A deal between two outsourcing companies, Zensar Technologies and BroadenGate Systems of Shenzhen, China, will help both companies better compete for IT outsourcing business from US companies, a senior company executive said.
Earlier this month, Zensar and BroadenGate made public the formation of a joint-venture company in Shenzhen, called Zensar Technologies. The joint venture, which was set up in November last year, is 51% owned by Zensar with the balance held by BroadenGate.
For BroadenGate, the joint venture with Zensar helps to open up access to the US market, said Lan Hongbing, founder and chief executive officer of BroadenGate.
"We have no experience doing business with the US or Europe," he said. "We're using Zensar's office and sales managers in the US to get business for us."
In return, Zensar is able to extend its development operations beyond India for the first time and better compete against its larger Indian rivals, Lan said.
With the establishment of the joint venture in Shenzhen, Zensar can now offer US clients the option of doing work at a development center in China and can rely on BroadenGate's local management experience to make that happen smoothly, Lan said. BroadenGate can also help Zensar to tap Chinese demand for outsourcing services.
"We're a local company, so we have relationships with the government and some big companies," he said.
This strategy is already showing results, Lan said. The joint venture currently does outsourcing work for two clients: China Mobile Communications, China's largest mobile operator, and Liz Claiborne, a US-based clothing company.
The contract with Liz Claiborne alone could bring in up to $5m (£2.8m) in revenue over the next two years, he said.
The joint venture will also help to improve the outsourcing capabilities that BroadenGate is able to offer
Software development methodology and project management expertise are two areas where Chinese outsourcing providers are generally considered weaker than their Indian rivals. Looking ahead, Chinese companies must overcome these hurdles before they will be able to scale in size to handle larger, more complex outsourcing projects.
That is where BroadenGate's partnership with Zensar will play an important role, Lan said.
"The Indian team will transfer their knowledge and experience to the local team."
Sumner Lemon writes for IDG News Service