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To Develop Rapidly on Occasion of Outsourcing Indu

To Develop Rapidly on Occasion of Outsourcing Industry Shifting
——Interview of Zhang Wei, Chairman of Sofmit Group


    As the rapid development of China software outsourcing industry, many fist-class domestic enterprises are stepping up to second-tier cities in central and western regions of China in the aim of obtain local human resources to improve self-competitiveness at more favorable costs.

    Facing such kind of new trends, some local outsourcing companies in central and western regions of China are pursuing cooperation with the entering companies on one hand, and perform actively to enter into the core economic zones in the east coast of China, even into global market to meet this challenge on the other hand.

    Chengdu Sofmit is exactly one of the representatives of those companies. Due to positive industrial development environment of Chengdu, Sofmit is experiencing significant development and expansion, from inland China to east coast, and to the whole world, how did it do on the road of development? Let’s find some answers.

Reporter: Now Sofmit has become one of the most influential software outsourcing companies in China during the past few years’ development. Could you introduce us Sofmit’s past and now?

Zhangwei: Started up in Chengdu Hi-tech Zone, 2002, Sofmit is a professional ITO&BPO service company. Holding the principle of “Do what you do best and outsource the rest”, Sofmit strated its business on an U.S. order. Through 8 years’ efforts, it now grows up into an enterprise with more than 100 million RMB assets and more than 1000 stuff. Till now, we have established American and Japanese subsidiaries and have successfully set up market channels in Europe, Singapore, Hong Kong and Macao. To meet the global market’s needs, we have set up two global outsourcing delivery centers in China, Chengdu and Shanghai-Huaqiao which covers the West China and the Yangtze River Delta respectively. The order-take and delivery model is primarily shaped as “Serve China, delivery globally”.

    As develops, Sofmit has won many honors both from the government and the industrial organizations as well, which include: Top 10 China National Outsourcing Delivery Guarantee, 2009 (ranked 6); Best Practice of China's Service Outsourcing Enterprises, 2007, No.12; Key Enterprise of Software Outsourcing and Export Companies, China’s Ministry of Commerce. One of The Top 20 of China’s Outsourcing/Export Companies, 2005; One of The Most Potential Software Companies, 2005, and so on. Besides, Sofmit is listed as Experimental Enterprise of Europe and American Export and COSEP(China Offshore Software Engineering Project)by Science and Technology Ministry of PRC; Chairman of Chengdu Service Ourtsoucing; Executive Member of Chengdu Software Industry Association.

Reporter: Many specialists regard Chengdu as the most potential city for software development in China.  As a major leading software outsourcing enterprise of Sichuan and even the West China,  how do you think of Chengdu’s industrial environment?

Zhangwei: Chengdu, indeed, has its obvious advantages for software industry which can be concluded from three aspects:  talent, habitat and culture. For talent, due to government polity on accelerating the development of more interior cities in China history, Chengdu and surrounding areas have gathered many top enterprises in electronic science of China, which strengthened Chengdu’s IT industry infrastructure. Meanwhile, the University of Electronic Science and Technology of China, the Sichuan University, the Southwest Communications University and many other universities have been conveying outstanding talents to Chengdu’s software industry. For habitat, Chengdu is regarded as the city with the highest level of life satisfaction in China. People here live and work in peace and contentment. What’s more, the low cost of living which enables such rare and commendable happiness situation. For culture, Chengdu has more than 2000 years’ history. With this great and special culture, people here have a very good mood. This explains why Chengdu software companies’ talent turnover rate is far lower than the ones in other domestic cities . Due to the above three reasons, Chengdu is concluded the most potential city in software industry in China. Surely Chengdu also has some deficiencies, such as  international commercial atmosphere in comparing with other opened metropolises like, Beijing and Shanghai.

    But  as Chengdu’s service industry develops rapidly nowadays, we can see its progress in globalization. After Chengdu brings up its strategy of constructing itself into the “Garden city in modern world”, we can predict that Chengdu shall become a charming software city in the whole world.

Reporter: Under the background that outsourcing industry is transferring from the coastal to the inland cities, being one of the major outsourcing enterprises in West China, how will Sofmit take full advantage of this opportunity to become bigger and stronger?

Zhangwei: Currently, indeed we can see there is a trend that the domestic outsourcing is meeting a strategic transferring. Personally I think there are two reasons which lead to this situation. One is the cost: many service outsourcing companies are driven to search for a place, with lower cost and sufficient IT talent supply. The other point is the rising of software industry in Western area which makes many countries realize that the West China has the capability to handle the global service transference well. However, the outsourcing industry, which is different from other traditional industries, does not have regional restrict. Once the West  joins the world competition, they stand at the same start line as  other places world widely. This provides Sofmit with a leaping  development opportunity.

    Sofmit  came to realize such opportunities years ago and made relevant preparations. At the end of 2007, Sofmit began to implement  strategic adjustment and  innovations. to cooperate with other companies who were willing to transfer into West China. Our open infrastructure enable flexible cooperation models like whole process outsourcing, joint venture and BOT. Combining our accumulated resources  of talent, technical know-how, management, market channels, integrating capability with our clients’ advantages in market resources and industrial experience,  Sofmit help our clients to build their own Delivery center, R&D center, Service center or even Sales center in West China to achieve a win-win situation.

Reporter: As we know Sofmit established many domestic & overseas branches.  Could you please give a brief introduction about it?

Zhangwei: Sofmit has been thinking national channels distribution long time ago. But in considering of basic strategy of going ahead steadily, at the beginning we mainly focused on the domestic market distribution. Therefore, in 2005 we set up Beijing branch for marketing and Shanghai branches for technical support. After 2008, due to the changes of global market landscape and requirements from clients, we are getting to think carefully on national wide layout strategy. During half a year’s investigation to Dalian, Shandong, Yangtze River Delta, Zhu River Delta, Fuzhou and other places, we finalized Yangtze River Delta  as another global delivery center with full consideration of Sofmit’s strategy in the next three to five year.  Immediatelywe launched Yixing, Kunshan, Changshu and many other offices.   It gradually formed a Yangtze River Delta delivery base  with Shanghai-Huaqiao as a center, and Yixing and Changshu as supporting. Thus, our clients can choose East China and West China as their delivery center, and some projects were soon launched, such as, Actionable, GNSS, CYLON, Global Video Processing, 3-dimension service and so on.

    Actually, we made some adjustment on Chengdu headquarter. In accordance with Chengdu’s garden city and high-end industry to industry high-end’s development strategies, we moved our data-process, call center and BPO sector to Wenjiang- an under construction sub-city of Chengdu. Our headquarter in New Tianfu City is now mainly focusing on software development, digital media and ITO business. With these reasonable adjustments, our general layout becomes more effective and powerful, which strengthen our competitiveness in the West China market.

    The oversea market expansion has always been a very unique part of Sofmit. By now, we have established our New York and Tokyo subsidiaries, and have successfully opened the market channels in Europe, Southeast Asia, Hong Kong&Taiwan areas etc. Our expansion methodology changes as the change of international market. From recruiting local people and developing high-end partners at the early time, to capital operation like holding and buying shares  to form alliance withlocal resources to promote our oversea market  together. We strive for  creating new cooperation models to maximally use Chinese resource to stimulate a steady growth in oversea business.

Reporter: Please introduce us the Sofmit’s market structure, and describe those effects the Financial Crisis brings to Sofmit’s business direction.

Zhangwei: At present most of Sofmit’s orders are still from oversea market. In the whole market share, U.S. and Europe takes more than  50% while other countries hold 10%, and the rest part is from domestic market which hold approximately 40%. In fact, the growth rate in the domestic market is not inferior to overseas markets. For 2 years’ promoting in IT industry solutions, we combine our service capability with our oversea partners’ experience, and provide domestic big enterprise with well-directed outsourcing solution. We already have certain advantages in many industries’ IT outsourcing solutions, such as, Banking, Telecom and Tourism. Besides, we have gained lots of achievements in government service and ERP practice. We hope for a bounce development of these businesses in the next 2-3 years.

    The Financial Crisis, surely, has attacked the outsourcing industry. However, judging from Sofmit market performance, only those big clients are affected. For China had an outstanding performance during this Crisis, more and more clients are willing to choose China as their outsourcing service. Obviously the Financial Crisis for us is not merely a challenge but more of an opportunity. In this situation, we are perfecting our outsourcing capability, in order to provide our clients with One-stop ODC service. Thus, to help our clients build R&D cent, service center or even Sales center in China. What’s more, our cooperation mode is also being  updated, likeBOT, JV and other flexible models. In short, we are working to make our clients feel more satisfied to implement their IT strategy in China.

Reporter: Sofmit has many professional technique specialists who have oversea study or work experience, and the foreign employee also take a certain ratio in stuff members. How did Sofmit integrate these foreign talents and local talents?

Zhangwei: The integration of Foreign talents and local talents, actually, is the integration of cultures. This would be a huge topic and contains too much. We are trying to making efforts on this point. But there is an important thing that I want to mention is that for thousands of years’ culture baptism, Chengdu people are showing a very kind and friendly attitude towards others, which makes our foreign stuff feel like being in a big family. I think this is a branding  that Tianfu history donate to Sofmit.

Reporter: Please give some ideas on the prospect of Outsourcing Industry and Sofmit’s planning and goal in the next few years.

Zhangwei: Like other partners and competitors, Sofmit is thinking of the future models and direction of outsourcing industry. There is a rapid development after year 2004. More and more companies are  joining in, which bring fiercer competition. To  stand out in this industry, we must stick on development model innovating, in order to enhance our core competitiveness to maintain a competitive edge. Generally speaking, at beginning, we rely on our technique, that is, to provide outsourcing by developing software. We call this Stage 1.0. With the deepening of the business, technical delivery is  not enough. We need to have full understanding of clients’ needs , accumulate related industry knowledge and experience, then provide our solutions actively. We call this Stage 2.0. To establish ourselves in an unassailable position, we should never stop moving forward, that is, to integrate various resources, such as, Marketing, Human Resource, Capital, Management, Policy and so on to provide our customer with One-stop service.  This is so called Stage 3.0. But currently we are still in the process of  transferring stage from stage 1.0 to 2.0. We hope there are more and more companies who have outsourcing 3.0 capabilities.

    The future 3-5 years planning goes like this: In guidance with our 8 years’ experience, by hard working, we aim to form some mature outsourcing business sectors for certain industry or major clients. And introduce the world’s IT business to China. The company is also considering  going public to enhance the company’s popularity and expand market share; and to recruit funds from market to make Sofmit walk faster. We look forward to cooperate with home and abroad partners to shape Sofmit into an International software service company with capability of high-end industries serving and resources integration, and devote in the development of Chinese outsourcing industry.