BearingPoint Move Raises China's Profile

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July 12, 2004 (Computerworld) -- BearingPoint Inc. has opened its second development facility in China, a move analysts see as part of a trend by U.S. firms to expand such operations in that country.
The McLean, Va.-based consulting firm said last week that it opened the 56,300-square-foot development center in the northeastern industrial city of Dalian. The facility currently 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.
BearingPoint, which has 15,500 employees worldwide, also runs a development facility in Shanghai with 400 employees. It has a center in Chennai, India, with 100 people, which it plans to expand to 1,000 workers during the next year. The company also operates a development center in Spain.
Growing Interest
BearingPoint isn't the only multinational firm that's interested in China, but the country remains well behind India as a provider of development services, said Eugene Kublanov, an analyst at NeoIT, an outsourcing consulting firm in San Ramon, Calif.
In 2003, India had IT services exports of about $9.5 billion, compared with about $700 million for China, said Kublanov. Most of China's export work is for the Korean and Japanese markets, he said.
According to Michael Ye, general manager of business operations at Dalian Software Park Co., other IT firms with offshore operations in Dalian include Accenture Ltd., SAP AG, Hewlett-Packard Co., IBM Global Services and GE Capital Corp.
Wu Jiazhi is a China-based programmer who works for TopCoder Inc., a Glastonbury, Conn.-based firm that conducts online competitions for recruiting programming talent for outsourcing projects. Wu said he believes China's workers have the technical skills that will enable the country to rival or exceed India within several years. China lags not in technical skills but in development standards, he said. "Most Chinese firms are providing application solutions with relatively poor extensibility and documentation," he said.
Kublanov cited project management as a problem for China as well. However, BearingPoint's Franklin said he believes his company has the necessary resources in place, including bilingual workers based in the U.S., to ensure good project management and clear communication.
Sierra Atlantic Inc., a Fremont, Calif.-based outsourcing firm that specializes in research and development, has a development center in India. But it's eyeing China as a future development site because the country "has the best combination of cost advantage and supply of strong engineers," said Marc Hebert, a vice president. Market access is also a key factor in opening a development center in China, Hebert said.
Although labor costs in India are rising, Hebert said he sees nothing threatening that country's dominance as an offshore development center. Impediments to doing business in China include government bureaucracy and the language barrier, he noted.

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