It is part of Lisa Pointe's role at Shanghai Wicresoft to stop her Chinese colleagues from writing "I'm deeply sorry for your inconvenience"...

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It is part of Lisa Pointe’s role at Shanghai Wicresoft to stop her Chinese colleagues from writing “I’m deeply sorry for your inconvenience” three times in a two-paragraph e-mail to an American.

For the Chinese, she explains, apologizing repeatedly means they really feel for the other side’s pain and trouble, but it can sound very insincere to Americans.

That is just one of the many lessons that Pointe, who hails from Traverse City, Mich., tries to impart in her role as an adviser at Wicresoft, a 400-employee joint venture between Microsoft and Shanghai Municipal Government.

Microsoft has outsourced part of its Web-based technical support to the concern, and Point is one of 10 people who are teaching the Chinese techies how to best provide that support for users of Microsoft products in North America.

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Forget about cheap labor and factories churning out shoes and toys. Some Chinese companies now want to become known for developing software programs and providing back-office services for U.S. companies — just like their counterparts in Bangalore, India.

Simon Bell of A.T. Kearney, a Chicago management-consulting firm, thinks it will take five to 10 years before China rises as an equal to India in providing information technology and outsourcing services, at least in the English language.

But if multinational companies look for alternatives to India, he says, China often tops the list. A.T. Kearney ranks China second, after India, in its 2004 global offshore-location attractiveness index, citing the country’s large, educated labor pool and cost advantage.

“Language is important, but more broadly, it is accounting skills, financial analyzing, information-technology skills (that matter),” Bell says.

To gain a foothold in the global outsourcing market, Chinese companies have to overcome many inherent difficulties. Among them: poor English skills, weak protection of intellectual-property rights and a shortage of managerial talent — not to mention a fragmented industrial structure less likely to spawn giants like India’s Wipro Technologies and Tata Consultancy Services.

Going extra mile

To surmount the difficulties and catch up with the Indian giants, Chinese companies such as Wicresoft are going the extra mile. Wicresoft’s English-speaking employees teach Chinese co-workers about American e-mail protocol and help polish the wording to sound more colloquial.

Every week the translators hold 30-minute “English corner” with each Chinese employee to assess their progress. Their mission: to make sure Microsoft customers won’t know they are exchanging e-mail with someone abroad.

Wicresoft pays dearly for this extra quality control. Wages of the 10 e-mail polishers account for 15 percent of total personnel costs of the venture’s 100-staff U.S. online-service department. The company declined to disclose the exact wages, but acknowledged it pays its foreign staff more than its local staff.

“It definitely increases costs,” says Ingrid Wang, Wicresoft’s president. “But it can help us narrow the language gap with Indians, at least in written English.”

Despite all its efforts, Wicresoft hasn’t developed any other client from the United States or Europe — its target markets. There were six or seven groups of executives from multinational companies visiting the company in the latter half of 2004 but none has offered a project.

Yet Wang isn’t discouraged. The multinational companies must be looking for potential partners in the future, she says.

“China’s (information-technology) outsourcing industry will grow exponentially in the next five years,” she says, if China’s macroeconomic environment remains stable, multinational companies don’t change their China strategies and the industry doesn’t blunder.

To achieve that goal, Wang and other information-technology executives will need more qualified talent. Although 300,000 out of 2.8 million Chinese college graduates in 2004 were engineers, information-technology companies have difficulties in recruiting for their outsourcing projects.

“There are many computer scientists in China, but not many software engineers,” says Joseph Hsu, chief executive of Symbio Group, of Rockville, Md., which has operations in Beijing and Wuhan.

Software projects are a team effort and require more application skills than theoretical knowledge, he says. Often, the companies have to train new graduates from scratch. There are around 200,000 architecture-level IT engineers — the people who direct teams of software engineers — in India, Wang says, while the number is around 1,000 in China.

To overcome the shortage of managerial talent, Chinese information-technology outsourcing companies have to either hire project managers from the United States and India, which will increase costs, or train their internal staff, which often takes six months or longer.

“You need to plan ahead when you do projects in China,” says Eric Rongley, founder of Shanghai software-outsourcing company Bleum and a former manager of Capital One Financial’s Indian offshore operation. Bleum’s clients include Citibank, Standard Chartered Bank and some U.S. financial-service companies.

One concern for companies sending business to China is protecting intellectual-property rights.

“The only way to solve it is to overcompensate it,” Rongley says.

At his company’s secure development rooms, for example, all papers are bright yellow and have to be shredded, and every personal computer has special log-in software. The goal, he says, is to dispel the perception that China has no respect for intellectual-property rights.

Promotion lacking

Industry officials say the Chinese government could do more to promote its IT-outsourcing industry.

There is no Chinese equivalent of India’s powerful National Association of Software and Service Companies.

“In terms of China changing perception of the West, there is no single entity that focuses on that,” says Dean Stevens, chief executive of Silicon Valley-based ChinaTechSource,

Furthermore, to compete effectively in global outsourcing, China’s information-technology industry itself must consolidate. McKinsey & Co. estimates in a January report that there are about 8,000 software-service providers in China, compared with fewer than 3,000 in India, and almost three-quarters of them have fewer than 50 employees.

In fact, only five have more than 2,000 employees. Without adequate scale, McKinsey says, Chinese players are unlikely to attract top international clients.

Wang of Wicresoft agrees. “China’s IT-outsourcing market will never grow if there are always 10,000 small companies fighting for one business transaction.”