partners this year to expand its business lines.
Neusoft has more than 100 employees in Japan and most of them are Japanese. The CEO of Neusoft Japan and managers of finance and technology wings are all Japanese.
"The key for us is to build trust in the local market and grow with the local people and in the framework of local rules," says Liu.
Compared with Liu, Kingsoft's Lei does not visit Japan that often, relying more on conference calls with executives of the Japanese venture. But he, too, believes trust and partnership are pivotal.
Lei spent almost two years to find the right people for his Japanese business and finally found a Japanese executive, who used to run his own gaming software firm and had rich experience in Japan's software distribution network. Kingsoft also offered local managers stakes in the Japanese firm as additional incentives.
Innovate and win
As latecomers, Chinese companies have to work extra hard to enter foreign markets, but their innovative business models in the domestic market could help.
When Kingsoft opened its Japanese business in 2005, it faced challenges on several fronts: Microsoft had an overwhelming dominance in the office automation software market and companies like Symantec and Trend Micro led in the anti-virus segment.
What Lei did was that he took advantage of the Internet to cut distribution and sales costs. In the first year, Kingsoft offered free downloads and upgrades on the Web, which attracted thousands of customers. By the time it began to charge users from September 2006, Kingsoft had already clocked up a huge user base. While Microsoft Office suite sells at around 50,000 yen ($421), Kingsoft's WPS is priced at just 10 percent of that.
"As a latecomer, we must have a business model different from established rivals, and the online platform was our solution," says Lei.
Experience in developing products for the local market is also something Chinese Internet companies want to use when venturing into Japan.
In the first stage of Baidu's development in China, attracting young users with its music search service was the key, while in the later stage, it developed a distribution model that allowed the company to take its services to thousands of small and medium-sized companies and beat Google's online sales platform.
"With our proven strength in Chinese search services and our focus on delivering the best user experience, we will be able to provide Japanese users a quality alternative to existing search engines," says Baidu's Li.
(Source: China Daily)
Human Resource Outsourcing (HRO) is a process in which a company uses the services of a third party to take care of its HR functions. A company may outsource a few or all of its HR-related activities to a single provider or a combination of service providers located in onshore or offshore destinations like India, China and the Philippines. HRO is being billed by some as the future of corporate HR strategies, making the next generation of in-house HR professionals simply integrators of the company's outsourced services. The worldwide HRO revenue reached $59 billion in 2006.
Yet, 2006 also saw some HRO suppliers struggle with profitability and retrench employees in order to improve their bottom-line results. This is expected to exert a drag on the market, especially on the growth of the U.S. segment, through 2007.
Key Processes
Businesses outsourcing HR processes are typically small to midsize with number of employees ranging from 25 to 1,500. The primary candidates for globalization of HRO services are the processes related to payroll, benefits administration, e-training, recruitment and non-voice employee data management. HR-related IT is also frequently offshored. Payroll services and benefits administration services comprise the largest segment of the total worldwide HRO market — this was nearly three-fourths of the total market in 2006. The remainder of the market includes education and training, hiring and recruiting, and personnel administration services.
| HRO Services |
| Strategic
Collaborative
Administrative
Improving employee relations |
The health care and energy sectors lead HRO offshore adoption, followed by the manufacturing, telecommunications, financial services, hi-tech and retail sectors. Multiprocess HRO transactions include three or more HR processes having an annual contract value of more than one million dollars, serving more than 3,000 employees and having a duration of three years or more. Such transactions have grown at a significantly faster rate than single-process HR functional services market over the last few years. The worldwide multiprocess HRO market was estimated at about $14 billion in 2005. Multiprocess HRO is about an eight-year old market. Despite its rapid adoption, meaningful penetration of multiprocess HRO is yet to be realized. Currently, the market is barely touched in terms of the potential number of companies that can outsource HR. However, 2007 will be a milestone year in the development of the this market, as first-generation buyers renew their outsourcing transactions and attempt to address some key challenges that buyers and suppliers had to face during the first wave of HRO.
Centers of Excellence
The most popular location for HRO is Europe , with many top HRO companies having centers in Western Europe . However, with costs on the rise, companies are looking for cheaper alternatives. Many are turning to Central and Eastern Europe , and some are looking further east to India and Southeast Asia .
Some top cities for HRO are Brussels , Paris , London , Warsaw and Prague . Other emerging cities include Mumbai, Delhi , Manila and Dalian .
ARINSO International, Hewitt Associates, Manpower and SharedXpertise are some HRO companies with a presence in Brussels.
Adecco, Boyden, EADS and European Human Resource Consultants are a few of the leading HRO service providers in Paris.
London has by far the most HRO companies in Europe . Some of these include Accenture HR Services, ACS, Alexander Mann Solutions, Bnb Outsourced Solutions, Ceridian and Crystal RPO. Glasgow in Scotland houses the HRO center for Hewitt.
Eastern Europe is fast becoming a preferred HRO destination, though it still requires more time to reach the level of Western Europe. Some of the popular destinations for HRO in Eastern Europe include:
As the cost of operations and staffing goes up in Europe, many companies are looking for alternatives in India, which currently has the largest number of HRO offshore centers. Companies are also considering other Asia-Pacific destinations.
In India, Delhi (national capital) houses HRO centers for ATS Services, Secova, Hewitt (captive) and Fidelity, among others. Mumbai has centers for Caliber Point Business Solutions and Hewitt (captive). Chennai has centers of SummitHR and Standard Chartered Bank (captive), while Bangalore has centers for Fidelity, Accenture and Convergys.
Other important centers of HRO firms in the Asia-Pacific region include:
Emerging Trends
A majority (around 60%) of business organizations use the centralized shared-services model for HR services, while about 40% use a model that combines some sort of outsourcing which internally provides HR services, according to a study by BenchmarkReports.com. The research findings indicate that not a single company among the 40 companies studied by the firm has completely outsourced its HR functions.
Outsourcing will heavily increase in the next few years, but reliance on shared service centers will also continue to increase, and is expected to remain the preferred sourcing alternative for HRO. Over the next few years, businesses will see significantly more HRO work being executed by offshore shared services centers, as opposed to having it delivered through outsourcing.
As the HRO industry matures, vendors will seek contracts to handle end-to-end work. This will directly benefit the customers, and will expand the scope for ongoing process improvement within the industry itself, hopefully leading to wider business benefits such as improved cash flow and improved access to financial information in addition to further cost reduction.
Such improvement is derived from identifying bottlenecks between processes and gradually eliminating manual intervention within HRO. Technology will increasingly become a leverage to deliver scalability, productivity and quality. Access to better technology and systems is becoming a key driver for HRO.
The demand for HRO will continue to rise significantly. Sole-sourced and multisourced outsourcing contracts will become increasingly common in a global marketplace that is more knowledgeable and experienced about sourcing. Private-equity investments will energize the mid market, making this segment a significant player in HRO. There will be almost double the number of HRO contracts signed in 2007 compared to the last year.
By Joe Leahy in Mumbai
Published: April 18 2007 00:59 | Last updated: April 18 2007 00:59
Tata Consultancy Services is planning a big push into China, the only computer services outsourcing market that the Mumbai-based company believes has the potential to match India in size.
India’s biggest outsourcing company, which has set a goal of increasing its China staff fourfold to 5,000 in four years, sees the country as the central plank in a global emerging market expansion plan that takes in Asia, Latin America, eastern Europe and north Africa.
“If any country has the potential to scale up like India, it’s China,” N. Chandrasekaran, TCS global head of sales and operations, told the Financial Times. “We can easily grow to 3,000 or 5,000 in Hungary but not to 50,000 like we could in China.”
China has raced ahead of India in manufacturing but it remains a comparative minnow in terms of the IT outsourcing industry.
TCS had nearly 90,000 employees at the end of March, dwarfing Shenyang Neusoft, China’s largest comparable company, which had a staff of about 8,000.
But China is the only other emerging market whose universities and colleges are producing enough engineering graduates to build a large-scale software engineering outsourcing hub, making it attractive for the Indian outsourcers.
“China will become one of the major markets for IT services in the longer term. Therefore establishing a foothold is critical for success,” Moody’s Investors Service said in a report on TCS.
Expanding in China, however, has been a relatively slow process for TCS and its peers at other Indian computer services companies, such as Infosys Technologies.
TCS stole a march on its competitors by collaborating with the National Development and Reform Commission, a powerful government agency, to take a controlling stake in a joint venture with Microsoft, Uniware of China and two other state agencies.
But the negotiations for the venture, which were concluded in November, took more than a year to complete.
The challenge now for TCS will be to recruit and retain good staff in a country where costs are higher, the language is less familiar, potential recruits do not recognise the TCS name and staff attrition is high.
Mr Chandrasekaran said the first source of China business was multinationals operating there, followed by domestic Chinese companies. Eventually, its China operations would also serve global markets.
“If you take the Fortune 500, all of them will be in China one day,” he said.
In an industry in which margins are everything, TCS will also have to find new ways to mitigate higher costs associated with China and its other overseas operations.
The percentage of foreign nationals in its workforce has risen to nearly 10 per cent from a fraction of a per cent several years ago, driven by the need to be closer to clients and to diversify risk.
“If TCS fails to promote efficiency, this [the rising percentage of foreign nationals] could pressure overall profitability,” Moody’s, the rating agency, said.
To raise its profile overseas, the company in recent weeks has launched a frontline print and online media advertising campaign, touting among other things work it does for Ferrari.
The campaign is an unusual step for India’s outsourcing companies, which have normally been content to operate behind the scenes.
“We’re recruiting people internationally, so it’s important people know about us,” said Mr Chandrasekaran.
DALIAN - China's growing software outsourcing trade with Japan is expected to rise even faster after Premier Wen Jiabao's "ice-melting" visit to Japan.
"China accounted for more than 60 percent of Japan's outsourced software trade in 2006 and has become the country's biggest software outsourcing base," said Mine Shentaro, of the Japan External Trade Organization based in Dalian, northeast China's Liaoning Province.
Dalian Hi-Think Computer Technologies (DHC) Co. Ltd is one of China's leading software outsourcing firms. Manager Liu Jun is proud of its big-name customers, including technology giants Hitachi, Sony, Mitsubishi and NEC.
"DHC started outsourcing computer software from Japan in 1996, a time when Sino-Japanese relations were at low ebb. Political hindrances have not impeded our business," said Liu.
DHC's business with Japan has grown 30 percent annually since 1996 and now employs 2,000 people. Last year, the company exported software worth 50 million US dollars to Japan.
"More than 60 percent of China's software trade is Japan-oriented," said Jin Guowei, deputy director of Dalian Information Technology Bureau.
Dalian, a Japanese colony for 40 years before the end of World War II, became the outsourcing center of information technology to Japan due to its geographical proximity and its skilled labor force.
The city's software industry sales last year set a new record at 10 billion yuan (1.23 billion US dollars), maintaining a 60 percent annual rise in the past six years.
Of the sales, processing outsourced software contributed 3.7 billion yuan (456 million US dollars), of which at least 80 percent was for Japanese companies.
The city has 20,000 people working in the software outsourcing sector and 70 percent of them speak Japanese.
According to a government plan for the development of software and information services, China aims to generate 168 billion US dollars from the software sector and export 12.5 billion US dollars worth of software services in 2010.
Jin is confident in the future. "With the improvement of bilateral ties, I believe the industry will become more prosperous."
"The friendship between China and Japan is an irreversible trend. Premier Wen Jiabao's visit to Japan is good for the two countries. I hope after the visit more Japanese can put away misgivings and start cooperating with Chinese firms in the software industry. It will be a win-win solution."said Jin.
"While European and American companies are choosing India as an outsourcing base, Japanese firms prefer China because we are close neighbors and have similar cultural backgrounds." said Noshiro Yasuo, president of Fujitsu System Engineeering Co., Ltd in northwest China's Xi'an.
"Premier Wen's visit to Japan will give us more confidence to expand our business in China," he added.
2nd April 2007
By Patrick Wachter
With its low-cost, high-skilled and plentiful labour force,
While the largest of the Chinese offshore suppliers have posted remarkable growth numbers recently, their efforts on the whole have been overshadowed by the bigger outsourcers that lie to the south, in
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Chinese firms, on the other hand, are still mostly working on the lower end of the services ladder - basic applications, software testing and some R&D - mostly for multinational companies' Chinese operations, not their wider IT concerns.
But even if their outsourcing model is not as evolved as their Indian counterparts, Chinese companies are positioning themselves for further growth and more sophisticated project work. Many have established good relationships with software and high-tech companies, doing a lot of the product development and testing required before a company such as Microsoft or Oracle releases its latest software. Some are beginning to move up to services such as package implementation or infrastructure management. A few companies have established their headquarters and front-end sales offices in the
The Chinese offshore outsourcing market stood at $1.4bn in 2006, according to the latest figures from CCID Consulting, an analyst group sponsored by the Chinese government that focuses on the country's IT sector. The market should grow between 45% and 50% on a compounded annual basis, according to Li Jun, CEO of CCID.
But the geographic breakdown of offshore customers is heavily concentrated in
The Japanese offshoring market is not nearly as mature as that of the
Apart from
The offshore service mix remains tilted toward lower-end services, Li adds. In 2006, system testing and software localisation - where a Chinese vendor adapts a software product for the Chinese market and language - together made up more than 50% of the total $1.4bn in offshore services. Application development was responsible for another 40% of the market, Li says. Despite
This means it is hard for Chinese outsourcers to assemble properly qualified teams for high-value consulting and implementation work.
Of the major Chinese players, Li says the biggest is Neusoft Group, a provider of software and services as well as medical technologies. Overall the company employs more than 10,000 staff, and about 7,000 of those are now dedicated to the software and services business, up from 4,000 at the start of 2006, Li says. "Still this is relatively small, especially when compared with the Indian companies," Li says, but the key for Chinese suppliers is growth rates, and there are several Chinese vendors that doubled their revenue in 2006.
Neusoft sees most of its revenue from domestic software and services sales. According to Walter Fang, Neusoft's CTO, the company posted about $
That means companies like Motorola and Nokia, eager to tap
"These technology companies are looking for skills in
But Neusoft's clients are also content to send the basic software testing and quality assurance work to China, and Fang says the cost of these is still attractive compared to India. Thus much of
Fellow Chinese outsourcer Worksoft Creative Software Technology derives about 70% of its revenue from R&D and product services, according to David Chen, the company's COO. Worksoft provides application development, quality assurance, testing and localisation services for big names such as IBM, Oracle and Microsoft, its largest client.
Chen says the company entered the IT services space - as opposed to its main R&D business - about two or three years ago, and this area now accounts for the other 30% of sales. He says Worksoft competes with notable Indian vendors such as TCS and Infosys for application development and package implementation. It is a tough field, but the company has had some success, beating out Infosys, for example, on a Seibel implementation project for Motorola.
Worksoft focuses on the financial services and manufacturing/retail verticals, both areas in which large multinationals such as Citibank, HSBC, and Wal-Mart are setting up operations in
Worksoft's offshore capabilities have attracted investments from Legend Capital, Doll Capital Management and Sequoia Capital, its largest shareholder. According to Chen, the company is planning a US IPO in the next 18 months and will use the proceeds to build up its infrastructure, potentially acquire other firms, and partner with other vendors. Chen was unable to disclose any revenue figures, but headcount stands at 2,600, and he sees that number increasing to between 4,000 and 5,000 by the end of the year, suggesting an impressive growth rate and solidifying the company's place as a top Chinese services outfit.
Much like Worksoft, Acheivo hopes to increase its global reach and service portfolio. The company, which is based outside of San Francisco but relies on its back-end squad of programmers and engineers in China, has been busy in the past two years acquiring additional delivery resources in China and more client-facing consulting and sales teams in the US, Japan and Europe.
"We'll probably slow down the acquisitions a bit in 2007, but there maybe a few more in the coming months," says Robert Lee, Achievo's chairman and CEO. He said the company today predominantly handles software development and testing-related areas for a combination of software vendors, for whom it provides product work, and a range of companies across several sectors, for whom it offers internal application services.
"We now have the critical mass to take on most development projects," Lee says. "We're probably the only main Chinese outsourcer with a global presence, and our local front-end has played out very well. We're practically hiring people as fast as we can."
Achievo last year achieved CMMI-5 certification, becoming "one of a very few, maybe five" Chinese firms to reach that level, Lee says. Neusoft, for example, received its certification in late 2004.
Lee puts Achievo's current headcount at about 1,600 employees, with a target of close to 2,500 by the end of the year. He says the company is organically growing at about 40%, which is roughly in line with the overall Chinese offshore growth trajectory. But factoring in Achievo's acquisitions, its growth rate is even higher.
Some 95% of Achievo's revenue comes from outside China, which Lee says helps differentiate it from many of the other Chinese suppliers. "In China there are several different segments of outsourcers. The Chinese-based companies have some non-China business from Japan. Within China, some are doing business with multinationals such as IBM and Siemens, but these are still Chinese clients. The vendors are still paid in Chinese currency."
Competitively, Lee says Achievo's position has not changed too much in the past few years. "We don't run into a lot of Chinese companies outside of China, except in Japan. But even there, demand is so high that it's a matter of hiring people quickly enough," he says.
Even with the different types of Chinese outsourcing models - China-based with a big domestic focus, Chinese-based with a bigger offshore component, and non-China-based with an almost pure offshore focus - Lee says there are a relatively small handful of strong vendors. "Eventually, only a handful will be left with the financial depth and operational scope to win the bigger deals."
CCID's Li does not see many mergers taking place in the outsourcing space right now, and he expects consolidation to take another two to three years to finally kick in. "We'll see it then, and there might be the possibility of Indian and US-based buyers moving in," he says. "But these [Chinese] companies are growing very fast and they have their own sales channels. There's no urgent need for them to be bought."
Go West: Chinese companies making an impact overseas Chinese outsourcing
Chinese outsourcing company hiSoft Technology bought US-based Envisage Solutions last month to boost its presence in the US and European outsourcing markets, as Chinese firms began to flex their muscles in Western markets.
The acquisition followed that of UK customer relationship management software company Respond Group by Chinese applications and IT services vendor CDC.
CDC has been in acquisitive mood recently, snapping up US-based vertically oriented services provider Vis.align in December, as well as UK-based food and beverage, pharmaceuticals and chemicals specialist MVI in October.
CDC also tried and failed to acquire US CRM vendor Onyx software in 2006 after its unsolicited offer was rejected.
Respond's software is designed to manage complaints and enterprise feedback, and CDC said it fits well with its own Pivotal CRM solutions. Respond has an installed base of about 800 customers including AXA Insurance, Barclays and Aegon.
Meanwhile, hiSoft target Envisage provides Siebel consulting services in business intelligence, CRM and web services. Besides giving hiSoft, which previously saw most of its revenue from Japan, a better client base in the US and Europe, the Envisage deal brings some higher-value consulting services to the company.
CBR Opinion
China's position as a booming consumer market and a global manufacturing and technology developmer will ensure there will plenty of entry-level testing and localisation services for Chinese outsourcers. The growing Chinese domestic market will also provide ample opportunities for even the smaller Chinese software shops. But eventually consolidation and the need to scale will whittle down the field of top outsourcing providers in
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