Haihui Software CEO Lu Zhequn: Chinese companies have obtained the desired results from outsourcing to Japan. In the future, they must exceed the scale of 20,000 to 30,000 employees and must make a difference in the European and American markets. Not long ago, they were located in Xi'an High-tech Zone Software Park. The Xi'an Connek Software Co., Ltd. quietly closed its doors, and its more than 100 employees were also divided by companies such as Fujitsu and NEC. Xi'an Kang Nike was established on February 9, 2001. It is a wholly-owned subsidiary of Konica Co., Ltd. of Tokyo, Japan. Its main business includes the construction of IT/network platform, user-customized system development and software outsourcing.
The shutdown of this company is just a microcosm of the downturn in the software outsourcing industry in Japan. It is understood that due to the long-term downturn in Japan’s economy, especially after the financial crisis, many large companies in Japan have suffered large losses and the appreciation of the yen, many Japanese companies have reduced their investment in IT, or have limited their partners to a few big ones. In the enterprise, the order to Japan decreased, which reduced the space for the outsourcing companies in Dalian and Xi'an to survive.
At one time, Japanese software companies were the main contractors for Chinese software outsourcing companies. At the initial stage of the development of China's software outsourcing industry, Chinese outsourcing companies used to rely mainly on the Japanese market. In the two outsourcing leading cities of Beijing and Dalian, 70% to 80% of export orders were outsourced to Japan, while sales revenue in the US market did not exceed. China's entire export sales revenue is 15%, which is almost zero in the European market. Take Neusoft as an example. In the past, the software outsourcing business of Japan once accounted for 70% of the entire business scale. Other domestic software outsourcing enterprises, such as Dalian Haihui, Huaxin, VanceInfo, etc., have a very high proportion of Japanese outsourcing business.
But now, the situation is changing. Due to the fierce competition in outsourcing to Japan and the long-term lack of improvement in prices, everyone is shifting to higher-priced European and American markets. "From the perspective of Dalian, the top companies in business outsourcing are now companies such as Microsoft, Oracle, HP, Intel, Accenture, etc. These companies are from the European and American markets." Liu Jiren, chairman and CEO of Neusoft Group, said that this shows that software outsourcing services to Europe and the United States It is gradually being strengthened.
In addition, due to the growth of the domestic market, outsourcing companies have also slowly shifted their focus to the country. For example, the largest VanceInfo innovation in outsourcing companies, its domestic market revenue has accounted for more than 40% of the total turnover.
The unique outsourcing of Xi'an Connek's fate to Japan is not a special case in the outsourcing enterprises in Japan. After the global financial crisis in 2008, Japan was one of the countries that suffered the most. Many large companies like Toyota and Sony suffered serious losses. Many companies gave up upgrading their IT systems and drastically reduced their investment in IT.
Liu Chun, general manager of Xi'an Silk Road Software Co., Ltd., who has just returned from Japan, deeply feels this. Liu Chun studied in Japan in the 1990s. Since many large Japanese companies think of the Chinese contracting projects with lower labor costs, the Chinese in Japan have become the bridge between them. In 2001, Liu Chun and 8 other international students set up Silk Road Software Corporation in Japan. At the beginning, only 500,000 yuan was used to start the fund. The strength was relatively weak. Many times, they dispatched themselves to some enterprises to complete outsourcing orders.
Labor dispatching was once a system that Japan was proud of. The "Labor Dispatch Act" passed by the Japanese Parliament in 1986 means that companies can introduce short-term contract workers through their dispatch companies and pay them on an hourly or monthly basis. For dispatching employees, companies do not need to be responsible for providing training, medical care, insurance, etc., nor need to send retirees or pensions, or even terminate the employment of dispatched employees without going through layoffs. In 2008, when labor dispatch was at its peak, Japan dispatched 4 million people, an increase of 4.6% compared with the previous year.
Early outsourcing of Chinese companies relied on this "salesmanship" approach to achieve development. Since SMEs can survive by dispatching labor, thousands of Chinese outsourcing companies have emerged in Tokyo, Osaka, and other places in Japan before 2008. Like the Silk Road software, these outsourcing companies in Japan rely mainly on labor dispatch to gain living space: Several international students can easily create a company, send themselves out to survive, and rely on the continuous expansion of dispatch to gain development. Strong opportunities. When you open a search engine, you can see that there are still a lot of outsourcing companies that are recruiting and dispatching employees to work in Japan, but the number is much smaller than before. After the financial crisis, the number of employees dispatched in 2009 was approximately 3.02 million, a decrease of 24.3% over the previous year. It increased for the first time in five years, and set the largest decline since comparable data in 1986. This has also caused many outsourcing companies in Japan to fall into a predicament and the competition has become more intense.
Liu Chun and others decided to extend the business to the country. "Originally thought of establishing branch offices in Beijing and Shanghai, but because these software developed regions do not attach importance to our SMEs, and the fierce competition, we finally put the company in Xi'an." Liu Chun said that Xi'an provides a lot of SMEs Preferential policies have therefore given Silk Road growth opportunities.
At present, although the unit price for outsourcing to Japan has not risen, there has been almost no growth in outsourcing to Japan, but due to the cost advantage in Xi’an, Silk Road software has survived and gradually expanded. It is understood that currently more than 40 Silk Road employees in Japan are dispatched from Xi'an.
The outsourcing market for Chinese companies in Japan is shrinking. At the same time, Fujitsu, the world’s third-largest IT service provider, has integrated its Chinese business and put forward the development strategy of “the first year of the Chinese marketâ€, striving to get more Chinese customers to the mainstream. There are various indications that although outsourcing to Japan is still a mainstream business of Chinese software companies, it is gradually becoming more mainstream than that of European and American outsourcing.
VanceInfo has now put its service and software outsourcing business primarily in the European and American markets. Last year it signed Expedia, the world’s largest online travel company, as well as major clients such as Citibank and Berkeley Bank. VanceInfo's second-quarter 2010 financial report showed that revenue increased by 49.8% year-on-year, and the increase in net income from main operations was mainly due to the continued growth in corporate business in the US, Europe, and Greater China markets. Chen Lifeng, president of VanceInfo, stated that many companies in the early days of their businesses spent their energies on Japanese outsourcing projects, mainly because their capabilities were not fully established, but now the European and American markets are the mainstream. It is understood that the average price of employees outsourcing to Japan is only about 15,000 US dollars, while the unit price in Europe and the United States is more than 22,000 US dollars, so the European and American markets have greater potential for development.
The key point is that due to the improvement of capabilities, Chinese companies already have capital to compete with India. As Neusoft Group Chairman and CEO Liu Jiren said, many Chinese companies’ customers have been taken over by Indian companies, such as VanceInfo’s innovations. The Expedia project was done from scratch, and it has now reached a scale of 300 people. The capabilities of Chinese companies have been recognized by many European and American customers.
Due to its close distance, Dalian was once a bridgehead outsourcing to Japan. Huaxin, Haihui and other companies started outsourcing from Japan, but now the business of these companies is already dominated by the European and American markets. Haihui Software, which was listed this year, started outsourcing from Japan. In 2003, Haihui began to enter the European and American markets. Although the start was very difficult, through the acquisition and other efforts, HiSoft has already reached a considerable scale in Europe and the United States, according to HiSoft. In the second quarter earnings report, the United States and Europe were the largest markets for the company, generating net revenue of US$23.4 million, accounting for 67.3% of the company’s total net revenue, while the Japanese market accounted for only 21.3% of the company’s total net revenue. Haihui Software CEO Lu Zhequn believes that Chinese companies have obtained the desired results from outsourcing to Japan, but Chinese companies currently have only the largest number of more than 10,000 people. They will have to exceed the scale of 20,000 to 30,000 employees in the future and must be in the European and American markets. Make a difference.
Neusoft Group has vigorously explored the international market since last year. In January 2009, Neusoft established a European company; in August, Neusoft Europe wholly purchased three subsidiaries of the Sesca Group of Finland engaged in the development of high-end smart phone software; on April 23 this year, Neusoft purchased Harman again for 6 million euros. The international R&D center in Hamburg, Germany (restructured to NTS), and Harman International established an outsourced technology development center in Shenyang. Liu Jiren believes that after the IT technology revolution, Europe and the United States have always been the birthplace of new technologies and new applications. Cloud computing and software platforms are changing the game rules of the industry. Chinese companies must expand their business to European and American markets to keep up with technology. The rhythm of change and innovation.
In fact, not all companies, like Neusoft, VanceInfo, and Haihui, are able to transfer their major frontiers from Japanese outsourcing to European and American markets in a short period of time. Liu Chun said that since small and medium-sized enterprises such as Silk Road are beginning to accept Japanese culture, it is difficult for them to transfer to Europe and the United States. It must take a long time to accumulate, but Liu Chun also believes that due to the long-term influence of Japanese companies The outsourcing enterprises in Japan are far ahead of Chinese companies in terms of document standardization, etc. Along with the growth of the Chinese market, turning to the domestic market is a good choice.
Looking for New Opportunities in China This year, Silk Road Software has obtained 4 Chinese customers through various channels such as Xi'an Software Park and began the journey of the domestic market. In fact, it is not only small companies such as Silk Road that are optimistic about the domestic market. One of the topics that people in the industry are talking about is that Fujitsu, the world’s third-largest IT service provider, has integrated its Chinese business and put forward the “Chinese market†in the first year. '' The development strategy, invest heavily in China's IT service market, and strive to obtain more Chinese customers.
Earlier this year, Founder International was founded in Tokyo, Japan. Founder International, which has been fighting in the Japanese market, has established a domestic headquarters in Suzhou and has devoted most of its energy to the domestic market. Zhao Jie, vice president of the Insurance Group of iSoftStone Insurance Financial Group, said that in the past year, the volume of business of domestic Chinese companies has grown the most. The financial crisis is more opportunities for them. In addition to existing businesses, some Chinese domestic banks have successively outsourced their Asia Pacific software and information platform testing services, such as Bank of China, Everbright Bank, and Hua Xia Bank, which have eliminated the Japanese and Korean markets due to exchange rate and other issues. The business has shrunk.
It is understood that the growth of VanceInfo's main business net income mainly comes from the continuous expansion of customer business in mainland China, Hong Kong and Europe, especially the Chinese market, which has accounted for 43.8% of VanceInfo’s main business revenue, becoming the most important The growth engine, while the business from the Japanese market shrank to a scale of only 5.0%.
Chen Lifeng said that outsourcing in China is still more difficult, but all are looking for opportunities for transformation. Chinese companies that are moving towards internationalization have created numerous opportunities in energy conservation, emission reduction, financial compliance, and exchange rates. Therefore, VanceInfo's consulting and solution business Has achieved great development.
It is precisely because of the vigorous development of the domestic market that many Chinese outsourcing companies have obtained excellent growth opportunities, and also made up for the dilemma of slow or even slow growth of outsourcing business in Japan. As a result, China’s outsourcing industry has achieved rapid growth when India’s competitiveness has declined. Development beyond the opportunity.
Japan's software outsourcing market has gradually shrunk, while the outsourcing business from European, American, and domestic markets has grown considerably.
The shutdown of this company is just a microcosm of the downturn in the software outsourcing industry in Japan. It is understood that due to the long-term downturn in Japan’s economy, especially after the financial crisis, many large companies in Japan have suffered large losses and the appreciation of the yen, many Japanese companies have reduced their investment in IT, or have limited their partners to a few big ones. In the enterprise, the order to Japan decreased, which reduced the space for the outsourcing companies in Dalian and Xi'an to survive.
At one time, Japanese software companies were the main contractors for Chinese software outsourcing companies. At the initial stage of the development of China's software outsourcing industry, Chinese outsourcing companies used to rely mainly on the Japanese market. In the two outsourcing leading cities of Beijing and Dalian, 70% to 80% of export orders were outsourced to Japan, while sales revenue in the US market did not exceed. China's entire export sales revenue is 15%, which is almost zero in the European market. Take Neusoft as an example. In the past, the software outsourcing business of Japan once accounted for 70% of the entire business scale. Other domestic software outsourcing enterprises, such as Dalian Haihui, Huaxin, VanceInfo, etc., have a very high proportion of Japanese outsourcing business.
But now, the situation is changing. Due to the fierce competition in outsourcing to Japan and the long-term lack of improvement in prices, everyone is shifting to higher-priced European and American markets. "From the perspective of Dalian, the top companies in business outsourcing are now companies such as Microsoft, Oracle, HP, Intel, Accenture, etc. These companies are from the European and American markets." Liu Jiren, chairman and CEO of Neusoft Group, said that this shows that software outsourcing services to Europe and the United States It is gradually being strengthened.
In addition, due to the growth of the domestic market, outsourcing companies have also slowly shifted their focus to the country. For example, the largest VanceInfo innovation in outsourcing companies, its domestic market revenue has accounted for more than 40% of the total turnover.
The unique outsourcing of Xi'an Connek's fate to Japan is not a special case in the outsourcing enterprises in Japan. After the global financial crisis in 2008, Japan was one of the countries that suffered the most. Many large companies like Toyota and Sony suffered serious losses. Many companies gave up upgrading their IT systems and drastically reduced their investment in IT.
Liu Chun, general manager of Xi'an Silk Road Software Co., Ltd., who has just returned from Japan, deeply feels this. Liu Chun studied in Japan in the 1990s. Since many large Japanese companies think of the Chinese contracting projects with lower labor costs, the Chinese in Japan have become the bridge between them. In 2001, Liu Chun and 8 other international students set up Silk Road Software Corporation in Japan. At the beginning, only 500,000 yuan was used to start the fund. The strength was relatively weak. Many times, they dispatched themselves to some enterprises to complete outsourcing orders.
Labor dispatching was once a system that Japan was proud of. The "Labor Dispatch Act" passed by the Japanese Parliament in 1986 means that companies can introduce short-term contract workers through their dispatch companies and pay them on an hourly or monthly basis. For dispatching employees, companies do not need to be responsible for providing training, medical care, insurance, etc., nor need to send retirees or pensions, or even terminate the employment of dispatched employees without going through layoffs. In 2008, when labor dispatch was at its peak, Japan dispatched 4 million people, an increase of 4.6% compared with the previous year.
Early outsourcing of Chinese companies relied on this "salesmanship" approach to achieve development. Since SMEs can survive by dispatching labor, thousands of Chinese outsourcing companies have emerged in Tokyo, Osaka, and other places in Japan before 2008. Like the Silk Road software, these outsourcing companies in Japan rely mainly on labor dispatch to gain living space: Several international students can easily create a company, send themselves out to survive, and rely on the continuous expansion of dispatch to gain development. Strong opportunities. When you open a search engine, you can see that there are still a lot of outsourcing companies that are recruiting and dispatching employees to work in Japan, but the number is much smaller than before. After the financial crisis, the number of employees dispatched in 2009 was approximately 3.02 million, a decrease of 24.3% over the previous year. It increased for the first time in five years, and set the largest decline since comparable data in 1986. This has also caused many outsourcing companies in Japan to fall into a predicament and the competition has become more intense.
Liu Chun and others decided to extend the business to the country. "Originally thought of establishing branch offices in Beijing and Shanghai, but because these software developed regions do not attach importance to our SMEs, and the fierce competition, we finally put the company in Xi'an." Liu Chun said that Xi'an provides a lot of SMEs Preferential policies have therefore given Silk Road growth opportunities.
At present, although the unit price for outsourcing to Japan has not risen, there has been almost no growth in outsourcing to Japan, but due to the cost advantage in Xi’an, Silk Road software has survived and gradually expanded. It is understood that currently more than 40 Silk Road employees in Japan are dispatched from Xi'an.
The outsourcing market for Chinese companies in Japan is shrinking. At the same time, Fujitsu, the world’s third-largest IT service provider, has integrated its Chinese business and put forward the development strategy of “the first year of the Chinese marketâ€, striving to get more Chinese customers to the mainstream. There are various indications that although outsourcing to Japan is still a mainstream business of Chinese software companies, it is gradually becoming more mainstream than that of European and American outsourcing.
VanceInfo has now put its service and software outsourcing business primarily in the European and American markets. Last year it signed Expedia, the world’s largest online travel company, as well as major clients such as Citibank and Berkeley Bank. VanceInfo's second-quarter 2010 financial report showed that revenue increased by 49.8% year-on-year, and the increase in net income from main operations was mainly due to the continued growth in corporate business in the US, Europe, and Greater China markets. Chen Lifeng, president of VanceInfo, stated that many companies in the early days of their businesses spent their energies on Japanese outsourcing projects, mainly because their capabilities were not fully established, but now the European and American markets are the mainstream. It is understood that the average price of employees outsourcing to Japan is only about 15,000 US dollars, while the unit price in Europe and the United States is more than 22,000 US dollars, so the European and American markets have greater potential for development.
The key point is that due to the improvement of capabilities, Chinese companies already have capital to compete with India. As Neusoft Group Chairman and CEO Liu Jiren said, many Chinese companies’ customers have been taken over by Indian companies, such as VanceInfo’s innovations. The Expedia project was done from scratch, and it has now reached a scale of 300 people. The capabilities of Chinese companies have been recognized by many European and American customers.
Due to its close distance, Dalian was once a bridgehead outsourcing to Japan. Huaxin, Haihui and other companies started outsourcing from Japan, but now the business of these companies is already dominated by the European and American markets. Haihui Software, which was listed this year, started outsourcing from Japan. In 2003, Haihui began to enter the European and American markets. Although the start was very difficult, through the acquisition and other efforts, HiSoft has already reached a considerable scale in Europe and the United States, according to HiSoft. In the second quarter earnings report, the United States and Europe were the largest markets for the company, generating net revenue of US$23.4 million, accounting for 67.3% of the company’s total net revenue, while the Japanese market accounted for only 21.3% of the company’s total net revenue. Haihui Software CEO Lu Zhequn believes that Chinese companies have obtained the desired results from outsourcing to Japan, but Chinese companies currently have only the largest number of more than 10,000 people. They will have to exceed the scale of 20,000 to 30,000 employees in the future and must be in the European and American markets. Make a difference.
Neusoft Group has vigorously explored the international market since last year. In January 2009, Neusoft established a European company; in August, Neusoft Europe wholly purchased three subsidiaries of the Sesca Group of Finland engaged in the development of high-end smart phone software; on April 23 this year, Neusoft purchased Harman again for 6 million euros. The international R&D center in Hamburg, Germany (restructured to NTS), and Harman International established an outsourced technology development center in Shenyang. Liu Jiren believes that after the IT technology revolution, Europe and the United States have always been the birthplace of new technologies and new applications. Cloud computing and software platforms are changing the game rules of the industry. Chinese companies must expand their business to European and American markets to keep up with technology. The rhythm of change and innovation.
In fact, not all companies, like Neusoft, VanceInfo, and Haihui, are able to transfer their major frontiers from Japanese outsourcing to European and American markets in a short period of time. Liu Chun said that since small and medium-sized enterprises such as Silk Road are beginning to accept Japanese culture, it is difficult for them to transfer to Europe and the United States. It must take a long time to accumulate, but Liu Chun also believes that due to the long-term influence of Japanese companies The outsourcing enterprises in Japan are far ahead of Chinese companies in terms of document standardization, etc. Along with the growth of the Chinese market, turning to the domestic market is a good choice.
Looking for New Opportunities in China This year, Silk Road Software has obtained 4 Chinese customers through various channels such as Xi'an Software Park and began the journey of the domestic market. In fact, it is not only small companies such as Silk Road that are optimistic about the domestic market. One of the topics that people in the industry are talking about is that Fujitsu, the world’s third-largest IT service provider, has integrated its Chinese business and put forward the “Chinese market†in the first year. '' The development strategy, invest heavily in China's IT service market, and strive to obtain more Chinese customers.
Earlier this year, Founder International was founded in Tokyo, Japan. Founder International, which has been fighting in the Japanese market, has established a domestic headquarters in Suzhou and has devoted most of its energy to the domestic market. Zhao Jie, vice president of the Insurance Group of iSoftStone Insurance Financial Group, said that in the past year, the volume of business of domestic Chinese companies has grown the most. The financial crisis is more opportunities for them. In addition to existing businesses, some Chinese domestic banks have successively outsourced their Asia Pacific software and information platform testing services, such as Bank of China, Everbright Bank, and Hua Xia Bank, which have eliminated the Japanese and Korean markets due to exchange rate and other issues. The business has shrunk.
It is understood that the growth of VanceInfo's main business net income mainly comes from the continuous expansion of customer business in mainland China, Hong Kong and Europe, especially the Chinese market, which has accounted for 43.8% of VanceInfo’s main business revenue, becoming the most important The growth engine, while the business from the Japanese market shrank to a scale of only 5.0%.
Chen Lifeng said that outsourcing in China is still more difficult, but all are looking for opportunities for transformation. Chinese companies that are moving towards internationalization have created numerous opportunities in energy conservation, emission reduction, financial compliance, and exchange rates. Therefore, VanceInfo's consulting and solution business Has achieved great development.
It is precisely because of the vigorous development of the domestic market that many Chinese outsourcing companies have obtained excellent growth opportunities, and also made up for the dilemma of slow or even slow growth of outsourcing business in Japan. As a result, China’s outsourcing industry has achieved rapid growth when India’s competitiveness has declined. Development beyond the opportunity.
Japan's software outsourcing market has gradually shrunk, while the outsourcing business from European, American, and domestic markets has grown considerably.
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