BearingPoint opens second development facility in China

Computerworld - BearingPoint Inc. is opening its second offshore development facility in China, a move analysts see as part of a trend by U.S. firms to expand offshore development operations in that country.
The McLean, Va.-based consulting firm said late last week that it has opened a 56,300-square-foot facility in Dalian, a city in the northeastern part of the country.
The Dalian facility now 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. The company, which has 15,500 employees worldwide, also runs a development facility in Shanghai with 400 employees, as well as one in Chennai, India, with 100 people. It plans to expand the Chennai facility to 1,000 workers during the next year. BearingPoint also operates a development center in Spain.
The company's interest in China mirrors developments by other multinational firms, although the country remains well behind India in developing a significant offshore export operation, said Eugene Kublanov, an analyst at NeoIT, a San Ramon, Calif.-based outsourcing consulting firm.
In 2003, India had IT services exports of about $9.5 billion, compared with IT services exports worth about $700 million in China, said Kublanov. Moreover, most of the export work in China is for the Korean and Japanese markets.
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. Ye's comments came in response to questions sent via e-mail.
Franklin said the Dalian facility will also serve the Asia-Pacific region. The area is well suited for providing services to that part of the world, because it has a large number of Japanese-speaking residents as well as a substantial Korean population, said Ye.
Kublanov said other U.S. and Indian firms are establishing services operations in China, in part as a hedge against the increasing costs of labor in India. Language issues and a lack of project management skills remain key hurdles for China's efforts to develop an offshore market with North America. But Kublanov believes that as firms such as BearingPoint build a presence there, those problems will diminish.
BearingPoint's Franklin said he believes the company has the processes in place, including bilingual workers based in the U.S., to ensure good project management and clear communication, and he sees China as a good alternative to India.