Chinese IT services providers can be a gateway to Chinese economy for big business

Multinationals that want to build business in China can increase their opportunities if they sign outsourcing contracts with China based suppliers.

This is the view of a China based IT services firm I met today. I blogged about the company, known as VanceInfo last month.

VanceInfo is similar to a company known as Bleum in that it carries out the majority of its work and has the vast amount of its human resources in China. But it is listed in the US and owned by US and European investors.

According to an IDC report VanceInfo is the biggest supplier of outsourcing services to the US and Europe from China.

David Chen, president at VanceInfo, says that multinational businesses based in the west, such as banks and retailers, are all trying to get into the Chinese market. He says that because of the challenges breaking into China it would be an advantage for these businesses to contract Chinese service providers to support them.

VanceInfo employs over 10,000 people. 95% of these are in China.

It already works with US and European businesses with 60% of its current business R&D work for technology companies such as Microsoft and Cisco. For example it has 900 dedicated staff in China carrying out R&D work for Microsoft.

Chen acknowledged that there are fears related to Intellectual Property in China. but he says if large technology companies, whose IP is everything, can offshore work to China anyone can.

The other 40% of its business is IT outsourcing. It carries out a lot of work to support the Asia/Pacific regions for large multinationals. It now wants to increase this as well as work in other regions for the same customers. It will eventually target customers anywhere in the world.

Some examples of the businesses it currently serves are:

– Expedia where it has 300 dedicated staff working on application development and data warehousing projects.

– It supports the SAP system used by BMW in China.

– UK based Trading software company Patsystems also uses VanceInfo to support customers and for software development.

The company also works with UK based banks. Although it would not tell me which it said it provides services such as: credit card processing, regulatory reporting for China, BPO services in North Asia as well as software development.

The company is about to ramp up its UK sales and marketing operation. It only has a few people now but is about to increase this. In its efforts to win more US business it has this year increased its US headcount from 30 to 150.

Here are other blog posts I have done recently about China.

China needs a Y2K to overtake India

Does China offshoring need a Western Hand?