Archives 2006

The Benefits of Outsourcing for Small Businesses

Outsourcing ¡ª the practice of using outside firms to handle work normally performed within a company ¡ª is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution, and many other important functions ¡ª often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies’ outsourcing needs.

But not many businesses thoroughly understand the benefits of outsourcing. It’s true that outsourcing can save money, but that’s not the only (or even the most important) reason to do it. As many firms discovered during the outsourcing “mania” of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. The flat economy caused many companies into huge layoffs and subsequently outsourced functions that were better kept in-house. Wise outsourcing, however, can provide a number of long-term benefits:

Control capital costs. Cost-cutting may not be the only reason to outsource, but it’s certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you’re able to pump more capital directly into revenue-producing activities.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider’s cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on your core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Level the playing field. Most small firms simply can’t afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act “big” by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

Foreign trade barriers cost Chinese exporters US$70 billion

Technical barriers established by foreign countries cost Chinese exporters up to 69.1 billion US dollars last year, said a report from the Commerce Ministry in Beijing on Monday.

“The textile industry has been most affected by barriers, taking up to 43 percent of the losses,” said the report. “Exports of food, poultry, wood products, electronic and machine products were also greatly affected.”

The report said the European Union and the United States had taken the lead in setting high technical standards for Chinese export products, followed by Japan and the Republic of Korea.

These countries usually added items to inspection and quarantine lists or revised trade regulations on the grounds of environmental protection, consumer health and other reasons, said the report.

Among 22 categories of Chinese export commodities, 18 had encountered technical barriers in 2005, said the report.

Chinese export companies were learning to respond rapidly to foreign technical barriers and improve competitiveness in exports, but there was still a long way to go, said the report.

The government started to set up centers across the country this year to analyze technical standards for foreign market access, issuing regular reports for the government and industries.

Under WTO rules, every WTO member has the legitimate right to question new trade regulations by other nations within 60 days of the promulgation. However, the lack of assistance from technical experts and the abstruseness of technical standards often frustrate Chinese companies and prevent them from taking effective action.

One hundred technical service centers are scheduled to be set up by 2010 to cover more than half the country’s export commodities, according to the ministry.

Nine Tips on Checking References

Checking applicants’ references is one of the most important procedures in the hiring process. Many job seekers misrepresent their backgrounds and credentials; others simply leave out important information. And no matter how honest applicants are, you can still learn a great deal by talking to other people who know them well.

Checking references takes time, but it can save you a lot of money and headaches down the road. A negative reference could save you from hiring someone who is woefully unqualified for a job or who has destructive tendencies that could land you in trouble. For example, you can be held liable for a new hire who becomes violent and injures an employee or customer, or commits fraud ¡ª if it’s proven that a reference check could have stopped you from hiring the applicant. The best rule of thumb: always check applicants’ references before offering them the job.

These nine tips will help you get the goods on a job applicant:

1.Tell all applicants that you will check their references before you make any hiring decisions. Business owners often hire applicants because of a sharp-looking resume or a “good feeling” from an interview. No matter how quickly you’d like to get a position filled, always perform due diligence before you take the hiring plunge.

2.Ask each applicant to sign a release form permitting you to ask detailed questions of former employers and other references (sample background check permission forms are listed on this page). Make sure the form prevents the applicant from suing you or any former employers based on the information you learn during the reference checks. Without this permission, you may only be able to confirm employment dates, pay rate, and position ¡ª information that tells you little about a prospective employee’s character. Also, check with your lawyer, because some kinds of liability cannot be waived.

3.Fax over a copy of the prospective employee’s background check waiver and your personal credentials before you call a prospective employee’s references. Many employers fear being sued for defamation if they say anything negative about a former employee. Your fax will ease their fears. Keep in mind that some states now consider employers’ comments to be “qualifiedly privileged.” That means the employer cannot be held liable for the information he or she reveals unless he or she knows it to be false or reckless. If that’s true in your state (check with your lawyer), make sure the references know it.

4.Verify basic information such as employment dates, job titles, salary, and types of jobs performed. If one of the basic checks doesn’t match the prospective employee’s resume or what you heard during an interview, you’ve got a clear sign that something may be amiss.

5.Avoid vague questions. Ask specific questions based on what you learned about the applicant in the interview. For example: how did the employee contribute to projects mentioned in the interview?

6.Pay attention to neutral or negative comments from references. Lukewarm comments or half-hearted praise speak volumes. Ask the former employer if they would hire the person back. If they hesitate, move on to the next applicant.
Put less weight on positive references. Most people can find someone to say something good about them. And some employers give positive references even to bad ex-employees, because they’re afraid of legal action or are tired of paying unemployment taxes on the applicant.

7.Use former supervisors or senior coworkers as references. An applicant might not want you to contact their current employer (who might not know about the job hunt), but there are always people who can provide a reference.
Don’t rely on prospective employees’ verbal word regarding salary figures. Ask for a current pay stub to verify employment and pay rate.

8.Another bit of research you might conduct on a prospective employee is a background check. Not every company does this, and not every position merits it, but it might be appropriate for many of your staff. Learn more about how a background check is different from a reference check.

Our guide to online recruiting includes some general guidance on interviewing, reference checks, and other aspects of hiring, and it also tells you about the different online resources available to support your hiring and recruiting.

Int’l banks move into RMB retail

Foreign banks are expanding aggressively in the lucrative Chinese market, knowing they will soon be able to deal in the renminbi retail business.
The country’s banking regulator approved over the weekend the first group of nine foreign lenders to incorporate locally, a sign that these overseas players will qualify for the business that is currently closed to them.

Executives of major domestic lenders in Shanghai said yesterday that Chinese players would be compelled to engage in further reforms amid the pressure that comes with full-front competition with overseas rivals in attracting high-end customers, recruiting talent and offering products with high added value.

At the same time, an equivalent competitive environment and supervisory framework would help domestic and overseas institutions carry out further partnership, they insisted.

The Hong Kong-based Hang Seng Bank plans to expand its operation on the mainland to more than 2,000 staff working among a network of 50 outlets by 2010, the bank said yesterday. The lender, a principal member of the HSBC Group with 15 outlets on the Chinese mainland, has been approved to begin preparations for setting up a subsidiary bank.

“Hang Seng’s mainland subsidiary bank, with its headquarters in Shanghai, is expected to be set up in the first half of 2007,” Johnson Fu, the bank’s head of China business, said.

He said that it would incorporate locally with a registered capital of 5 billion (US$625 million) and, as of 2007, the total investment by the lender would reach 6.7 billion (US$838 million), together with its 1.7 billion (US$213 million) investment in a 15.98 per cent stake in the Fujian-based Industrial Bank.

Compared with domestic rivals, the biggest obstacle for foreign banks is the scarcity of outlets. To close the gap, the British Standard Chartered Bank has decided to open two additional sub-branches before the end of 2006 and double the number of existing outlets within the next 18 months.

With one of the largest foreign bank networks in China with 20 outlets in 14 cities, Standard Chartered intended to expand the number of staff in China to more than 2,000 before 2008 from the current number of about 800.

It also signed a framework agreement last week with Shanghai’s metro operator and is about to install its ATM machines inside metro stations. Last month Standard Chartered announced the installation of their first ATM machine in Shanghai and their plan to set up at least 20 self-service facilities in key Chinese cities in the next few months.

In view of the fierce competition in the eastern regions, overseas players are advancing westward to explore the relatively less developed areas.

HSBC, Europe’s biggest lender, opened a new branch in Xi’an, capital of Northwest China’s Shaanxi Province, on Friday, becoming the first foreign bank to expand its presence to western China following the full opening of China’s financial sector on December 11.

“As an economic centre of western China, Xi’an has achieved impressive growth in recent years and offers great potential for HSBC,” Richard Yorke, HSBC chief executive officer China, said.

Vincent Cheng, HSBC chairman, said: “as long as there are customers, we will go there.”

Other players approved in the first group of nine to set up local corporations are also sparing no efforts to roll out new outlets. ABN AMRO and the Bank of East Asia plan to open 30 and 35 new outlets respectively in five years.

Overseas lenders are working to boost other parts of their operation such as product development, service improvement and image building.

Singapore’s DBS Bank posted an ad on Kong.net, a WAP portal owned by China wireless value-added service provider Kongzhong, to promote its brand.

Among imminent full-front competition, leaders of domestic lenders pointed to a wider prospect for co-operation in areas such as owner-management mechanisms, risk control, profit-making plans and product and service innovation.

Chen Xin, president of Bank of Shanghai, said yesterday that lenders would compete more fiercely for high-end customers in the relatively developed regions.

In order to best respond: “domestic banks should fully play on their advantages in geography, human resources and network, and enhance management, innovation ability and provide qualified services,” Chen said.

Quality System Supervisor

company:
A top semiconductor and electronic manufacturing company

Responsibilities
1.Address system issue to improve the quality management system by setting up /optimizing the procedures
2.Plan and perform internal audit, report & follow up the actions
3.Coordinate for the 2nd or 3rd party audit, report & follow up the actions
4.Prepare and organize management review
5.Superviser SPC engineer to introduce and implement SPC system
6.Lead quality system training
7.Supervise the documents administrator for document control
8.Supervise calibration administrator to administrate calibration system
9.Supervise the complaint administrator¡¯s work
10.Other standard compliance

Qualifications
1.Bachelor degree, Engineering Background
2.3+ years quality work experience in high-tech macnufacturing quality team
3.Familiar with ISO9001 system and SPC
4.Internal auditor certification is required
5.Good English in oral and written comunication
6.Good computer skills in the use of Excel,Word¡­.
7.Work independently and Initiative
8.Good team work

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_ic054sh@dacare.com’

Maintenance engineer China

company:
A top semiconductor and electronic manufacturing company

Responsibilities
1.Perform troubleshooting and repairing work when machine breakdown.
2.Responsible for implementing the preventive maintenance for production machine as scheduled.
3.Responsible for developing the preventive maintenance schedule
4.Work with process engineer and other production people on process improvement project.
5.Support the implementation of new project or new production line introduction with other department.
6.Arrange daily work for maintenance technicians or workers and monitor their work results.

Qualifications
1.Bachelor degree, major in electronic Engineering or Mechanical Engineering.
2.Have 3 years machine maintenance experience.
3.Fluent both in written and oral English.
4.Be a team player and have a good problem solving skills.
5.cleanroom experience is a plus
6.If necessary , be able to work with shift

* Please send us your complete resume (both in Chinese and in English) to: ‘topjob_ic053sh@dacare.com’

Employee Performance Management: What’s Gnu at the Zoo

The San Diego Zoological Society, which employs 2,600 people, this year introduced an employee performance management system whose ratings will determine managers¡¯ pay raises. It¡¯s part of an emphasis on employee accountability outlined in the organization¡¯s strategic plan.
By Todd Henneman
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or years, employee performance evaluations were a low priority at the Zoological Society of San Diego, with no uniform metrics and no consequences for ignoring appraisal paperwork sent by the human resources department.

Different versions of the one-page form were used. Managers didn¡¯t judge subordinates on goals, but on a nebulous sense of how they were doing. Some employees hadn¡¯t been reviewed in years¡ªa few of them had waited decades.

“It wasn¡¯t taken seriously, and it didn¡¯t hold any credence because there was not a pay-for-performance system here,” says Tim Mulligan, director of human resources for the not-for-profit Zoological Society, which operates the San Diego Zoo, the San Diego Zoo¡¯s Wild Animal Park and the Conservation and Research for Endangered Species scientific center. Managers received annual raises, which were essentially cost-of-living increases not linked to their performance, Mulligan says. “HR would send out a form, say, ¡®This review is due,¡¯ but then would never follow up to see that it was turned in.”

That is changing. The Zoological Society, which employs 2,600 people, this year introduced an employee performance management system whose ratings will determine managers¡¯ pay raises. It¡¯s part of an emphasis on employee accountability outlined in the organization¡¯s strategic plan, which was being finalized when the nonprofit organization hired Mulligan two years ago.

Like an increasing number of organizations, the Zoological Society, whose revenues in 2005 reached $176 million, wanted a Web-based employee-appraisal system that helps guide managers through the process and reduces rote work.

The demand for software that accomplishes this is growing. Fueled by the performance and succession management segments, the talent management software market will increase by 20 percent this year, surpassing $2.3 billion in revenue, according to an estimate by technology consultancy Yankee Group. Of 244 large and midsize organizations surveyed by consulting firm Towers Perrin, 34 percent said their spending on human resource technology increased in 2005 compared with 2004. Only 15 percent said spending decreased; the rest of the respondents said spending was flat.

This year, the Zoological Society¡¯s management team, which consists of 225 employees classified as assistant managers or higher, falls under the Web-based employee appraisal system. Next year, the practice will be expanded to include all exempt employees.

With built-in prompts for completing reviews, performance management applications standardize the format of performance reviews and free human resource professionals from the administrative tasks of reminding managers that appraisals are due. They also tend to be affordable ways to update appraisal processes, have multiple raters and enable timely feedback on performance.

Setting goals
Mulligan identified the primary objectives for the Zoological Society¡¯s new system: establish impartial employee goals directly linked to the organization¡¯s goals; include a midyear review to ensure an ongoing dialogue and to prevent end-of-the-year surprises; and require year-end reviews whose ratings will be used to determine merit increases.

Mulligan also realized his diverse workforce, which includes everyone from world-renowned scientists to teenage food-service workers, needed metrics to measure performance, as well as easy-to-use software. He created two teams¡ªone looking at vendors, the other at skills that characterized a successful leader within the organization, regardless of their department.

“We didn¡¯t want to throw this down our managers¡¯ throats,” he says of involving employees in the planning. “We wanted to have them work on and approve of it.”

The process led to performance appraisals based on two categories: goals and leadership competencies. At the beginning of the year, each manager chooses five goals, at least three of which must be linked to organizational objectives. Those goals are based on everything from guest satisfaction to revenue.

The other two goals are what Mulligan calls “wild cards”¡ªtargets pertinent to their specific area. Together, the performance goals make up 50 percent of the overall employee appraisal.

The other half comes from ratings on leadership competencies. Those were identified by 220 managers and then whittled to a list of six, each with five sub-factors. For example, the competency of “professionalism” includes scores on teamwork, communication, interpersonal relations, Zoological Society mission and customer focus.

Halogen Software of Ottawa was chosen as the vendor. Halogen has gained a reputation as an appropriate choice for midsize companies. Business-information provider Hoover¡¯s Inc. estimates that Halogen¡¯s sales reached $4.2 million in 2004. Halogen declined to disclose its current revenue but says it is profitable and has added 400 customers during the past two years. The company also says a nondisclosure agreement prevents it from divulging the value of its contract with the San Diego Zoo and the length of the agreement.

In a market report last year, research firm Gartner rated Halogen and competitors Softscape of Massachusetts and SuccessFactors of California each as “strong positives” based on criteria that included product capability, affordability, scalability, viability, market momentum and vision.

Halogen¡¯s eAppraisal performance management solution lets employees record accomplishments in an online journal that they may share with their manager. Mulligan says the tool helps to craft an accurate year-end review. “Many of our people are very involved with organizations in conservation and in the animal world,” he says. “We don¡¯t want those things to be forgotten by management at the end of the year when they do their review.”

The performance management solution¡¯s other tools include a “comment helper” that offers feedback templates that automatically insert pronouns using the correct gender and a “language sensitivity checker” that flags offensive words and suggests alternatives. The company¡¯s product tour shows the language checker suggesting “overqualified” to replace “old,” for example.

Many human resource professionals feel an increasing demand to build business cases for HR investments and to calculate their return on investment. Last year, even the publisher of the Myers-Briggs Type Indicator introduced a guide for measuring the ROI of the venerable personality-type test.

As a not-for-profit organization, the Zoological Society is more concerned about the “return on mission” than its ROI for the technology, Mulligan says. But Halogen¡¯s president, Paul Loucks, points to studies by research firm IDC as proof that his clients can expect a healthy return on their investment.

IDC determined that Amcor Sunclipse North America, a division of Australian packaging manufacturing company Amcor, saved more than $300,000 a year since introducing Halogen¡¯s eAppraisal. In a separate analysis, IDC estimated that Halogen client Howard Regional Health System of Indiana might see a 164 percent return on its investment, in terms of cost savings.

Flexibility of the web
The Zoological Society¡¯s adoption of a Web-based solution also reflects another trend. One of the notable changes in the past five years has been the shift to Internet-based appraisal systems from client-server platforms, in which programs are kept on a central computer connected through a network to PCs. “As long as they have a Web connection, managers can write appraisals at home,” Loucks says.

Loucks expects that organizations will expand from using Web-based appraisal systems to adding compensation and succession planning processes. In fact, Mulligan lists such a flexible system among the reasons he liked Halogen.

“Those types of processes will be adopted by more companies over the next few years,” Loucks says. “It¡¯s not clear whether the new customers will do it in steps or whether they¡¯ll go for more of the big bang.”

Not everyone sees Web-based employee appraisals as all good news. Anthony Chelte, dean of Dillard College of Business Administration at Midwestern State University in Wichita Falls, Texas, says the key benefits of online employee appraisals are the timeliness of feedback and the efficiency of eliminating paperwork.

“When you look at the ratio of individuals to HR people in terms of the number of reviews that have to be looked at for completeness, accuracy and legal concerns, it¡¯s probably far more efficient,” he says.

Chelte cautions against relying on online appraisals to deliver feedback, saying one-on-one discussions are as important. “I do not think the online appraisal system is a good proxy for delivering feedback,” he says. “The whole social context is gone. It takes the entire human element out of the mix.”

Halogen executives say their system is not intended to replace one-on-one appraisal meetings, but rather to simplify preparation for it.

Mulligan says he ensured the “human element” remains intact for zoo staffers. The appraisal must be delivered in person, with the supervisor printing and reviewing it with the subordinate or the two discussing results as they go over it on the computer screen. “It has to be done with two people together,” he says. “You can¡¯t just pull it up and read your review.”

The supervisor then must certify that the in-person meeting occurred. “I don¡¯t want us to go back to where we were before, with employees and managers not having this face-to-face dialogue on performance,” Mulligan says.

Michele Stancer began working at the zoo 28 years ago, starting in food service while in high school and working her way up to animal-care manager. She describes her experience with the new appraisal system as positive because of discussions with her boss about setting goals and basing raises on performance.

“If you perform well, you¡¯ll get more,” Stancer says. “I think people should be held accountable. I¡¯ve been here a long time. You see people who are ¡®working in retirement,¡¯ and that¡¯s not good for anyone.”

Mulligan says the Web-based appraisal process has helped the zoo attract talent. “What I found is that it¡¯s a recruiting tool,” he says. “A manager who starts here sees that we have a program like this where you have goals and objectives and are given timely feedback and paid for the work that you do. As we come into the modern world here in HR, we have to provide programs like this.”

Speed Recruiting in China

R¨¦sum¨¦ flow is strong and time-to-hire is fast in Asia¡¯s largest labor pool. Broad statements in the U.S. media about an impending talent shortage in China are not borne out by more granular data on the labor supply and direct reports from companies engaged in heavy recruiting.
By Fay Hansen ——————————————————————————–
San Francisco-based Freeborders reviewed 25,000 job applications in China last year, conducted 3,400 first-round and 800 second-round interviews, and hired 251 new employees for its IT outsourcing services facility in Shenzhen. Recruiting is proceeding at roughly the same pace this year, with more than 2,000 r¨¦sum¨¦s flowing in each month for 30 to 50 positions.

Gomez Inc., another U.S.-based high-tech firm, moved from no presence in China to a fully functioning R&D facility for new-product development in less time than it takes many companies to hire a single advanced-degree engineer in the United States. The company posted positions in May and opened its new Beijing office in July.

Despite widespread predictions of looming talent shortages in China, where GDP growth is now clocking in at 10.2 percent, Freeborders¡¯ recruiters are swimming in r¨¦sum¨¦s in Shenzhen and the company¡¯s CEO discounts reports of acute shortages of managerial and high-level technical workers. Gomez¡¯s executives anticipate no difficulties in building headcount in Beijing.

Broad statements in the U.S. media about an impending talent shortage in China are not borne out by more granular data on the labor supply and direct reports from companies engaged in heavy recruiting.

Hard data offer no evidence of tighter labor markets, even in China¡¯s first-tier cities. In 2005, 295,000 new university graduates looked for work in Beijing alone. The highly developed Chinese university system is pumping out an ever-larger annual pool of candidates whose skills more closely match the needs of high-growth multinational companies than graduates in the United States and most of Europe.

Simultaneously, China¡¯s recruiting infrastructure is growing to meet the needs of employers, including multinationals expanding in the urban areas. The number of online job boards in China hit 2,000 this year and online sites have become the dominant form of recruiting for large companies, according to BusinessForum China. Last year, Monster Worldwide bought a 40 percent stake in one of the largest players, ChinaHR.com, which currently offers 480,000 jobs and 7.5 million registered job seekers.

Bulking up
Freeborders announced in June that it plans to quadruple the size of its Shenzhen facility to accommodate 2,000 employees, who will work in coordination with the company¡¯s U.S. and European project managers. Freeborders has stepped up its recruiting efforts to sign on hundreds of new employees in short order.

“We plan to hire several hundred graduates majoring in software development in a month or two as trainee developers,” Freeborders CEO John Cestar reports.

With revenue up 45 percent in 2005 and year-over-year bookings up 30 percent, Freeborders is a high-growth firm recruiting in a high-growth market.

In Shenzhen, Freeborders can pull from the 600,000 technology professionals who live there or the thousands who pour in from other regions of China every month. Most of Freeborders¡¯ new hires come from outside the Shenzhen area.

Shenzhen is home to 3,000 software companies. GDP growth for the metropolitan area is topping 15 percent a year. IDC forecasts that China will be the largest IT services market in the Asia-Pacific region by 2010, with a 24 percent share of IT spending in the region.

But those growth rates do not necessarily translate into tight labor markets. Instead, they act as a magnet for new investment and job seekers. China¡¯s Ministry of Science and Technology is pouring money into incentives for investment in new technologies, particularly in e-commerce, logistics, design and finance, and the Education Ministry is moving in tandem with university programs that boost the supply of tech candidates.

When Freeborders moved into China five years ago, it recruited 20 Chinese nationals who were working for software multinationals in North America and Europe. This core group then recruited for Freeborders¡¯ Shenzhen expansion. The company now runs a nationwide recruitment program through its own network, Web sites and job fairs.

“Our strategy is to focus our hiring for the key technologies that we know North American and European companies have demand for,” Cestar says. “We determine these needs through client surveys and training-needs questionnaires with our workers. Our software graduates speak good English and become highly valuable resources after going through our rigorous training program.”

Freeborders has not been forced to accelerate salary increases or bonuses to meet its recruiting goals.

“We find that many of our employees choose us because of the opportunity to work with Western clients,” Cestar says. “It¡¯s a source of prestige and they know it¡¯s good for their careers to deliver services to Western companies. That¡¯s our main selling point. When we survey our teams, compensation is usually the third or fourth reason they chose Freeborders.”

Freeborders minimizes its use of expatriates, but most of its senior managers in China have worked or been educated in the United States. This is changing, however.

“We are leveraging our current employees to recruit heavily within their personal networks to find managerial talent,” Cestar says. “We also plan to promote the next group of managers from within.”

Securing the managerial talent in China is a top priority for the company.

“It is a challenge simply because the universities are churning out so many young and highly skilled technology workers that there are not enough middle managers to handle the massive labor pool,” Cestar notes. “But it¡¯s a manageable challenge. Over time, this shortage will shrink as the junior-level technology workers grow in experience to become middle managers. It¡¯s only a matter of time.”

Meanwhile, Freeborders¡¯ global structure allows the company to segment tasks when necessary.

“Because we¡¯re a U.S.-based company, we mitigate a lot of the risk by having a strong U.S.-based project and technical management component to our teams,” Cestar reports. “They essentially work with the client on site and with our offshore teams at all hours of the day.”

Starting from scratch
While Freeborders is calmly recruiting more than 1,000 IT workers in Shenzhen, Gomez is expanding its R&D staff in Beijing, bringing in additional support staff and basking in the new recruiting environment that China offers.

“We were up and running in Beijing with 20 R&D employees in 12 weeks,” reports Richard Darer, vice president and CFO of Gomez.

“We never could have done that in our U.S. office near Boston, no matter what we threw at it. The talent pool is so much smaller in the United States that there simply isn¡¯t sufficient r¨¦sum¨¦ flow.” The company pulled in 3,000 r¨¦sum¨¦s to fill the Beijing jobs.

“In the United States, we use job boards like Monster, but we end up hiring contract recruiters,” Darer says. “The universities in China are turning out so much talent that it¡¯s a different situation.”

In its site search, Gomez considered Shanghai, but it settled on Beijing because of its exceptionally strong university system. The company¡¯s new facility is located near Tsinghua University, China¡¯s leading science and technology institution. The Beijing area is home to 274,000 tech workers, with scientists and engineers accounting for 83 percent of the total, according to the Beijing Municipal Science and Technology Commission.

Gomez provides Web application performance management solutions for 400 companies worldwide, including Amazon, Yahoo and Best Buy. Headquartered in Lexington, Massachusetts, with European operations centered in Hamburg, Germany, the company reported Q1 2006 revenue growth up 50 percent compared with Q1 2005. As its first step in expanding into China, CEO Jaime Ellertson personally recruited Yuan Cheng, a Chinese national with an engineering degree from Tsinghua University and a doctorate from MIT, as general manager for China.

The new office will triple Gomez¡¯s product development staff by the end of 2006. To recruit the first group for the Beijing location, Cheng tapped job boards such as ChinaHR.com and targeted university online job sites. The company¡¯s online job postings for China include JavaScript software engineers and technical support engineers.

“Cheng screened the r¨¦sum¨¦s to find candidates with the right technical skills and to eliminate job jumpers,” Darer says.

From the 3,000 r¨¦sum¨¦s, Cheng invited 200 candidates for interviews, most with two to five years of experience and 40 percent with graduate degrees.

Large groups of candidates attended high-level presentations on the company, followed by one-on-one interviews that used the presentations as the context for detailed technical questions.

“Our challenge was screening out candidates, not finding sufficient talent,” Darer says.

He worked with technology companies operating in India before joining Gomez, and notes the sharp differences there.

“If you want to fill two positions in India, you make offers to four candidates because only two of those will actually show up to start the job,” he says.

During Gomez¡¯s initial recruiting drive in Beijing, a few candidates who received offers didn¡¯t accept because of compensation issues.

“Our challenge in China is that compensation is beginning to move up,” Darer says. “But the economic cost ratio for the United States and China is 3-to-1, so even if compensation creeps up in Beijing, there is still a huge cost advantage.”

Darer is not concerned about retention in the Beijing office.

“We work on the cutting edge of the Web and e-commerce, and part of the attraction for our employees is the opportunity to work on exciting and sexy stuff,” he notes. “You can see the gleam in their eyes.”

The R&D employees in Beijing develop new products with worldwide reach and the company now plans to hire direct-sales and support staff, but with different language skills.

“When companies set up R&D in China, they have to think about language proactively,” Darer advises. “For some of our key managerial and customer support positions, our employees must be fluent in English. But we do not require fluent English from our engineers.”

Darer, who received an engineering degree and an MBA from Harvard, sees his HR responsibilities as a logical part of his work as CFO.

“As we all know, our assets walk out the door every night at 5,” he says.

Managing talent is a critical component in the company¡¯s financial success.

“And the talent in Beijing is well beyond our expectations,” he notes.

China’s West Attracts 300 Bln Yuan Investment from East

Firms based in the east of China have invested more than 300 billion yuan (about US$37.5 billion) in western China, Fu Ziying, assistant minister of Commerce, said on Wednesday.

The 10,000 east China-based enterprises include state-and private-owned enterprises as well as foreign companies, Fu said at a press conference at the 11th China Chongqing Investment and Global Sourcing Fair (CCISF).

Abundant resources, preferential policies, and cheap land and labor in the region spelt opportunities for investors. The rapid expansion of manufacturing, high-tech, power, and tourism industries in the region has added to its attractiveness.

The CCISF, held every two years, promotes trade and investment in west China. It is a platform that allows the western region to seek investment from outside, according to Fu.

The 11th CCISF will be held between April 18-21, 2007 in Chongqing Municipality, focusing on the theme of “Global sourcing and investment.”

China launched the western development program in 2000 to narrow the economic gap between the region and the country’s east.

In 2005, the region generated a total of 3.37 trillion yuan in gross domestic output, up 12 percent on 2004, significantly higher than the national average of 9.9 percent.

Thirty thousand overseas experts to be recruited

The Ministry of Personnel is bringing in some 30,000 overseas specialists next year to address China¡¯s talent shortage in certain sectors. ¡°The governmnt is to introduce 10,000 economic and technical specialists and 20,000 education, health and science specialists in 2007,¡± Zhang Baolin, Minister of Personnel, told Xinhua News Agency in an interview. Zhang said China should further explore international intellectial resources, which has provided strong support to the country¡¯s overall development. China has already recruited a total of 400,000 specialists from overseas, Hong Kong and Macao special administrative regions and Taiwan.

¡¡¡¡At the same time, China will explore establishing a mechanism to attract Chinese currently overseas to work in the country. The plan also hopes to target foreign talents.

¡¡¡¡The ministry is preparing for the fifth round of job recruitments in Beijing slated for April 21, 2007. For more information, contact.