Quintiles has announced two initiatives that reflect compelling trends in the current drug development space: outsourcing to China and the need for viable biomarkers to underpin personalised cancer therapy.

The news from China is that the US-based biopharmaceutical services company has opened a business process outsourcing (BPO) and project management centre of excellence in Dalian, following the lead of Quintiles’ existing BPO centre in Bangalore, India.

The new office will provide data management, biostatistics, medical writing, pharmacovigilance and post-marketing safety surveillance services, as well as back-office support for administrative functions. It will also back up clinical operations for study sites in north-east China.

Valuable resources

Dalian’s strategic location and talent pool will enable Quintiles to offer clinical services in English, Japanese, Korean and Mandarin, coupled with a cultural understanding of the city’s neighbouring countries, the company said.

These will be valuable resources for both North Asian and global customers looking to expand in the region or to ensure business continuity through resource diversification, it added.

Quintiles’ Bangalore BPO center now has more than 1,000 people supporting global clinical studies.

The latest announcement comes hard on the heels of Quintiles launching its own contract research organisation, Kun Tuo, in China.

On that occasion, Ling Zhen, general manager, Quintiles China, highlighted the company’s “aggressive” growth plan for China, which included doubling overall staff numbers during 2012.

Quintiles expects staffing at the Dalian centre to grow to 500 over the next several years as services become fully established. Dalian will be the company’s fourth hub office in Greater China, joining existing operations in Beijing, Shanghai and Hong Kong.

Biomarker venture

The biomarker venture is Oxford Cancer Biomarkers, a company spun out from the University of Oxford with investment from Quintiles, which is the biggest shareholder.

Oxford Cancer Biomarkers will provide oncology consulting services and develop new biomarkers using CancerNav, a proprietary DNA- and protein-based assay technology platform invented by Nick La Thangue, chair of cancer biology at Oxford University.

La Thangue is a major shareholder in Oxford Cancer Biomakers, alongside the University of Oxford and David Kerr, professor of cancer medicine at the University, who will serve as the new company’s chief medical officer.

“Biomarkers hold great promise to improve trial success rates by identifying patient sub-groups most likely to respond to treatment, increasing the probability of trial success and improving patient safety,” commented Ben Cons, vice president, Quintiles Corporate Development.

Quintiles’ investment in Oxford Cancer Biomarkers “is further evidence of our commitment to provide biopharma and healthcare service providers with the tools, expertise and services needed to increase R&D productivity and speed, and better the lives of patients”, Cons added.

Source:http://www.pharmatimes.com/Article/12-01-19/Quintiles_opens_BPO_centre_in_China_invests_in_biomarker_company.aspx

China’s leading comprehensive information service provider, ChinaSoft International, signed a contract with Huawei, a leading global information and communications technology solutions provider, to establish a joint venture company specialising in the software outsourcing business, Market Watch says.

The contract stipulates that ChinaSoft International will hold 60% of the joint venture and will have three seats on the board, and that Huawei will hold 40% and will have two seats on the board.

ChinaSoft International’s success as an IT outsourcing provider can be attributed to its experience, its efficient human resource supply system, and its outstanding management, development and services team.

Huawei is an important client of ChinaSoft International’s outsourcing business, and it has experienced firsthand the high quality and cost-effectiveness of ChinaSoft International’s delivery and outsourcing services. Likewise, ChinaSoft International is wholly familiar with Huawei’s high quality management practices. By combining the qualities of both companies into this new joint venture, the vast experience of both companies can contribute to the creation of this new, top-ranking software outsourcing company.

Beijing-based ChinaSoft said in a statement that its wholly owned ChinaSoft International (China) Technology plans to set up an IT outsourcing flagship called ChinaSoft International Technology Services, Total Telecom reports. This company will consolidate its IT outsourcing resources in China, the US and Japan.

Huawei Technologies, currently a major outsourcing customer, will contribute 40% of the new company’s 100 million yuan registered capital, it added.

Huawei, China’s biggest telecoms equipment manufacturer, competes with Samsung Electronics and Apple in consumer electronics, and with Ericsson and Cisco Systems in telecoms network gear, The Economic Times notes.

Source:http://www.itweb.co.za/index.php?option=com_content&view=article&id=50658:huawei-chinasoft-team-up-on-outsourcing&catid=69

Global services exports revenue in China is projected to increase to at a CAGR of 20-25 per cent from $3.5 billion in 2010, according to Everest Group, an advisory and research firm on global services.

Global services exports from China have been increasing at a continuous pace, surging from about $1.2 billion in 2007 to $3.5 billion in 2010, according to Everest Group’s study, Global Locations Compass: China.

The study reports that ITO services contribute 65 per cent towards China’s total export revenue, driven by in country presence of several global IT services providers. Business Process Outsourcing (BPO) work comprises the remaining 35 per cent.

“China offers a compelling regional language advantage and cost arbitrage and is thus best leveraged to serve the Asia region, which accounts for about 60 per cent of China’s global sourcing revenues,” said Amneet Singh, vice president – Global Sourcing.

“While lack of clear cost and English language skills translate to a limited competitive advantage over India and the Philippines for work exported to North America and Europe, these regions still account for about 40 per cent of China’s global sourcing exports. China can serve as a risk diversification alternative to serve North America and Europe.”

Last year’s market growth in China prompted its reclassification as a mature offshore destination on Everest Group’s Market Vista Locations Maturity Heatmap.

According to the study, weak data privacy laws are among the key risks of operating in China. However, the government is taking steps to rest such concerns by establishing stronger data protection guidelines The report provides an in-depth analysis of China’s global services landscape across captives and third-party service providers for ITO and BPO services to include market characteristics, education system and future outlook.

The study also provides detailed data and perspectives on seven key cities – Shanghai, Beijing, Dalian, Guangzhou, Chengdu, Hangzhou, and Suzhou – spanning across labor pool, cost, market activity and risk analysis.

Source:http://timesofindia.indiatimes.com/tech/news/outsourcing/China-next-growth-frontier-for-Indian-IT-BPO-cos-Report/articleshow/11021302.cms

India has been at the forefront of the development of the knowledge process outsourcing (KPO) industry and will remain so for the foreseeable future. However, in recent years a number of other viable KPO sourcing hubs have emerged in the Asia-Pacific region, according to Ovum.

In a new report*, the independent technology analyst firm finds that these new KPO delivery locations, including China, the Philippines and Sri Lanka, are unlikely to challenge India’s dominant position in the market, but they have enabled many vendors to pursue a multi-shore strategy.

Ed Thomas, Ovum analyst and author of the report, said: “Being able to deliver services from multiple locations means providers can offer existing clients greater flexibility and minimize the risks associated with having all their operations in one facility, while at the same time tapping into fresh labour pools”.

The KPO industry is maturing and the range of services being provided has expanded as the market has developed. From its initial beginnings in research and analytics, the definition of KPO currently includes a variety of services, such as legal process outsourcing and clinical trial management, among others.

On the latter topic, Ed Thomas said: “A major challenge facing life sciences companies is the growing cost of R&D and, as a result, a growing number of pharma companies are turning to

outsourcing and offshoring as ways of reducing these costs. China is an attractive location for companies that run and manage all phases of the clinical trial process, as it offers a significant pool of potential patients in an important emerging market.”

Along with China, the Philippines is also becoming an increasingly important player in the KPO market. It has started to carve out a niche for itself in a number of key areas, including healthcare outsourcing (providing industry-specific services to hospitals and healthcare providers). This market is expected to grow significantly during the next few years, with a notable increase in demand coming from the US as a result of the recent reforms in healthcare regulations.

Sri Lanka has also focused on developing skills around specific service lines. For example, the country has a significant number of qualified accountants, capable of providing the kind of high-end complex tasks associated with service areas such as equity and credit research.

The recent emergence of countries such as China, the Philippines and Sri Lanka as viable locations for KPO delivery has been a positive development for vendors, as it has enabled them to begin offering a blend of offshore and nearshore delivery while also giving them access to sizable and previously untapped talent pools.

Source:http://www.newsmaker.com.au/news/12720

When David Chen met his future business partner, Chris Chen, in 1992, David was a Chinese student struggling to make ends meet in Southern California and Chris was working at a Great Wall computer store. Happy to find a fellow mainlander behind the counter, David put in an order for one of the cheap knockoffs the company sold. “It was all I could afford,” he says.

Over the years, whether to fix a mafunctioning keyboard or brainstorm big ideas, they kept in touch. Today the pair, who aren’t related, run one of China’s fast-growing info-tech outsourcing businesses, VanceInfo Technologies. It’s a long way from playing in the same league as the Indian giants–Tata Consultancy Services, Wipro, Infosys and HCL Technologies–but it does list blue chips such as Microsoft, 3M, IBM, Citibank and AirAsia among its customers. VanceInfo collected $212 million in revenue last year and turned in a $30 million net profit. This year consensus estimates call for $276 million in revenue and a $40 million profit. Analysts say revenue could jump to $345 million next year.

Typically, big companies turn to outsourcers such as VanceInfo to handle some part of their operation. The outsourcer supplies the office space, employees and the ability to scale up quickly to fill a need. Last year Hong Kong’s Cathay Pacific Airways delegated some of its growing IT and software development workload to VanceInfo, which set up an office across the border in Shenzhen. Cathay’s chief information officer, Tomasz Smaczny, says outsourcing an IT operation pays better dividends than buying individual IT services or hiring more staff: “We didn’t do this so much for cost savings as for effectiveness and increasing our capabilities. Outsourcing allows us to dial up or dial down as needed.”

VanceInfo runs such offices around the country and works with some 25 universities to provide and train staff. Many of the offices are scattered around a huge new computer park on the outskirts of Beijing, though there’s no way to tell from the outside–they often sport only the customers’ sign. There’s a big office for Microsoft, a customer since 1997, where VanceInfo worked on Windows 7.

VanceInfo also keeps its headquarters here. Despite the marquee clients, and stakes that make them both well off–Chris’ 8.6% stake is worth $37 million, David’s 0.7% stake $3 million–each Chen drives his own car, unusual for Beijing executives, and works out of a nondescript office when he’s not traveling. David, 43, the company vice chairman and president, has files piled to the rafters in his. Chris, 48, the chairman and chief executive, sits in the next one, which does boast a window but it looks out at the wall of another IT office. “It’s our style to be frugal,” he says. “We’re in an industry where there aren’t big margins. What impresses our customers is good service at good prices.”

The austerity is certainly part of the company culture. One example cited by Alicia Yip, a former Citigroup analyst who followed VanceInfo, involves the chief financial officer, who found that his flight to the U.S. had been booked in business class. “He quickly went online and changed the ticket to economy,” she says. Another time, at a conference, she remembers that VanceInfo executives checked out of the pricey conference hotel and moved to a nearby budget inn.

Chris Chen grew up in Wuning, a remote village in remote Jiangxi Province that had scant electricity. His mother is illiterate. “She cannot even write her name,” he says. Nonetheless, he scored high on the national college test and won a place at Tsinghua University, considered the MIT of China, and graduated in 1986. He didn’t know anything about information technology then, so when he started working for Great Wall, then China’s biggest computer company, “Some people thought I was useless,” he says. “My major was mechanical engineering.”

Chris’ skills were more suited to an entrepreneurial age that hadn’t yet dawned in China. He spent six years with Great Wall and was posted to California, partly to scout new technology. In addition to selling computers to walk-in customers such as David, he was always on the alert for opportunities. One arose when IBM asked Great Wall to translate its operating system software into Chinese. The profit margin didn’t interest Great Wall. Chris pounced.

Raising money from friends and relatives, Chris started a business. That morphed into a company called Worksoft, which later changed its name to VanceInfo (see box, p. 38). It quickly enjoyed success in localizing software for China and helping foreign IT firms operate there. “We had no concept of outsourcing,” says Chris. “We just did projects, focusing on opportunities to make money. If I knew anything about outsourcing then, we’d be much, much bigger now.”

David brings a dab more international expertise to VanceInfo. From Fujian Province, he went to the University of California, Irvine, earning a computer engineering master’s in 1994. He moved to Silicon Valley, where he worked as a software engineer at Oracle and a consultant at KPMG. After a decade in the U.S. he returned to China in 2001 and joined Chris. With his Silicon Valley background, David comfortably courts new customers and oversees operations. Chris is more of the strategist, as well as the closer. “Chris has great people skills, and is a good storyteller,” says David.

But can the Chens propel VanceInfo out of the crowded ranks of midsize Chinese outsourcers and into the global big leagues? It’s probably one of the three or four biggest outsourcers now. (Comparisons are tricky–larger companies, such as Insigma, Neusoft and DHC, get some of their revenue from software and product sales and other sources.) Analysts also see VanceInfo as one of the two or three best run and most reputable. Frances Karamouzis, an analyst for Gartner and the coauthor of a report last year on the Chinese outsourcing sector, praises VanceInfo’s adoption of Western-style accounting, which led to a New York Stock Exchange listing in 2007; most competitors opt to trade in China.

The comparisons with India are inevitable. Outsourcing has mushroomed into a $70-billion-a-year business in India, while some analysts value the Chinese sector at $20 billion; CLSA predicts that it will reach $30 billion in 2014. “China is almost exactly where India was a decade or so ago,” says Pierre Samec, former chief technology officer of U.S. Internet travel company Expedia. “I think it will follow the same rapid growth curve.” VanceInfo set up an outsourcing operation for Expedia in Shenzhen.

But times are different, and China is a different country–it may never produce another Infosys. Just as the Chinese industry is today, the Indian industry was once very fragmented, with dozens of small companies vying for business. The industry underwent a rapid consolidation, but in China, where analysts have been predicting the same trend for five years, it’s been slow in coming. Karamouzis says that when it does arrive, the key for VanceInfo will be how well it handles the numerous deals and the integration of thousands of added employees. It’s done four deals this year, spending almost $9 million to buy three Chinese outsourcers and one in Australia.

A hiccup for VanceInfo over the past six months was the drastic drop in its share price after an accounting scandal at rival Chinese outsourcer Longtop erupted in May (see box, p. 36). With consolidation a key to growth, the lower share price leaves VanceInfo with a weaker currency for buying other companies. Indeed, of its four deals this year, it did the two before May with cash and stock while the two since May were cash only. But David says: “We are actually in good shape. We have a lot of cash on hand ($130 million as of June 30), and are still looking at acquisitions.” He added that a lower share price could be an advantage in buying companies, giving the sellers more potential upside.

Another difference from India is that most of the Chinese outsourcing business is in Greater China–with Chinese companies or multinationals operating in China. Indian companies exported most of their work to the West (and have never been able to make many in-roads in China). VanceInfo’s headcount numbered 12,542 at the end of the second quarter–up by 25% from a year earlier–but only 200 of those were outside Greater China. The company does seek to grow in Europe and North America by moving into consulting and business solutions, allowing it to travel up the value chain by taking on more lucrative projects.

But despite VanceInfo’s digital culture, change can be slow. In fact much of the industry looks inward, because business has been so abundant in China. “This is a very Chinese company,” says Samec, noting that there has been much talk of adding foreign expertise to help the company grow and especially to expand overseas, but little action. Says David Chen: “This is something we have talked about and agreed upon, but we have been slow to implement. We really need to step up.

Punished for a Rival’s Misdeeds

VanceInfo began the year tipped as one of the world’s hottest stocks. Then in May a scandal erupted at rival Chinese outsourcer Longtop Financial Technologies, hitting the shares of the entire sector. From around $32 a share, VanceInfo’s stock fell to almost $5 early last month before beginning to rebound to around $11. And it didn’t help that VanceInfo Chief Financial Officer Sidney Huang served as CFO of Longtop in 2005–06; he has not been connected to the scandal.

Investors were giving the sector’s wave of listings increased scrutiny, albeit a bit late. Both Longtop and VanceInfo went public on the New York Stock Exchange in 2007. Choosing the U.S. over markets in China opened the vaults to bigger investments, at the price of more regulation and paperwork. The scandal came to light when its auditor for several years, Deloitte Shanghai, resigned, alleging that financial information had been falsified.

By the time trading in Longtop was halted in August, over $1 billion in value had evaporated. Scores of lawsuits are pending and a U.S. Securities and Exchange Commission investigation guarantees that the matter will remain in the news. “It will take some time to recover,” says VanceInfo’s David Chen. Yet he downplays any long-term impact. Rising costs and the yuan’s continuing strength, he maintains, are bigger concerns that also contributed to the stock drop. Now, with a chance for the sector to feast on Longtop’s clients, analysts see VanceInfo becoming a hot stock again, climbing to a $16 to $20 range. –R.G.

Source:http://www.forbes.com/global/2011/1107/companies-people-technology-service-provider-chen-outsourcing-india-gluckman_2.html

Infosys Technologies (China) Co. Ltd. Monday said it has signed a pact with the government of the Dalian high-technology industrial area to set up a branch company that will focus on software development and outsourcing business in the region.
The new facility in the Dalian High-Tech Zone has the capacity to seat 700 employees and will focus on delivering consulting, technology and business process outsourcing services to clients from the U.S., Europe, Japan and neighboring regions, the China unit of India’s Infosys Ltd. said in a statement.
The agreement also provides a framework under which the region’s administrative committee will help Infosys launch programs with local universities for training and recruitment, it said.
Infosys China, which was incorporated in 2004 and employs more than 3,300 people in China, had revenues of $79 million in the last fiscal year through March.

Source:http://online.wsj.com/article/SB10001424052970204644504576650672538473718.html

China released the Evaluation Report on Investment Attracting Capacities of Chinese Service Outsourcing Cities in 2011. Chengdu ranked first with 88.36 points, according to Chengdu municipal bureau of commerce on October 9. The report makes detailed analysis of the development opportunities of the Chinese service outsourcing industry, features and development trends of service outsourcing cities, appraisal systems, and TOP 50 cities. It announced the top 10 city names and assessment indexes. Chengdu was ranked first with the highest scores.

Excel in comprehensive quality

The Evaluation Report on Investment Attracting Capacities of Chinese Service Outsourcing Cities is the only professional assessment of the Chinese service outsourcing industry on investment attractiveness of Chinese cities engaging in service outsourcing. It has closely formed ties with cities and outsourcing businesses. The evaluation targets are 21 service outsourcing demonstration cities, including Beijing, Shanghai, Dalian, Chengdu and Xi’an, and 35 non-demonstration cities, such as Shenyang, Yantai, and Ningbo. It has, for the first time, revealed the situation of Chinese service outsourcing cities since China introduced the outsourcing business. It breaks the previous pattern of focusing on the industry and companies by studying the outsourcing industry.

According to Qi Haitao, CEO of China Outsourcing Network, which initiated the evaluation activity, the Report has put forward the IEEG evaluation system for Chinese service outsourcing cities. This is done on the basis of OIOP, an international operation standard, and the DEVOTT four-dimensional spatial model. The system covers the four grade-one indexes, which are industrial basis, economic level, supporting environment, government support, and 60 segmented indexes. It evaluates service outsourcing cities in diversified angles and all-round approach to comprehensively reflect the overall strength and investment attractiveness of the cities. Qi says that “In this evaluation, Chengdu has the highest average score, because it has low comprehensive costs, sound overall industrial environment, and a good whole industry motivation system.” With a fine environment, sufficient human resources, low commerce costs, and quality government services, Chengdu has become the best destination to receive investment from Chinese and foreign service outsourcing companies.

Prospect

Li Hao, deputy director of Chengdu municipal bureau of commerce, says that in recent years, Chengdu has given priority to developing service outsourcing as a key emerging business. The service outsourcing industry has developed fast. In 2010, the city’s service outsourcing output values exceeded 30 billion yuan, with 100,000 employees in the sector. The Chengdu service outsourcing industry has gradually embraced famous multi-national businesses, leading Chinese companies, and local companies. To date, three of the world top 10 service outsourcing companies, IBM, Accenture and WIPRO, have settled in Chengdu. They are accompanied by 18 others of the world top 100. Six of China’s top 10 services outsourcing companies have set up branches in Chengdu. Over 40 multi-national companies have established global delivery centers, sharing service centers or R&D centers in Chengdu. In 2010, 10 companies employed over 1,000 staff respectively. Six companies were listed into the Top 100 Chinese Service Outsourcing Companies in 2011. Li says that “In the next move, we will continue to make great efforts inviting businesses and investment. We are highly interested in the top 30 companies in the IT R&D, biological medicines, and financial service outsourcing sectors. We will attract more World Top 100 service outsourcing companies to Chengdu. We will also support local companies and companies from other parts of the country.”

Qi proposes that to sharpen competitiveness, Chengdu’s service outsourcing industry needs to segment fields into an industrial chain, and transform from extensive development to intensive growth.

Source:http://www.chinadaily.com.cn/usa/china/2011-10/13/content_13882125.htm

India’s second largest Information Technology services firm Infosys has managed to bag the Rs 700-750 crore financial services systems integrator contract from the Department of Posts (DoP). This is the second contract from the department for Infosys.

Infosys, said sources, has emerged as the lowest bidder for the contract. Other vendors in the fray includes India’s largest software exporter Tata Consultancy Services and global services giant HP.

A postal department official confirmed the development. Infosys top management declined to comment because the company is observing a silent period before announcing its second quarter results on October 1.

The contract is part of the government’s postal department modernisation project. The financial services contract is among the eight that the department is outsourcing.

Earlier this year, Infosys had also managed to bag the ‘rural information and communications technology (ICT) system integrator (SI)’ contract, worth Rs 100 crore.

As part of the new project, Infosys would help with postal banking and insurance solutions, enabling the department to perform ‘anytime, anywhere’ banking. In August 2010, the Cabinet Committee on Economic Affairs had approved the India Post Modernisation, IT modernisation project with a total outlay of Rs 1,877.2 crore. India Posts’ IT modernisation initiative is expected to create opportunities of Rs 5,000-crore for IT services and hardware companies.

Besides the financial services SI, other contracts include data centre facility, network integrator, mail operations hardware and change management. The bidding process for DoP’s ‘core system integrator’ contract is on. This is touted as the largest of the eight contracts. The financial outlay of the project could not be confirmed.

Ever since Infosys established a separate business to focus on the domestic IT outsourcing market, it has been aggressively participating and winning government contracts. With the change in guard at Infosys, there were indications that the company will now increase its focus on emerging markets, including India.

K V Kamath, who took over as the chairman of Infosys this year, had hinted about a ‘Blue Ocean’ strategy. The strategy will make the company focus on newer verticals like healthcare and government, and to expand operations to emerging markets like India and China.

Source:http://business-standard.com/india/news/infosys-bags-rs-700-cr-postal-contract/451085/

A global provider of consulting, technology and outsourcing solutions to financial services and internet based business, announced that Paul Liu, CIO at Freeborders, will discuss the role that China plays in the global information technology industry during the HYSTA (Hua Yuan Science and Technology Association) 2011 Annual Conference on October 1, 2011, in Santa Clara, CA.

Alongside seven other co-founders of HYSTA-CGSA, Liu will share his insights on the path China is taking to become a new leader in the global outsourcing market. Drawing upon Freeborders’ more than ten years of experience in driving technology innovation with a service model that blends Chinese and Western business practices, Liu will address critical success factors, such as access to technical talent and IT infrastructure requirements. In addition, Liu will discuss the use and adoption of social media channels in China along with other industry experts on the panel “Social Media Evolution in China and its Global Impact.”

Founded in 1999, HYSTA is one of the leading Chinese professional associations in the United States. It promotes career development and facilitates the exchange of business ideas between Silicon Valley and China. The HYSTA annual conference is one of the largest summits focusing on China, entrepreneurship, hi-tech and venture investment in Silicon Valley.

Source:http://www.prweb.com/releases/2011/9/prweb8836108.htm

Bleum Inc., a China-based specialist IT outsourcing provider, announced today that it has appointed Pete Gibson as Chief Information Officer. Mr. Gibson is assuming responsibility for Bleum’s information technology and software development division as it strategically expands to meet the growing needs of the company’s clients.
Bleum founder & CEO Eric Rongley said, “We are happy to have Pete join Bleum as we continue to expand our core offerings as the premier China-based outsourcing provider for MNC clients. His two decades of information technology management experience, including as CIO of several Fortune 400 organizations, are a great addition to our management team.”
Mr. Gibson commented, “Having focused my career on aligning IT as a strategic business asset, I am very pleased to be joining a company that not only has a track record for quality software development second to none, but specializes in enhancing business value for its clients. The software outsourcing industry is moving away from a reputation of cost savings and cheap labor and into the value-added sphere. Bleum is leading this change and I am looking forward to working with some of the industry’s brightest engineers based in China.”
Prior to joining Bleum, Mr. Gibson was CIO at BridgeStreet Worldwide and CTO at Cendant (now Wyndham Worldwide). He streamlined Alamo Rent-A-Car’s local technology division and worked with IBM to restructure and improve their global e-commerce operations. Prior to joining IBM, Mr. Gibson spent 14 years with the U.S. Department of Defense directing large research, development, innovation and technology operations.

Source:http://www.prnewswire.com/news-releases/bleum-appoints-pete-gibson-as-chief-information-officer-130624778.html

India’s second-largest software services exporter, Infosys Ltd, sees the grim economic situation in Europe as its biggest concern and is diversifying actively into fast-growing markets such as China, a top executive said on Thursday.

While the US and Europe markets are too big to ignore, Infosys, which competes bigger rival Tata Consultancy Services Ltd and smaller Wipro Ltd, is expanding in neighbouring China, planning to roughly triple its staff headcount to 10,000 in 2-3 years.

“Right now, of course, the economic situation is the biggest concern because it’s something that’s outside our control, but will have an impact on the global economy and hence our industry,” Executive Co-Chairman Kris Gopalakrishnan told Reuters on the sidelines of the World Economic Forum in the northeastern Chinese city or Dalian.

Infosys derives more than 70 percent of its revenue from the United States and Europe.

Slowing US and European economies, volatility in the rupee, severe competition, rising wages, high staff turnover rates and management shakeups at Infosys and Wipro have been hampering growth in India’s $76 billion software services sector.

The United States alone accounts for about half of the revenue of India’s IT outsourcing industry.

Source:http://economictimes.indiatimes.com/tech/software/infosys-sees-grim-economic-situation-in-us-europe-plans-china-expansion/articleshow/9992919.cms

After information technology, it’s now the turn of Indian business process outsourcing (BPO) services companies to harness China as a delivery location.

With a large talent pool yet to be tapped and a growing number of English speakers coming out of colleges in recent years, China is becoming an attractive offshore destinations for the Indian BPO sector. Many BPO majors, including Aegis, TCS BPO and Hinduja Global Solutions (HGS), are either looking at entering or expanding their presence in China.

Indian IT majors such as TCS, Infosys, Wipro, HCL Technologies and Mahindra Satyam, are already present in China. These companies are mostly servicing global clients from these centres. Recently, Infosys said it was setting up its own campus in China, the first by any Indian IT company there. However, BPOs were maintaining a cautious approach.
“We have been trying to enter China through a joint venture, as it is difficult to enter the market on your own. Thus, it is taking a long time. However, we hope to close the JV in China by the end of this year,” said Partha Desarkar, global CEO, HGS. The company had been trying to crack the China market for long.

TCS employs about 500 people in China across two centres for its BPO business. It is planning to expand its presence. TCS BPO global head, Abid Ali Neemuchwala, says Indian BPO firms are no longer merely cost-centric but are focusing on harnessing talent from across the globe for enhancing domain capability.

According to Nasscom, China has the potential to develop a large IT-BPO industry. Underlying this is substantial domestic market potential, a sizable educated workforce and strong government support on developing the IT-BPO sector, says a Nasscom report.

“In non-voice BPO services, China will take over India as an attractive destination. In the next four years, you will see a generation of English-speaking Chinese coming up. They have worked really hard in the last 10 years to improve on this,” said Aparup Sengupta, CEO & MD of Aegis.

Aegis did not have a presence in China so far and is is now thinking of centres in the country. “We are looking at it,” said Sengupta.

A few BPO companies still maintain a cautious approach. Said Rohit Kapoor, president and CEO of EXL Services, “We did explore China last year. We have decided that it’s not the best time for us to go there. The markets more interesting to us right now, in terms of onshore capability, are the US, South Africa and Latin America.”

Genpact, among Indian BPOs, has considerable presence in China. The company owns five centres there, which employ a little over 3,000 people. Some analysts, however, feel the IT -BPO industry in China is still in its early phases. Frequent comparisons with India and commentary positioning China as a substitute destination is misplaced, they say.

Source:http://www.business-standard.com/india/news/its-bpos-turn-to-enterdragon/447110/

A new law passed in India and a new set of laws being considered in China may spell the end for many types of outsourcing to the two countries. On April 13 of this year, India issued final regulations to implement the Information Technology (Amendment) Act of 2008, dealing with the protection of personal information. These regulations will effectively eliminate the possibility in both India and China that companies can effectively collect and utilize the personal data of customers. Essentially, this means that call centers, sales centers, and support centers can no longer keep or transmit the personal data of callers to anyone. Since so many companies from the EU and US outsource business divisions to India or China specifically to deal with customers, if the outsourced companies can no longer collect or transmit digital information about said customers, the companies are thus rendered almost completely useless to their EU and US affiliates.

The already-passed regulations in India proscribe extremely strict regulations for companies dealing with personal customer information. First of all, companies must obtain written consent by letter, fax, or e-mail from each customer before they can collect data from them. The customer can choose to opt out of this at any time and withdraw their consent. Companies will also be under significant restrictions in how they can disclose this personal data to third parties. And even if they meet all the data disclosure restrictions, a company can only send the data to an organization that provides the same level of security as the Indian regulations. Finally, customers have the right to review the personal data collected about themselves and correct it. And just to be clear, these regulations apply to any personal information at all, not just to personal information of Indian nationals. This is a sudden and terribly huge headache for any EU or US company that is now using Indian firms as office processing centers. Companies that have set up working relationships with Indian firms are now most likely going to have to bring that functionality back to their home countries or risk losing or never again gaining access to their own customer data.

The regulations in China are similarly strict, but not yet approved. Companies that hold personal data in China must receive explicit consent to show the data to third parties. There are a lot of restrictions under consideration to govern the collection, processing, use, transfer, and maintenance of personal information. And for the clincher, personal data cannot be exported out of the country unless specifically allowed by law or government authorities. The same problems with the Indian regulations will pop up in China if they are approved, as it looks like they will. The regulations were put on the table in response to China’s bad international image of a country of online espionage and shoddy IT security. Another aspect of these new regulations is that companies cannot even collect personal information about their own employees without explicit consent. So companies which have outsourced their HR departments to India, or even Indian companies themselves, will have more paperwork to process the consent of their own employees just to let the company store their personal information.

China and India experts are currently warning outsourcing companies to prepare for big changes. Despite the draconian nature of the laws, they do seem to have strong backing and are not likely to change in India’s case, or are likely to be passed in some similar form in China’s case. There is just too much momentum behind these laws for businesses involved to change them. Expect to see some significant changes in the outsourcing sector in Asia soon.

While these privacy laws are very strict and pose a significant business problem, from the perspective of an individual, the laws also seem to have much merit. No longer would companies be able to share mailing lists of customers, or bother you with offers for irrelevant junk after you signed up for some service 10 years ago from another company. Also, the ability to review and correct information, or to revoke the company’s ability to even keep information about you at any time, is a huge boon for those concerned with personal privacy. Citizens of countries other than India might start looking in envy to these laws or even move to get something like them passed at home. Imagine what Facebook and Google would have to do if laws like these governed their collection of customer personal data. It seems like the citizens of China and India will soon be well-protected from the fears of a corporate invasion of privacy, while European and American citizens will still have to sit in vague unease while the great big eye in the sky of corporate scrutiny continues to stare down at them.

Source:http://www.biztechreport.com/story/1493-death-knell-outsourcing-india-china

Human rights and labor groups protested Tuesday to declare their opposition to the outsourcing of call centers to China and asked the country’s media regulator to take action.

Members from the Taiwan Association for Human Rights, the Taiwan Labor Front, and the Alliance for Fair Tax Reform gathered in front of the National Communication Commission (NCC) and chanted slogans such as “call center outsourcing to China is illegal” and “save young people from losing jobs.”

The hodgepodge of groups coalesced over the likelihood that outsourcing takes away jobs for young people, as well as people with physical or mental disabilities, who are frequently employed at call centers.

Lai Chung-chiang, an executive member of the human rights association, cited government labor statistics that reported a loss of over 3,000 call center jobs since 2004.

In 2004, the number of people working as call center operators at telecommunications companies in Taiwan was 8,277. Only 4,513 people were employed in the sector by 2010.

According to the Council of Labor Affairs, young people between the ages of 22 to 35 account for the largest group of call center operators, he said.

“The loss of jobs does not mean a weaker local economy, because all of the telecommunications companies are making profits,” Lai said.

He also claimed that outsourcing of call centers to China would jeopardize local consumers’ rights because in China, there is no law to protect the confidential data of customers.

The groups suspect local telecommunications companies have exported these jobs because of lower wages across the strait, and called on the NCC to investigate the matter.

They singled out Far EasTone Telecommunications Co. Ltd. as a culprit.

The company later refuted the groups’ claim, saying its call center is located in Kaohsiung.

In response, Liang Wen-hsing, a specialist at the NCC’s operational management department, told the CNA they have done a similar investigation on whether local telecommunications operators had indeed shifted call center operations to China.

Although refusing to confirm this is happening, the NCC would only say that it did not find any violations of the law.

However, the agency said it will accept the groups’ call and launch another inquiry.

Since 2010, Taiwanese telecommunications operators have been allowed to open up companies in China, but they are forbidden to deal with or disclose the personal data of Taiwanese customers to its

Source:http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aALL&ID=201107260030

As China is transforming its economy from being based on low wages to value-added products, many Chinese cities are considering whether to make the software sector their leading economic driving force, business leaders told Xinhua.

Inspired by what was achieved in Dalian, a city reliant on heavy industry before the turn of the century but now accounts for more than a 10th of China’s total software and outsourcing sector output, many cities are attempting to reduplicate its success story.

This would leave China’s software sector fragmented and give rise to overcapacity, said Michael Ye, vice president of Dalian Software Park (DLSP), home to more than 500 Chinese and foreign companies, including IBM, HP and Cisco, and about 70 percent of Dalian’s total software and outsourcing sector output.

More than 20 cities in China are aiming to copy the success model of Dalian, which really poses risks, as not all of them are well equipped to become IT hubs, Ye told Xinhua in an interview.

This is in sharp contrast with India, by far the largest outsourcing service provider which accounts for more than 40 percent of the world’s total sector. India has only four cities that are strongly focused on software development and outsourcing.

Just in China’s coastal Jiangsu Province, there are five or six cities struggling to become centers for software development and outsourcing, Ye said.

The central government should make an overall plan which selects those cities with the most and the highest quality universities, Ye said.

He suggested the establishment of one software and outsourcing hub in each of the country’s five main regions, namely southwest, north, south, central, and northeast China.

Source:http://english.peopledaily.com.cn/90001/90778/90860/7414164.html

Think privacy issues are a pain when they affect consumers? Get ready for the grandfather of all corporate computing headaches. Big privacy-law changes in India and China are about to turn data-processing outsourcing into a hurdle-leaping, paperwork-generating mess.

Start with the proposed rules from the People’s Republic. The country has suffered bad PR fromserious allegations of China-based online economic espionage. However, there’s another whole problem area: security in outsourced IT services because of high personnel turnover and little cultural recognition of the importance of data security. So the government has called for the following:

Those that hold personal data must receive explicit consent to divulge that data to third parties.
There are specific restrictions “during the collection, processing, use, transfer and maintenance of personal information.”
Personal data cannot be exported unless specifically allowed by law or government authorities.
As currently proposed, the restrictions could prohibit an outsourcer from transferring data received from a company to that company’s affiliate. There’s even a question as to whether an outsource firm could return data to the company that sent it the first place.

At least the Chinese rules are still in a relatively early draft. Not so with India, which issued some final privacy regulations in the middle of last month, according to an article by two Morrison & Foerster lawyers:

The new rules prescribe how personal information may be collected and used by virtually all organizations in India, including personal information collected from individuals located outside of India. Among other obligations, prior written consent will be required, without exception, to collect and use sensitive personal data. These consent requirements are far more restrictive than what is required under either the Gramm-Leach-Bliley Act or the EU Directive. As a result, U.S. and European multinational businesses that currently rely on their India-based operations or Indian outsourcing service providers to handle sales and other transaction-related calls from their U.S.- or EU-based customers (or even benefit-related calls from their U.S.- or foreign-based employees) may have to adjust their personal data collection practices to conform to Indian data protection rules, even though their current practices may comply fully with U.S. or EU privacy rules.

According to the lawyers, the new privacy rules seem to apply to any personal information, and not just that of Indian nationals. Some of the requirements are rigorous:

A company must get written consent by letter, fax, or email for the collection of data.

People can opt out at a later time and withdraw their consent.

There are significant restrictions on disclosing personal data to third parties.

When a person has given consent for the transfer of data, or it’s necessary by contract, a company can only send the data to an organization that provides the say level of security as the Indian regulations.

People have the right to review their data and to correct it.

This will be a major challenge for Western companies that use Indian firms as back office processing centers. Expect to see companies bringing some degree of data processing back in-house again, as well as investigating new potential outsource locations in South America. Or until enough wealthy business owners complain to the Chinese and Indian governments about the amount of business they might lose.

Source:http://www.bnet.com/blog/technology-business/new-privacy-laws-in-india-and-china-could-make-it-outsourcing-ugly/10620

China has proposed strict new data security regulations that could hamper the country’s nascent IT outsourcing industry if made into law, even as they aim to give foreign business leaders confidence in the way the Chinese handle sensitive business and personal data.

China’s data privacy protection has long been considered one of the world’s weakest. But the government’s proposed data security guidelines may go too far in the opposite direction.
The People’s Republic of China took a step toward addressing its lack of comprehensive data privacy laws earlier this year: It issued a series of proposed data security guidelines intended to better protect the privacy of Chinese citizens and provide guidance for international businesses operating in the country. The document, developed in consult with China’s Ministry of Industry and Information Technology, contains a set of broadly applicable rules and principles for storing, handling and transferring personal information.
Some business leaders worry the regulations, as they are currently written-with requirements stricter than those that exist in the U.S. or Europe-are too expansive and could cause serious damage to China’s growing IT and business process outsourcing industry and to its customers. Specifically, the proposed rules indicate that information sent to China would face restrictions in getting back out again.
To shed light on China’s proposed data privacy regulations, CIO.com interviewed Paul McKenzie, managing partner of the Beijing office of law firm Morrison & Foerster. He explains what the draft guidelines say, how likely they are to pass as written, and what offshore outsourcing customers can do to prepare for them.
CIO.com: Data security and intellectual property protection are always a concern when offshoring, but China has a particularly bad reputation in this area. Is that perception of lax information security in China warranted?
Paul McKenzie, managing partner, Morrison & Foerster: High levels of employee churn amongst outsourced service providers-particularly in the application development and maintenance field-coupled with limited cultural awareness of the importance of proprietary information tend to exacerbate the problem in China. Proper compartmentalization and practical data security controls can be worth far more than a contractual right, which may be difficult to enforce. An ounce of prevention is often worth a pound of cure.
What are the most noteworthy new personal data protection guidelines the Chinese government has proposed?
The most significant concepts in the guidelines involve:
An overarching principle that the holders of personal information keep such information confidential, and a specific requirement that express consent be obtained for all third-party disclosures of personal information;
A set of more specific principles to be observed during the collection, processing, use, transfer and maintenance of personal information;
Application of such principles specifically to personal data on computer networks (as opposed to other data storage media in hard copy form);
Restrictions on outsourcing the handling of personal information;
Prohibition on the export of personal information unless expressly permitted by law or otherwise approved by government authorities.
How do these restrictions compare to data privacy regulations in the U.S. and Europe?
The most significant way in which the guidelines are different from the U.S. and the European Union relates to the transfer of data. The U.S. has no general prohibition against transferring data across borders. Rather, U.S. companies that are regulated are expected to protect personal information wherever it is located-in the U.S. or outside of the U.S.
If these data security guidelines are enacted in China, express consent from an individual must be obtained in connection with the transfer of personal information to any other organization. Yet no exceptions are provided, unlike rules in other jurisdictions, such as the E.U., where sharing customer information is permitted without consent if it is necessary to complete a contract between the customer and the company. Without a clear definition of “other organizations,” the guidelines could even prevent transfers of data to company affiliates and could be a significant impediment to outsourcing.
Export of personal data from China would also be prohibited under the draft guidelines unless an exception was found under Chinese law. But without a clear Chinese law currently in effect, the guidelines, if made mandatory, would prohibit the export of such data even when a customer had consented.
That sounds like bad news for Western companies sending IT work to China-and for China’s outsourcing industry.
This would likely have a crippling effect on the growing Chinese outsourcing industry. Companies would be reluctant to outsource customer data processing to China-based providers for fear of a prohibition on having such data returned to them. However, there are reasons to expect that export carve-outs will eventually be forthcoming, as other sections on outsourcing in the draft guidelines are very much in line with requirements in other countries.
How likely is it that these rules will be tweaked to allow exceptions for IT outsourcing?
The guidelines are still very much in draft form, and regulators have received a heavy volume of comments from the public. While on the surface, some of the restrictions on export of data would appear draconian, we expect that more explicit exceptions will be put in place-for example, allowing transfer of data to affiliates and transfer of data back to the companies which outsourced their data processing to a firm in China.
What is the process by which such proposed regulations become law in China?
The drafts have been circulated as a potential “national standard” under China’s national standardization system. They would first be issued as a voluntary guideline lacking the force of law. Examples of other non-mandatory standards include standards for book numbering, codes for representing the names of countries, and use of punctuation marks.
We do believe that the regulators are testing the waters with these guidelines to see what form and substance national regulations on data privacy would ultimately take. Based on our conversations with relevant regulators, it is expected that these initial draft guidelines may still be changed significantly before being issued due to the extent of comments they have received from the business community.
In the absence of national guidance, have there been regional or city data privacy regulations in effect?
Several provinces and cities have introduced laws to try to regulate data privacy, particularly the online disclosure of personal information. By definition local legislation is limited in territorial scope, and it is therefore difficult to see how it might be sensibly applied to the Internet. The existing patchwork of local laws is actually one of the factors motivating the central government to accelerate progress towards the adoption of a unified national law based on the draft guidelines.
What should companies currently outsourcing IT to China or sending IT work to their own captive centers there do to prepare for increased data security scrutiny?
China recently enacted new criminal and tort laws that could be used to impose liability on companies if information is not properly protected. Companies should be thinking of how to develop internal control procedures to prevent rogue employees from misusing customer data. Incorporating some of these new guidelines may prove to be a useful defense in case of individual lawsuits.

Source:http://news.idg.no/cw/art.cfm?id=5C82C446-1A64-6A71-CEC7F816F3E47ABB

The top 10 Chinese outsourcing providers employ a total of 85,000 people. That may sound like a lot, but it’s a small number in the world of global outsourcing.

India has a number of outsourcing companies far larger than the combined total of China’s 10 leading outsourcing firms. India’s Tata Consultancy Services , for instance, employs 187,000 people alone.

But China’s IT outsourcing firms are in a good position to grow, according to outsourcing consultancy TPI.

“What’s interesting, and perhaps coincidental, is that the size of the leading Chinese providers today by employee and revenue [counts] is roughly equivalent to the size of the leading providers in India a decade ago,” said Michael Rehkopf, a partner and director at TPI during a conference call about the outsourcing market.

A decade ago, Indian providers accounted for less than 1% of the outsourcing market; today they have about 20% of the market by contract value. Contracts were $1.5 billion 10 years ago and about $18 billion today, which represents a 32% annual growth rate, said Rehkopf.

Many of the major Indian providers count on business from U.S. customers for more than 50% of their revenue, a path that China-based firms may not need to follow.

John Keppel, TPI president, believes the Chinese firms won’t need to rely as much on the U.S. for work. They have a substantial domestic market to tap, and the large economies of nearby countries, Japan and Korea, to do business in as well.

But what could hurt China’s outsourcing growth is increasing competition from other nations and intellectual property protection issues, said Rehkopf.

Caveats aside, Rehkopf said he won’t be surprised to see “Chinese service providers take off quickly and dramatically in the decade ahead.”

China’s outsourcing firms have been turning to Wall Street to raise cash.

For instance, ISoftStone Holdings, a company with about 10,000 employees, held an initial public offering in December. Last year two other Chinese firms went public as well, HiSoft Technology International and Camelot Information Systems. All three are on TPI’s list of top 10 outsourcers.

The Chinese employment market is influenced by the country’s vast number of engineering graduates, more than 300,000 annually. One company, Bleum Inc., seeks to hire new Chinese graduates who score an IQ of 140 on the company’s test.

Source:http://www.computerworld.com/s/article/9215967/China_s_outsourcers_poised_for_growth

VanceInfo Technologies Inc. (NYSE: VIT) (”VanceInfo” or the “Company”), an IT service provider and one of the leading offshore software development companies in China, today announced that it has acquired 100% equity interest in the main operating subsidiaries of LW International Holdings Limited (”Lifewood”), a China-based company providing business process outsourcing (”BPO”) services. Under the terms of the acquisition agreement, VanceInfo will pay an initial consideration of $5.6 million in cash and stock, with contingent consideration to be paid based on Lifewood’s financial performance over the next three years.

Established in 2004, Lifewood provides primarily data processing services to clients in the United States, Europe and Asia Pacific. Its key industry verticals include publishing, healthcare and financial services. The acquisition marks VanceInfo’s strategic expansion into the BPO business, an early stage growth sector with increasing synergies to the IT outsourcing sector.

“Lifewood is a highly process oriented BPO service provider with a well-developed system platform and customer centric service culture,” commented Chris Chen, Chairman and Chief Executive Officer of VanceInfo. “It invested heavily over the past few years and has built a solid foundation for us to move aggressively into this high-growth business that is complementary to VanceInfo’s service offerings. We believe this strategic alliance will create synergies for both and allow VanceInfo to serve a broader range of international customers with combined offerings.”

“We are very excited to join the VanceInfo family,” said Ronald Cheung, Chief Executive Officer of Lifewood. “Leveraging VanceInfo’s platform and Lifewood’s BPO capabilities, we hope to quickly bring this young business to the next level and become a market leader in China-based BPO services in the future.”

Lifewood generated approximately $4.5 million in net revenues in 2010. The transaction is expected to be slightly accretive to VanceInfo’s 2011 earnings.

Source:http://www.prlog.org/11432228-china-based-software-outsourcing-firm-vanceinfo-announces-acquisition-of-bpo-company.html

China Telecom Chairman and Chief Executive Wang Xiaochu said his company will procure 60 million units of consumer-premise telecom equipment from Taiwan this year, a 33% increase from 2010`s 45 million units.

Wang is leading a trade mission to visit Taiwan. His company is currently the No.1 fixed-line and No.3 mobile telecom carrier in mainland China, offering fixed-line service to 175 million subscribers and mobile service to 90.52 million subscribers throughout the mainland.

He said major products on the company`s procurement list include mobile phones and tablet PCs. Besides the procurements, the company will enhance cooperation with Taiwan Semiconductor Manufacturing Co. (TSMC), HTC Corp. and VIA Telecom Inc., according to Wang.

People familiar with the cooperation deals pointed out that Wang`s company has to rely on Taiwan`s manufacturers to help it achieve the goal of increasing its CDMA mobile subscribers to over 100 million by the end of this year by supplying CDMA-2000 mobile phones, chips and LAN equipment.

Wang will confer with TSMC Chairman and Chief Executive Morris Chang, HTC Chairperson Cher Wang, and Kinpo Electronics Inc. Chairman Rock Hsu over cooperation. Also, he will visit Chunghwa Telecom Co., Ltd., Taiwan Mobile Corp., Far EasTone Telecom Co., Ltd., Asia Pacific Telecom Co., Ltd., Vibo Telecom Co., Ltd., Inventec Corp., Wistron Neweb Corp., MediaTek Inc., Gemtek Technology Co., Ltd., Microelectronics Technology Inc., and ZyXEL Communications Corp.

Wang said the mainland`s telecom market is very huge and his company is pushing to promote 3.5G service in the mainland, luring Taiwan`s manufacturers to work with it to develop the mainland market.

Source:http://news.cens.com/cens/html/en/news/news_inner_35478.html