Is China a serious alternative to India for software development?

I met up with Bleum today. This is a software services company that provides all of its services from China.

I first met Bleum in May when it was embarking on its first steps into the UK market. It had previously had customers in the US, including Walmart, and continental Europe.

But I got an update today.  Newly appointed UK sales director, Greg Leniston, is a former EDS and Perot Systems man, so he knows what it takes to win big outsourcing contracts in the UK.

Since my last meeting with Bleum it has been named a Cool Vendor by Gartner and appeared in the Deloitte Technology Fast 500, which ranks the fastest growing IT firms,

He told me that the company has lots of UK deals in the pipeline and should start announcing them in the next six months.

He also told me from his conversations with potential customers it appears they are looking to build software development capabilities in China as an alternative to India. “People do not want to put all their eggs in one basket in India and they are looking at putting some software development in China.

The CEO of one of the largest Indian global IT suppliers HCL Technologies, Vinnet Nayar, told Computer Weekly this month that China is a threat to India’s dominance.

When I interviewed Bleum in May, the then UK head Nigel Grieve told me that China would need a Y2K like event if it was to catch India. But the banking crisis, recession and the government deficit problems combined add up to a bigger shockwave than Y2K.

One of the biggest fears about working with China is around IP. There are no IP laws that match those in Europe. William Stancer, vice president business development at Bleum told me that IP is not a problem in China if you pick the right partner. Bleum is US owned and the Chinese government has no stake in it, which means it has no influence.

Bleum uses a model where every customer has a separate development centre with different developers and tight security, including the use biometrics.

Another perceived handicap for Chinese companies providing software development to UK firms is a lack of spoken English in China. Bleum, which is US owned, is overcoming this by having a policy where only English is spoken at work. New recruits come in with basic English skills, which are improved through speaking the language all the time at work. The company also employs seven qualified English teachers.

To demonstrate the power of human resources in China Bleum gave me a recent example. It decided to try out developing the ATG web platform technology. ATG is often used on ecommerce websites. It trained up five people to build some dummy websites. Customers were interested so the company set up a development team dedicated to ATG of 80 people within three months. It is now building sites on ATG for its customers. Not many end user companies or suppliers could do this internally so quickly.

Customers can take services known as stealth offshore, where their software development is carried out in an unbranded centre.  They can move to branded offshore centres if they want to make people aware of their presence in China. This might support their future entry into the Chinese market, which many multi-nationals will be keen to do.

When I met Chinese supplier Vanceinfo back in September the company said multinationals that want to build business in China can increase their opportunities if they sign outsourcing contracts with China based suppliers.

Vanceinfo already has customers in the UK.