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Outsourcing IT to China:Perceptions, Realities and Best Practices
China is becoming the number two countrybehind India for offshoring of IT services
– Strong government support
– Inexpensive IT Talent
– Highly skilled population
– Superior infrastructure
– Adopting quality standards
– Education system producing results
– Diversification from India
China Overview
21
Today’s Market Dynamics
Challenges facing the Offshore IT services market
Increased geographicdependence
Significant wageinflation
Very highturnover rates
Strained relationshipmanagement capability
Skills scarcity
Freeborders Profile
Freeborders is a leading provider of Technology Outsourcing Servicesfrom China to major global corporations
Global Delivery Model• US-based company founded in 1999• 10 global locations• Delivery center in Shenzhen, China
San FranciscoGlobal HQ
CMMI Level 5 certifiedand US standards for IPand security
New YorkEast Coast HQ
LondonEMEA HQ
ShenzhenDelivery Center
English languagecapability globally
China Outsourcing Competitive Landscape
5300+5000+
CompaniesOutsourcing to US
and EU-based clients
CompaniesOutsourcing to
Japan-based clients
“Localization”Companies
(re-packaging forPRC marketing)
Domestic (PRC) ITOutsourcingCompanies
Business Model
ManagementScale
QualityFocus
ProcessMaturity
InternationalTrack Record
EnglishSpeaking
Number ofViable Companies
1-2
Why Global Clients Turn to Freeborders
Global Track RecordProven ability to execute for major global companies
Vertical Market ExpertiseFinancial Services, Software & High Tech,Retail & Manufacturing
Process MaturityCMMI Level 5; Proven Project Management Process
Strong ManagementU.S. – based SME’s & China-based team includingChinese nationals with U.S. experience
Infrastructure & SecurityWorld class tech facility – communicationsinfrastructure, h/w & s/w, physical & info security
Sustainable Cost-Advantage• 5:1 vs. the U.S.• 40-50% lower than India and stable wage climate• Diversification vs. India = Risk mitigation
Recent Project – Global Investment Bank
Global investment bank requires post merger integration of new sales force –client relationship management platform
• The objective was to migrate sales functions of the investment bank from aheritage platform to the new, core CRM architecture
Success Metrics:
• Freeborders program manager defines project governance processes, programcontrols, and risk and issues management processes
• Program manager succeeded in integrating the investment bank and consumerbank software development processes and cultures with on and offshoreresources located in Chicago, Houston, Mumbai, and New York
• Project delivered on time and under budget by 15%
The project had a duration of 12 months and a staff of more than 100individuals, was conducted over multiple locations, and had a budget of morethan $15M
Client
Challenge
Solution
Result
Proven Management Solutions
CommonConcerns
OurSolutions
FreebordersAdvantage
English Language
Infrastructure
IP Security
Technology Talent
Wage Inflation and Turnover
English is our core value in hiring, compensation & promotion
Freeborders facility is world-class
Relentless focus on securitybest-practices – ISO 27001:2005(in process)
Rigorous HR focus: superior hiring, training, retaining
Superior compensation system; no wage inflation, 3% turnover
Management Scale
• Western-quality HR practicesand scale
• Recruit, train, review, retain,exceptional senior management
Process Maturity
• High quality outcomes assured &repeatable – CMMI Level 5
• Proven application developmentprocess between US and China
• Focus on zero communicationerror
Final Thoughts
Sustainable Cost Advantage5:1 savings vs. the U.S.40-50% more cost effective than India
Diversification Versus IndiaRisk Mitigation
Mature Development ProcessProven process and methodology
Global Track RecordProven ability to execute for global companies
Vertical Market ExpertiseManufacturing, Retail, Financial Services,Software / High-Tech, Transportation
India outsourcers lackoperating expertise in ChinaVast cultural and operating differences
Chinese entrepreneurs aremarket-blind to the WestLack know-how and reach to serviceFortune 1000