Watering the Plants: Is China Finally Embracing Software Outsourcing?

Outsourcing companies serving Western clients have been operating in China now for decades, leveraging China’s large talent pool to provide high-value and high-quality service.

But within China, there has historically been a reluctance to fully embrace the outsourcing model for local projects, says Bleum Senior Engineering Director, Dennis Wang.

“In China, when a customer asks a vendor to build a new application, they usually want to take on the maintenance work themselves. However, they often find out later that their IT departments don’t really have the skills or bandwidth to complete this work internally. They seem reluctant to outsource the maintenance to other companies, so many then look to ‘borrow’ resource from the original vendor in a staff augmentation approach”.

Things seem to be changing in the last 18 months or so, according to Dennis:

“More and more China-based customers are approaching us to provide maintenance and support, either as part of the original development engagement, or to ‘pick up the pieces’ from a lack of delivery from an internal team or previous vendor.”

“Chinese companies are becoming more accepting of the fact that their core business is not IT and that they lack the expertise to build, manage and monitor internal IT teams to provide a high-quality result. Maintaining a professional team takes time and money and China customers are beginning to realize that outsourcing this kind of work saves on both.”

So what are the main challenges faced when trying to support and maintain an application internally?

“Something we see time and again is an over-reliance on one or two key individuals internally. Combined with a lack of documentation and proper process management, the company is vulnerable when these people leave – leaving them with an expensive system that quickly becomes impossible to support and maintain. As a professional IT services company, this is a problem we can easily mitigate for, given our large pool of experienced people to draw from in Shanghai and Chengdu. It’s this assurance that’s starting to bring round China customers to fully embrace the outsourcing business model.”

Is some of this down to cultural differences?

“Yes, I think so. Chinese companies traditionally want to maintain more direct control than their Western counterparts. There’s historically been this mentality of ‘If I save my photos on my computer, I know they’re safe. If I save them in the cloud, I’m not so sure’. But we’re seeing this change now – people are embracing concepts like cloud storage as they’re starting to realize the benefits massively outweigh the risks.”

Chinese Technology

Cultural differences affect the outsourcing approach

What’s the biggest problem you see when approached by Chinese companies looking for help?

“There are three main things China CIOs are looking for:

Firstly, they want improved working efficiency. China CIOs are spending a growing portion of their budgets on support and maintenance and they grow frustrated with a lack of transparency and poorly designed processes.

Secondly, they want more flexibility around their staffing. If you need to scale your application twenty- or thirty-fold for a China shopping festival like Double Eleven (11/11) or 6/18 [China’s versions of Cyber Monday] how can your internal IT team manage this? They can’t! And what if you need support from a highly experienced software architect for just a few weeks per year? It’s clearly a waste of money to employ someone full time, and a one-off contracting engagement is often a slow and incredibly expensive process.

Finally, they seek guarantees around SLAs and technical capability. As a professional services company, we offer contractual guarantees around our performance. This helps CIOs sleep much easier at night.”

Is this historical reluctance to outsource just related to IT, or is it a broader thing?

“I often use this analogy: looking around our offices, I see many plants. But who will water the plants so they don’t die? Who will treat them if they become sick? What do I, an IT professional, know about plants? Nothing! That’s why we outsource it to another company. They can take care of the regular maintenance, and they have an expert who can come when a plant gets sick. It’s simple economies of scale and it makes perfect sense. I tell people, ‘if you can use outsourcing for your plants, you can use it for your IT applications.'”

Dennis has more than 15 years’ experience in the IT outsourcing industry in China. He holds a patent in DHCP network switching and in 2012 completed his MBA from Webster University.

Connect with Dennis on LinkedIn li_logo_128

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