A Peek Into China's Tech Sector (Long Circle)

A look at why western companies are seeking support from China's high technology sector companies. Brian Schwartz, a western journalist granted rare access to one of China's offshore development centres in the eastern city of Shanghai shares his impressions.

Seizing on the growing outsourcing trend, China has built a number of offshore development centers (ODC). “As a western business journalist, ODCs seemed mysterious. Questions filled my head, such as how an ODC actually operates and how two teams of engineers on opposite sides of the globe can be able to work together to create a successful product.”

Schwartz requested and was granted one-day access to Long Circle, an ODC providing engineering services to multinational companies developing embedded software and hardware technologies. What follows is a description of that day, changing only the names.

“I was honored to have an opportunity to visit this state-of-the-art facility in Pudong, on the eastern side of China’s most vibrant commercial city.” Long Circle’s Voice-of-Customers (VOC) team—with members in both the U.S. and China—has been working with U.S. clients on project definition and management since 1994. China’s Engineering Center of Excellence in Shanghai carries out the project work.

Even before arriving at Long Circle at around 8 a.m., the company was buzzing with activity. “Hayden phoned Jim, Speedsmart’s U.S. VP of engineering to discuss recruiting efforts. Speedsmart was a long-time client, and Hayden has had conversations with him before.” On this day, Jim was looking for a team of top ASIC design engineers.

Speedsmart’s recruits were required to have extensive front-end and back-end system and architecture experience, and Long Circle had been building this team for more than a month. “We are not a headhunting service,” Hayden explained with a smile, “but part of building a team for our customers, of course, requires us to find the team.”

At 8:25 a.m., more staff members started to stream in. Hayden stepped into the doorway and asked if Schwartz would like to attend their weekly teleconference with MagicImage, another ODC customer. He jumped at the chance. Standing beside Hayden was Long Circle's VP of technology, Weiming, who oversees all project management work for ODC teams. “We went into the conference room where the rest of the MagicImage ODC team—a total of six— was sitting, and dialed into a U.S. bridge.”

The meeting focused on the status of defects found in a new product that was to be released soon. The two teams ranked the severity of each defect and identified which one to focus on first. “By listening to the discussion, I could tell both teams understood the system equally well, and had formed a close relationship.”

At 9:25 a.m., Schwartz and Weiming walked out of the conference room to a secure area that Weiming accessed with a badge. “He took me to the MagicImage’s ODC area, where Vivian explained to me how the complex system works. I didn’t understand much.”

At this point, Weiming explained that Steven, leader of U.S.-based Solarios—another ODC customer—just got a hold of him over Skype and wanted to have an emergency teleconference as soon as possible. Steven was planning to show some new products at an exhibition in Taiwan and his ODC team needed to help resolve some technical issues.

By 10:50 a.m., the emergency teleconference had started, with application screen shots projected on the wall. The application runs on cell phones and interacts with a GPS board over Bluetooth. Steven, still on Skype, said he did not like how some of the logic flows were going.

Just before noon, Hayden hung up his phone. He and Speedsmart’s Michael just completed a joint phone interview with a candidate who might be a good match. With 12 years’ experience in the right area, there was a lot to talk about. Now we were ready to head out for lunch.

At 3 p.m., Weiming started his presentation on the Product Development Process for a couple of new hires. Schwartz joined in. The five-step process considers the client’s specific needs. “The process involves requirements specifications, system modeling and analysis, design-build-test iteration, project acceptance and delivery and postmortem.” Each step has numerous sub-categories.

By 5:30 p.m., it was off-duty time for most of the staff, but the ODC working for Steven’s company was still undergoing its emergency work. Hayden said it could last another several hours. “I asked Hayden when he would go home. He said he had another interview at [6 p.m.] and he would leave after it concluded.” Schwartz decided he would leave for home.

So why would a U.S. company want Long Circle to build and host an ODC rather than do it on their own? “This is often asked by candidates,” explained Hayden. “Three reasons: recruiting network, service orientation and cost savings. Very often the talent they need is not something they can recruit easily to their satisfaction, or within a meaningful time frame.” Schwartz cited research from Gartner that Chinese ODCs can cost as much as 30 percent less than so-called “captive ODCs,” which companies build and operate on their own.