Crescent to Close $36 Million Outsourcing Contract in China

November 27, 2009 – 4:58 pm

China Crescent Enterprises’ pending contract with Aoyuan Electronic Co. Ltd in Dalian, China, for $36 million over three years, is expected to close and go into service next month.

Company officials said that the CEO Paul Danner is slated to meet with the client in China the week of Nov. 9 for finalize and execute the contract. Preparations to complete the contract are underway and service is expected to start immediately, the company said.

The pending contract would be the second major outsourcing contract signed by China Crescent this year, bringing the total long-term revenue value of China Crescent’s outsourcing contracts signed in 2009 to approximately $66 million.

China Crescent Enterprises, Inc. is a major player in the rapidly developing Chinese market specializing today in software engineering, high quality software development and digital multimedia outsourcing services delivered to customers globally.

At the same time, the firm is a systems integrator and value added reseller of major global hardware brands in the Chinese domestic market.

China Transforms Manufacturer Center to Outsourcing Base

November 26, 2009 – 10:32 am

Wuxi, a picturesque city that lies along the Taihu Lake resort of the Jiangsu province, is planning to build an outsourcing base in years to come in order to become a major service outsourcing center.

Wuxi is traditionally a manufacturing city, but with a focus on environmental protection, and especially after a serious blue-green algae outbreak in Taihu Lake, city leaders started to study how to transform the city’s development.

Wuxi decided to replace manufacturing with the service outsourcing industry, which has far less pollution and consumes much less energy, the China Daily reports.

The city is expected to attract 30 to 40 billion dollars in service outsourcing business and help create jobs for one million people by 2020, equivalent to that of India as a whole in 2007. The advancement of the service outsourcing industry cannot survive without a large talent pool. But the city three years ago learned that fewer than 2,000 students in the city were studying software and information technology fields.

As a result, Wuxi established a goal to build a total area of six million sq m for software service outsourcing within three years, and encouraged enterprises to cultivate and import skilled workers.

The local government will establish the NIIT (China) Outsourcing College in Wuxi as a training base for the city’s outsourcing businesses.

While the domestic macro-economy continues to be affected by the global financial crisis, outsourcing is maintaining robust growth in Wuxi.

The city signed 1.14 billion dollars in contracts from January to July, up 110 percent year-on-year.

CDC Global Services to Acquire Microsoft Technology Base in China

November 25, 2009 – 8:37 am

CDC Global Services, a wholly-owned subsidiary of CDC Corporation and a provider of consulting, IT and IT-enabled professional services, announced today it has executed a term sheet with the Nanjing High-Tech Zone to acquire a 35 percent stake, with an option for up to a 51 percent stake, in Sowell, known also as the platform of JiangsuMicrosoft Technology Center, that is expected to help fuel CDC Global Services’ rapid expansion in the growing IT outsourcing (ITO) services market in China.

Sowell operates its ITO businesses, which also include R&D outsourcing services, in Nanjing, Wuxi, Suzhou and Huaian and was the exclusive technology base of Microsoft in Jiangsu Province. Jiangsu Microsoft Technology Center, is a major Microsoft Technology Center where it provides research and development services to Microsoft.

This investment is part of CDC Global Services’ plans to build more IT and R&D outsourcing services in China, which the company plans to grow to 5,000 seats in a few years. Sowell provides IT and Research and Development services that complement CDC Global Services’ business which includes IT and business process outsourcing services in India and China. Sowell’s ITO services include onsite and remote IT support/help desk, IT infrastructure planning, custom/offshore application development, network management and administration and application maintenance and support.

“We expect that this planned acquisition will serve as the launch pad for expanding our IT/R&D outsourcing capabilities in China to serve our global clients,” said C.K. Wong, chairman of CDC Global Services. “As part of our acquisition strategy, Sowell is expected to serve as the platform for rolling up other Microsoft Technology Centers and expanding our services throughout China. In addition to Microsoft, Sowell is expected to continue to attract more key clients, which we believe may include national and local government agencies in China as well as local and multi-national companies. This is a key part of our strategy in seeking strategic initiatives that may include acquisitions, partnerships and investments that will help CDC Global Services grow and increase its market share in the high growth outsourcing services market.

“This planned acquisition is part of our strategic initiative to build CDC Global Services into one of the world’s leading R&D and IT outsourcing centers for premier technology companies like Microsoft,” said Wong. “CDC Global Services IT/R&D operations in China can also help serve the outsourcing needs of some ofCDC Software’s ( News - Alert) 6,000 customers worldwide. We believe this strategic initiative will help unlock shareholder value for CDC Corporation shareholders.

“Notably, this planned acquisition also further strengthens our relationship with the Nanjing government, and we expect to continue our expansion in this region. We believe China holds significant growth opportunity for the rapidly growing market of IT/R&D outsourcing services. With other future planned acquisitions like this, as well as partnerships with other software companies, we expect to be well positioned to become a market leader in IT/R&D outsourcing for customers around the world.” The acquisition of this interest in Sowell is subject to several customary closing conditions, including the satisfactory completion of due diligence by CDC Global Services.

Outsourcing Giants More Upbeat as Economy Recovery Underway

November 24, 2009 – 4:57 pm

With the US economy, the biggest market for India’s over $50 billion outsourcing industry, showing signs of an economic recovery, top honchos at Infosys, Wipro and HCL said their optimism has proven right. The financial results of the country’s top-three software exporters have shown signs of recovery earlier this month. India’s software exports industry derives more than half of its revenue from the US.

“The IT industry has seen a better Q2 and given positive guidance for the rest of the fiscal. The GDP data reinforces this optimism ,” said S Gopalakrishnan, chief executive officer of Infosys Technologies. Indeed , while number-two exporter Infosys saw profits rise by around 7.5% during the September quarter to Rs 1,540 crore, topranked Tata Consultancy Services (TCS) grew its net profit by 29% to Rs 1,642 crore. Wipro added 37 customers in the second quarter to September - the most in a year and a half - and forecast that revenue would rise by up to 4.5% in the three months to December.

Wipro was the first Indian software exporter to have provided an upbeat assessment for the industry. The company had said during its financial results during the quarter ending June that things could improve from the second half of this year. “Any economic recovery in the US, whether it’s consumer spending or capital markets, is good news. This will help step up investments for the tech industry and the business of outsourcing. They have money, what’s been holding them back is sentiments,” said Girish Paranjpe, joint chief executive officer of Wipro, India’s third biggest software exporter.

Many customers , including Citigroup, JP Morgan and BofA have been holding their new tech investments because of a worsening economic crisis. With the US economy showing signs of recovery, indian tech vendors believe the worst could be over.

“There are three phases of growth - negative, wait and watch and positive. The global economy is in the wait-and-watch stage currently where everyone is planning growth. US growing at 3.5% indicates that economic growth will definitely happen in a quarter or two, which will eventually increase spends on IT,” said Vineet Nayar, chief executive of HCL Technologies.

Experts such as Andrew Bartels, vice-president of Forrester Research told ET in a phone interview that the $567-billion market for IT goods and services in the US could see positive growth. “We are close to the bottom, and we expect the upturn to happen in 2010,” he said. According to Forrester, the outsourcing market will grow at 4-5 % in 2010. Forrester also advised tech vendors to step up on their marketing and sales activities.

“Now is the time for tech vendors to get ready to take advantage of the rebound in tech-buying as CIOs get the word from CFOs to go ahead with their tech spends,” Mr Bartels said in his September report.

Tata to Expand in China to Capture the Growing Needs for Information-Technology Services of Domestic Chinese Companies

October 22, 2009 – 11:57 pm

According to a recent report by Wall Street Journal, Tata Consultancy Services Ltd. plans to more than quadruple its work force in China over the next five years to tap rising demand for outsourcing services in the country.

India’s top software exporter in terms of revenue plans to increase its China staff to 5,000 by 2014 from 1,100 currently, said Girija Pande, executive vice president and head of Asian-Pacific operations. TCS has a total work force of more than 140,000 people in 42 countries.

“China is a big market. We are trying to grow there,” Mr. Pande said.

TCS, like its Indian peers, has faced slowing revenue growth amid the global economic slowdown as major customers, based mainly in the U.S. and Europe, shelved many projects and sought lower rates for products and services.

Now the company is looking to reduce its dependence on the U.S and Europe, which contribute more than 50% and about 30% of revenue, respectively. It wants to increase its presence in growing markets such as Asia-Pacific and the Middle East and Africa, which account for about 7% of its revenue.

Chinese companies in recent years have been increasingly willing to turn over some tasks to external service providers to reap economies of scale and lower costs.

According to consultancy firm IDC, offshore software-development revenue from China is expected to more than double to $6.78 billion in 2013 from $2.72 billion in 2009.

Mr. Pande said more Chinese companies will be looking for support in information-technology services as they globalize.

He said the Indian company has already provided services to Lenovo Group Ltd. and Huawei Technologies Co.

During the three months ended June 30, Asian-Pacific markets contributed about 5% to TCS’s total revenue of $1.48 billion. The core revenue contributors in the region were Australia, New Zealand, Japan and Southeast Asian countries.

Mr. Pande said China, Australia and Southeast Asia would continue to drive the company’s growth in the region, but that China would have the fastest growth rate in the next few years as the revenue base there is still small and information-technology spending is climbing quickly.

The Indian company entered the China market in 2002 and has a stake of about 66% in a joint venture, TCS China, that it formed with three Chinese companies in 2006. Microsoft Corp. joined the venture in 2008 with a share of 8.7%.

TCS has a strong presence in China’s financial sector. Its clients include Bank of China Ltd., Ping An Insurance (Group) Co., Huaxia Bank and China Foreign Exchange Trade System, a unit of People’s Bank of China, Mr. Pande said. TCS provides core banking services to Huaxia Bank and trading services to China Foreign Exchange Trade System.

The company is striving to broaden its client base in China, and TCS is in talks with some Chinese telecommunications companies and domestic airline operators, Mr. Pande said. He declined to give details.

Currently, half of the company’s China clients are multinational companies, including Motorola Inc. and Johnson Controls Inc. With the increase in its staffing levels in China, TCS aims to increase revenue from domestic clients, Mr. Pande said, but he declined to give targets.

The company operates four global delivery centers in China, including Beijing, Hangzhou, Shanghai and Tianjin. It has one sales office in Shenzhen. Mr. Pande said TCS will probably increase the capacity of its existing delivery centers to meet growing demand for information-technology outsourcing services in China.

China’s Call Center Revenue to Reach 10bn RBM in 2010

October 20, 2009 – 10:37 pm

The Chinese call center industry is predicted to have a revenue of CNY 10 billion in 2010, according to Mr. Wang Jun, chief engineer of the government and enterprise customer division of China Telecom Corporation Ltd., one of the nation’s Big Three telecommunications carriers, at the China Call Center Industry Summit in Beijing on October 15.

The industry is expected to reach a 20% growth next year. The size of the call center outsourcing service market will rise to USD 20 billion in the Asia Pacific region in 2011.

Currently, China’s call center outsourcing services weighted towards Japan and South Korea markets, due to similar culture and language roots.

Happy 60 Birth Day: The New China

October 1, 2009 – 1:21 pm

Today is the 60th birth day for the People’s Republic China.

According to a BBC report:

In six decades, the People’s Republic of China has seen more changes than almost anywhere else on Earth. During the period, China has been transformed from a backward peasant society into the greatest manufacturing economy in human history. See the facts and figures.

Entry Level Salary for College Gradutes In China

September 28, 2009 – 2:02 pm

According to a recent survey by Mycos.com.cn;  5.29 million college students completed and graduated from their under-graduate studies in 2008. About 86% of them found jobs within 6 months after graduation, and earned between 1,700 to 2,208 RBM per month, which are 5-14% lower than those who graduated a year ago.

However, the graduates from top 25 colleges can earn much more than the averages their peers earning.

Major

Employment Rate

Average Salary
(RBM/Month)

engineering

90%

2205

management

89%

2160

economics

88%

2260

history

87%

2053

agriculture

87%

1807

science

84%

2068

education

84%

1968

law

79%

2010

philosophy

76%

2112

medical

82%

1710

Average

88%

2133

Top 20 College Name

Average Salary
(RBM/Month)

China Music Conservatory

6000

Qinghua University

5297

Tianjin Medical Institute

5000

Shanghai Jiaotong University

4685

Fudan University

4631

Beijing
University

4554

Shanghai Foreign Language Institute

4554

Beijing
Foreign Language Institute

4390

China GongAn Institute

4320

Shanghai
Accounting College

4283

Beijing Language Institute

4247

Foreign Affairs Institute

4237

China
Science & Technology University

4059

Foreign Trade Institute

4033

Tongji University

3924

Shanghai Foreign Trade Institute

3878

China
People University

3851

Nanjing
University

3822

Zhejiang
University

3790

Central Music Institute

3750

Beijing Music Institute

3600

Guangdong
Foreign Language & Trade Institute

3545

Beijing
2nd Language Institute

3504

Sixth Annual Global Sourcing Summit Leverages Explosive Growth in Chinese Market to Connect IT Buyers and Service Providers

August 24, 2009 – 12:27 pm

At a time when high-tech companies are increasingly looking to the East for new growth markets, the sixth annual Global Sourcing Summit offers unprecedented access to the rapidly growing Chinese outsourcing community in Xi’an, the dynamic city distinguished as one of the four capitals of civilization of the ancient world.

Themed “New Opportunities for the Changing World,” the free program is organized by Shaanxi Province Government, supported by the Ministry of Commerce, Ministry of Industry and Information Technology and co-sponsored by the International Association of Outsourcing Professionals (IAOP). The event will connect international companies that are looking to streamline their businesses to meet growth and cost-saving objectives with Chinese service providers. Similarly, international IT and outsourcing professionals may also find increasing opportunities from the vast outsourcing and IT needs of Chinese enterprises looking to do the same.

“China is becoming both an outsourcing client and customer at the same time,” said Zigeng Wang, director of the Xian software park. “And we are seeing many international small and medium-sized companies becoming aware of China’s convenient set-up processes and favorable government and financial incentives.”

Organized into a series of keynote speeches and five individual sessions, the program covers topics such as Internet applications and open-source developments, client liaisons and service centers, and Sino-Japanese outsourcing talent development. “The idea is to give international IT professionals a firsthand look at the Chinese outsourcing community, government policy trends, and opportunities presented in the Chinese economy,” stated Wang.

Attendees can also request individual meetings with companies in advance and will have a chance to visit universities to talk with IT majors and graduate students. “Relationship-building is at the heart of this event,” explained John Luo, the Chicago-based U.S. representative for the summit.

The Xi’an location is a strategic setting on several fronts. Once the start of the famed Silk Road and home to a succession of 13 Imperial Dynasties, Xi’an is now the address for some 800 outsourcing enterprises and 70,000 employees generating more than four billion USD annually in the city’s high-tech zone. At least 200 companies based in Xi’an are represented in the Forbes 500. Moreover, the city is China’s densest when it comes to engineering populations, R&D institutions and colleges and universities, with some 400,000 engineers employed in the region. With the launch of the city’s new software zone during the November summit, state-of-the-art conference and office facilities will be available to accommodate an additional 20,000 engineers, a boon to future IT giants around the world.

Although there is no entrance free for this event, advance registration is required. For more information, visit http://china09globalsourcingsummit.com/.

The news has in parallel been released via NewsBlaze, an official distributor of PRNewswire Press Releases.

China becoming new lands of opportunity for American college graduates

August 15, 2009 – 8:52 am

According to a story originally appeared in the The New York Times, Shanghai and Beijing are becoming new lands of opportunity for recent American college graduates who face unemployment nearing double digits at home.

Joshua Arjuna Stephens, a 2007 graduate of Wesleyan University, works in Beijing for XPD Media, which makes online games.

Even those with limited or no knowledge of Chinese are heeding the call. They are lured by China’s surging economy, the lower costof living and a chance to bypass some of the dues-paying that is common to first jobs in the United States.

“I’ve seen a surge of young people coming to work in China over the last few years,” said Jack Perkowski, founder of Asimco Technologies, one of the largest automotive parts companies in China.

“When I came over to China in 1994, that was the first wave of Americans coming to China,” he said. “These young people are part of this big second wave.”

One of those in the latest wave is Joshua Arjuna Stephens, who graduated from Wesleyan University in 2007 with a bachelor’s degree in American studies. Two years ago, he decided to take a temporary summer position in Shanghai with China Prep, an educational travel company.

“I didn’t know anything about China,” said Mr. Stephens, who worked on market research and program development. “People thought I was nuts to go not speaking the language, but I wanted to do something off the beaten track.”

Two years later, after stints in the nonprofit sector and at a large public relations firm in Beijing, he is highly proficient in Mandarin and works as a manager for XPD Media, a social media company based in Beijing that makes online games.

Jonathan Woetzel, a partner with McKinsey & Company in Shanghai who has lived in China since the mid-1980s, says that compared with just a few years ago, he was seeing more young Americans arriving in China to be part of an entrepreneurial boom. “There’s a lot of experimentation going on in China right now, particularly in the energy sphere, and when people are young they are willing to come and try something new,” he said.

And the Chinese economy is more hospitable for both entrepreneurs and job seekers, with a gross domestic product that rose 7.9 percent in the most recent quarter compared with the period a year earlier. Unemployment in urban areas is 4.3 percent, according to government data.

Grace Hsieh, president of the Yale Club in Beijing and a 2007 graduate, says she has seen a rise in the number of Yale graduates who have come to work in Beijing since she arrived in China two years ago. She is working as an account executive in Beijing for Hill & Knowlton, the public relations company.

Sarabeth Berman, a 2006 graduate of Barnard College with a major in urban studies, initially arrived in Beijing at the age of 23 to take a job that would have been difficult for a person her age to land in the United States: program director at BeijingDance/LDTX, the first modern dance company in China to be founded independently of the government.

Ms. Berman said she was hired for her familiarity with Western modern dance rather than a knowledge of China. “Despite my lack of language skills and the fact that I had no experience working in China, I was given the opportunity to manage the touring, international projects, and produce and program our annual Beijing Dance Festival.”

After two years of living and working in China, Ms. Berman is proficient in Mandarin. She travels throughout China, Europe and the United States with the dance company.

Willy Tsao, the artistic director of BeijingDance/LDTX, said he had hired Ms. Berman because of her ability to make connections beyond China. “I needed someone who was capable of communicating with the Western world.”

Another dynamic in the hiring process, Mr. Tsao says, is that Westerners can often bring skills that are harder to find among the Chinese.

“Sarabeth is always taking initiative and thinking what we can do,” he said, “while I think the more standard Chinese approach is to take orders.” He says the difference is rooted in the educational system. “In Chinese schools students are encouraged to be quiet and less outspoken; it fosters a culture of listening more than initiating.”

Mr. Perkowski, who spent almost 20 years on Wall Street before heading to China, says many Chinese companies are looking to hire native English speakers to help them navigate the American market.

“I’m working with a company right now that wants me to help them find young American professionals who can be their liaisons to the U.S.,” he said. “They want people who understand the social and cultural nuances of the West.”

Mr. Perkowski’s latest venture, JFP Holdings, a merchant bank based in Beijing, has not posted any job openings, but has received more than 60 résumés; a third are from young people in the United States who want to come work in China, he said.

Mick Zomnir, 20, a soon-to-be junior at the Massachusetts Institute of Technology, is working as a summer intern for JFP. “As things have gotten more difficult in the U.S., I started to think about opportunities elsewhere,” he said. He does not speak Chinese but says he will begin studying Mandarin when he returns to M.I.T. in the fall.

A big draw of working in China, many young people say, is that they feel it allows them to skip a rung or two on the career ladder.

Ms. Berman said: “There is no doubt that China is an awesome place to jump-start your career. Back in the U.S., I would be intern No. 3 at some company or selling tickets at Lincoln Center.”

For others, like Jason Misium, 23, China has solved the cash flow problem of starting a business. After graduating with a degree in biology from Harvard in 2008, Mr. Misium came to China to study the language. Then he started Sophos Academic Group, an academic consulting firm that works with Chinese students who want to study in the United States.

“It’s China’s fault that I’m still here,” he said. “It’s just so cheap to start a business.” It cost him the equivalent of $12,000, which he had in savings, he said.

Among many young Americans, the China exit strategy is a common topic of conversation. Mr. Stephens, Ms. Berman and Mr. Misium all said they were planning to return to the United States eventually.

Mr. Woetzel of McKinsey said work experience in China was not an automatic ticket to a great job back home. He said it was not a marker in the same way an Ivy League education: “The mere fact of just showing up and working in China and speaking Chinese is not enough.”

That said, Mr. Woetzel added, someone who has been able to make a mark in China is a valuable hire.

“At McKinsey, we are looking for people who have demonstrated leadership,” he said, “and working in a context like China builds character, requires you to be a lot more entrepreneurial and forces you to innovate.”

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