BearingPoint will open its second offshore development facility in China, a move analysts see as part of a trend by US firms to expand offshore development operations in that country.
The consulting firm said it has opened a 56,300sqft facility in Dalian, a city in the northeastern part of the country.
The Dalian facility now has 60 employees, but BearingPoint hopes to have 1,000 people working there "as quickly as possible", said Craig Franklin, an executive vice-president at BearingPoint and head of its Global Technology Services arm.
The company, which has 15,500 employees worldwide, also runs a development facility in Shanghai with 400 employees, as well as one in Chennai, India, with 100 people. It plans to expand the Chennai facility to 1,000 workers during the next year. BearingPoint also operates a development centre in Spain.
The company's interest in China mirrors developments by other multinational firms, although the country remains well behind India in developing a significant offshore export operation, said Eugene Kublanov, an analyst at NeoIT, an outsourcing consulting firm.
In 2003, India had IT services exports of about $9.5bn (£5.1bn), compared with IT services exports worth about $700m in China, said Kublanov. Moreover, most of the export work in China is for the Korean and Japanese markets.
According to Michael Ye, general manager of business operations at Dalian Software Park, other IT firms with offshore operations in Dalian include Accenture, SAP, Hewlett-Packard, IBM Global Services and GE Capital.
Franklin said the Dalian facility will also serve the Asia-Pacific region. The area is well suited for providing services to that part of the world, because it has a large number of Japanese-speaking residents as well as a substantial Korean population, said Ye.
Kublanov said other US and Indian firms are establishing services operations in China, in part as a hedge against the increasing costs of labour in India. Language issues and a lack of project management skills remain key hurdles for China's efforts to develop an offshore market with North America. But Kublanov believed that as firms such as BearingPoint build a presence there, those problems will diminish.
BearingPoint's Franklin said he believed the company has the processes in place, including bilingual workers based in the US, to ensure good project management and clear communication, and he saw China as a good alternative to India.
Patrick Thibodeau writes for Computerworld