Overcoming the Piracy Stigma in China

IDG News Service - SHANGHAI -- Walk into the access-controlled room full of software developers at Bleum Inc.'s headquarters here and you can't miss the slogan written in large blue and black letters that stretches across the far wall: "Protect our customer."

The message is there to serve as a constant reminder for Bleum's team of English-speaking software engineers of the importance of keeping clients' software code secure, said Eric Rongley, the outsourcing service provider's founder and CEO.

Concerns about the protection of intellectual property and proprietary corporate data are hardly unique to China. But the security risks are greater here than in locations such as India or Eastern Europe, Rongley said. "It's definitely in the interests of a company here to overcompensate for it," he said.

China's poor reputation for intellectual property protection stems largely from the widespread availability of pirated DVD movies and software. Last month, the Business Software Alliance in Washington estimated that 92% of software used in China during 2003 was unlicensed and illegal. That figure tied the country with Vietnam for the dubious distinction of having the world's highest piracy rate.

But a high piracy rate for packaged applications doesn't inherently place outsourced software development projects at risk, said Chen Lingsheng, vice president of greater China at BearingPoint Inc., calling security concerns in China overblown. Outsourcing projects to companies in China can be as secure as it is anywhere else, he said.

"We had a major financial client from the U.S. come over here to do a security audit before they would give us a project, and we passed the audit," Chen said, noting that BearingPoint follows the same security procedures in China that it uses in the U.S.

In addition to conducting security audits, those procedures include strictly enforcing nondisclosure agreements and restricting development work to facilities that require a keycard for access.

BearingPoint and other outsourcing service providers in China are willing to go even further to meet their customers' security demands. For example, BearingPoint developers have access only to code and project documentation.

"As an outsourcing service provider, we take it very seriously to protect our clients' secrets and business data," said Walter Fang, group vice president and chief technology officer at Neusoft Group Ltd., a Chinese software company based in the northeastern city of Shenyang. Neusoft employs 1,500 developers who work on outsourcing projects at several locations in China.

Neusoft allocates separate buildings for major clients such as Toshiba Corp. and Alpine Electronics Inc., and it restricts access to the buildings to staff working with those companies, Fang said.

Reprinted with permission from

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