Achievo is headquartered in San Ramon, California, but uses centers in China to provide low-cost software development services to clients in Japan, the US and Europe. The company has been one of the most prolific IT services vendors in terms of M&A activity this year, making five purchases in China, Taiwan, Germany and Canada.
BBX has 450 employees that provide software services to Japanese clients including NEC, Nomura, Toshiba and Hitachi. It focuses on the financial services, telecoms, manufacturing and government sectors and makes over 90% of its revenue from outside China.
Privately owned Achievo was formed in 2002 and now has 1,500 employees, of whom around 70% are based in China. Dr Robert Lee, chairman and CEO at Achievo, told Computer Business Review that the company is considering a listing on a stock exchange in order to fund further growth.
A public listing is something of a rite of passage, he said.
Lee said that the process of acquiring companies in China is more complex than it is in Europe or the US. He said: The Chinese government has to make an assessment of the value of the transaction, and they even have set requirements for the size of paper on which our paperwork is printed.
China is tipped to be the main rival to India as the world’s premier source of low-cost IT and back office administration services, but it still has a lot of ground to make up. According to China’s Ministry of Information Industry, software exports will reach $12.5bn by 2010. In comparison, India’s software and services exports reached $23.4bn last year, according to industry association NASSCOM.
One of the obstacles facing China’s challenge to India is that its community of offshore outsourcing vendors consists largely of medium-sized players who lack the scale to take on the size of wins being regularly secured by India’s larger players.
Four of India’s services suppliers have annual sales in excess of $1bn. Top dog Tata Consultancy Services racking up sales of almost $3bn in its most recent financial year an has more than 71,000 employees.
Lee said that Achievo does not compete against the big Indian companies it tends to go head-to-head against local systems integration and services firms in its target markets. However, he expects there to be major consolidation among China’s IT services suppliers.
The scale of most vendors in China is small and it will remain that way for some time to come, he said. But we want to grow very quickly to reach a globally relevant scale where we have thousands of employees and are able to provide the level of services that are companies want.
