Tweet
China's software skills out front
By Sherman So
HONG KONG - China's software outsourcing industry is considerably smaller than its much-heralded counterpart in India but it is growing fast, and unlike Indian firms, many Chinese companies are working on cutting-edge product development for the world's major technology firms, rather than information technology for back offices.
"We are going to double our size by the end of this year," said Jacob Hsu, chief executive officer of Symbio, a software outsourcing company based in Beijing. Symbio has about 1,500 staff and Hsu expects that to grow to 3,000 as more clients place bigger projects with the company. Symbio has development centers in China, the United States, Finland, Sweden, Taiwan and Japan. Clients include many major technology companies, such as Nokia, Eriksson, IBM, Microsoft and PayPal.
China's software outsourcing revenue from the offshore market (ie work for overseas clients) will climb to US$6.8 billion in 2013, or 16.2% of the worldwide market, from $2.4 billion in 2008, according to market researcher IDC. That is growth of 23% a year, compared with the forecast worldwide average of 6.2% over the same period.
Symbio is not alone. Beijing-based Vanceinfo Technologies, founded in 1995, has more then 9,000 staff and plans to more than double its workforce to 20,000 over the next two to three years. Vanceinfo, which is listed on the New York stock exchange, made $21.5 million profit last year on total revenues of $148.1 million.
Price is not the key factor for Western companies to outsource their software development to China. "Compared with India, in fact, China's rate is not very cheap," said Hsu.
"Indian universities are very good at teaching their students about Western business processes," said Hsu. "If you want to develop some banking systems, there are many Indian software developers with the right domain expertise."
"China is good at basic technology and engineering. There are many universities training students to be great software engineers," said Hsu, "Also, China is a big market for technology products, such as mobile phones, Internet portals, social networks and so forth. There are huge search engines, like Baidu. Developers here can develop cutting-edge technology products."
"In the past, outsourcing was about low-cost labor, which everyone knows and has become a commodity," said Hsu. "Now, it is about expertise - how to develop products with better quality faster and with more innovations. That is why we have development centers around the world - to tap different talents.
The 400 staff in Finland and Sweden, in particular, are for embedded mobile software. The two Nordic countries are home to global mobile-phone makers Nokia and Ericsson.
Vanceinfo is in a similar situation. Research and development (R&D) work for embedded systems and for software systems implemented in computers accounted for 63.6% of its 2010 first-quarter revenue. "Vanceinfo primarily provides R&D services to its global clients that are different from the service offerings of the Indian IT services firms," said Wei.
In the future, Hsu wants his firm to be a "foundry" for software development. "Independent foundries, like TSMC [Taiwan Semiconductor Manufacturing Co, the world's largest chip foundry] make possible a whole generation of fabless chipmakers, such as Qualcomm," said Hsu, "We want to be the TSMC for software development and allow technology companies to have no need to hire engineers."
As a foundry, TSMC makes chips for other chip suppliers such as US-based Qualcomm, a leading wireless telecommunication chip designer and supplier. Qualcomm does not have manufacturing facilities, or fabrication plants - it is "fabless" - but outsources the actual chip-making processes to foundries like TSMC. Qualcomm is the world's largest fabless chip-maker.
http://www.atimes.com/atimes/China_B.../LG07Cb01.html
By Sherman So
HONG KONG - China's software outsourcing industry is considerably smaller than its much-heralded counterpart in India but it is growing fast, and unlike Indian firms, many Chinese companies are working on cutting-edge product development for the world's major technology firms, rather than information technology for back offices.
"We are going to double our size by the end of this year," said Jacob Hsu, chief executive officer of Symbio, a software outsourcing company based in Beijing. Symbio has about 1,500 staff and Hsu expects that to grow to 3,000 as more clients place bigger projects with the company. Symbio has development centers in China, the United States, Finland, Sweden, Taiwan and Japan. Clients include many major technology companies, such as Nokia, Eriksson, IBM, Microsoft and PayPal.
China's software outsourcing revenue from the offshore market (ie work for overseas clients) will climb to US$6.8 billion in 2013, or 16.2% of the worldwide market, from $2.4 billion in 2008, according to market researcher IDC. That is growth of 23% a year, compared with the forecast worldwide average of 6.2% over the same period.
Symbio is not alone. Beijing-based Vanceinfo Technologies, founded in 1995, has more then 9,000 staff and plans to more than double its workforce to 20,000 over the next two to three years. Vanceinfo, which is listed on the New York stock exchange, made $21.5 million profit last year on total revenues of $148.1 million.
Price is not the key factor for Western companies to outsource their software development to China. "Compared with India, in fact, China's rate is not very cheap," said Hsu.
"Indian universities are very good at teaching their students about Western business processes," said Hsu. "If you want to develop some banking systems, there are many Indian software developers with the right domain expertise."
"China is good at basic technology and engineering. There are many universities training students to be great software engineers," said Hsu, "Also, China is a big market for technology products, such as mobile phones, Internet portals, social networks and so forth. There are huge search engines, like Baidu. Developers here can develop cutting-edge technology products."
"In the past, outsourcing was about low-cost labor, which everyone knows and has become a commodity," said Hsu. "Now, it is about expertise - how to develop products with better quality faster and with more innovations. That is why we have development centers around the world - to tap different talents.
The 400 staff in Finland and Sweden, in particular, are for embedded mobile software. The two Nordic countries are home to global mobile-phone makers Nokia and Ericsson.
Vanceinfo is in a similar situation. Research and development (R&D) work for embedded systems and for software systems implemented in computers accounted for 63.6% of its 2010 first-quarter revenue. "Vanceinfo primarily provides R&D services to its global clients that are different from the service offerings of the Indian IT services firms," said Wei.
In the future, Hsu wants his firm to be a "foundry" for software development. "Independent foundries, like TSMC [Taiwan Semiconductor Manufacturing Co, the world's largest chip foundry] make possible a whole generation of fabless chipmakers, such as Qualcomm," said Hsu, "We want to be the TSMC for software development and allow technology companies to have no need to hire engineers."
As a foundry, TSMC makes chips for other chip suppliers such as US-based Qualcomm, a leading wireless telecommunication chip designer and supplier. Qualcomm does not have manufacturing facilities, or fabrication plants - it is "fabless" - but outsources the actual chip-making processes to foundries like TSMC. Qualcomm is the world's largest fabless chip-maker.
http://www.atimes.com/atimes/China_B.../LG07Cb01.html
Comment