Our first impression of the VanceInfo offices was that they were very unprepossessing. One of the ways that I like to judge the overall wealth and success of a business in a developing country is the quality of the bathrooms, particularly the women’s bathrooms. A newer, lower-revenue company will have squat toilets only, whereas a newer, more expensive building will typically have western-style toilets. VanceInfo had poorly appointed squat toilets.
We were ushered into a very sad little room with tan crepe-ish drapes on the sides. It was incredibly hot. Our speaker was a soft-spoken American named Ken Schulz, who had been living and working in China for a number of years after getting laid off by HP after the first dot.com bubble burst and outsourcing was ramped up in earnest around 2000-2001. He gave us a marketing style presentation demonstrating VanceInfo’s phenomenal growth, and expansions of graphs for the case we studied prior to visiting the location.
The most interesting business aspects of VanceInfo are its growth, and its status as a Chinese-owned company on the NYSE. Just two years ago, when the Stanford case we read was written, there were only 5,000 employees at VanceInfo. When we went on Tuesday afternoon, Ken said that there were nearly 11,000. Entirely aside from the daunting HR challenges that would pose, this sort of growth is virtually unheard of outside of a developing country. The jobs for unskilled labor aren’t coming back to our economy, they are going to developing countries and are likely to stay there. However, VanceInfo does have offices in Seattle, San Diego, and somewhere else in the U.S., so perhaps growing Chinese and Indian outsourcing companies will start hiring locally in the U.S. as prices continue to rise in the home countries. The second important aspect of VanceInfo is its status as a NYSE traded firm. This allows it to offer stock based incentives to employees, and provides an important source of pride for the Chinese government. It is my opinion that this status will help it immensely in the coming years.
By the end of Ken’s presentation, no one was listening because it was so hot. There was no A/C, as apparently it was considered unnecessary, but if there isn’t to be A/C, there at least needs to be a fan. We took a tour of their other building, which was also A/C free, but at least had more airflow. I think by the time we left, no one was able to pay attention to the value of the information we were receiving because they were too overwhelmed by the volume of sweat stuck to the backs of their legs and the small of the back.
Also, apparently a “low voltage area” is a “weak electricity room.” I will never tire of reading amusing English translations.
Our case debrief in the bus focused on VanceInfo’s future prospects, as they offer a very low-end, not much value-added service to their partners. This is work that virtually anyone could do, so what is the reason VanceInfo would be chosen above anyone else? To be honest, there isn’t any reason other than that they are Chinese. They are low cost, certainly, but there are other low cost locations globally. VanceInfo is first and foremost a Chinese company, and this is the value they will add over a long-term partnership, which is the proper way to approach setting up a business relationship in China.
Saturday, September 11, 2010
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2 comments:
I highly enjoyed your visit to our headquarters in Beijing. Unfortunately, as I explained, we had to use a room that we would not normally use, due to our primary executive meeting rooms coincidentally being booked for other executive meetings. So I apologize again for the weak A/C system in that room.
Regarding the question about why VanceInfo might be chosen, other than the fact that it is a Chinese company that can assist with China market penetration, please view the video linked to our homepage http://www.vanceinfo.com It speaks about, from a customer's perspective, why VanceInfo was chosen. Thanks again and hope to keep in touch!
Thanks so much for your comment! I'm afraid I much prefer cooler climates - it's gloomy and dark today in Seattle, just rained last night. :)
From my perspective, if IT outsourcing is, in fact, a commodity, then it shouldn't matter who does it. However, that's rather an easy claim to disprove, as a company could waste a lot of money outsourcing to the wrong provider. I think that it's a question first of where to outsource, for whatever stratefic reasons might exist, then if China has been chosen, then I can certainly see why VanceInfo would be the provider of choice within China for a U.S. or EU company - but I do think after hearing your comments and visiting other companies in Chinas as well that the benefit of having a strategic partner in China would be the first consideration, if a company wants to expand their presence in the Chinese market.
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