China still safe for IT outsourcing, despite US security concerns, says vendor

Pactera is one of China's largest IT outsourcing vendors

By , IDG News Service |  Security, outsourcing

Pactera formed out of the merger last year of two Chinese outsourcing vendors, HiSoft and VanceInfo, which have histories stretching back almost 20 years ago. Pactera declined to name its key clients, but before the merger HiSoft and VanceInfo were known to count Microsoft, IBM and General Electric as some of their customers.

"These Chinese outsourcing companies have been around for 10, 15 years or more," said Tina Tang, an analyst with research firm Gartner. "They've been following the Western companies' standards, so I don't think security would be a problem."

China's outsourcing vendors, however, still lag behind their Indian counterparts in terms of scale. One of India's largest vendors, Infosys, has over 150,000 employees, with an annual revenue at US$7.4 billion. Pactera, in comparison, has only over 23,000 workers, and an annual pro forma revenue at US$673 million in 2012. In addition, the country's outsourcing vendors are facing China's rising labor costs, along with a depreciating U.S. currency.

It's why the Chinese companies such as Pactera want to wean themselves from low-cost outsourcing, and move toward developing their own more profitable enterprise services and products for customers. Currently, it receives about 70 percent of its revenue from outsourcing, with the rest coming from consulting and products.

"If we can become successful, I think we can definitely become a leading service provider in China," Su said. "That will be the challenge for the next two or three years."

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Answers - Powered by ITworld

ITworld Answers helps you solve problems and share expertise. Ask a question or take a crack at answering the new questions below.

Ask a Question