From last year’s position as runner up, Neusoft has emerged as the top-most company to watch in China, in our study this year. Interestingly, Bleum, last year’s winner, has gone down to the fifth position.

Providing services in three areas — software and services, medical systems and IT education and training — Neusoft, like most Chinese outsourcing companies, services primarily the domestic Chinese market with almost 75% of its revenues coming from there. Says Walter Fang, VP & CTO, Neusoft, China, “For every dollar we make from offshore, we make three from domestic outsourcing.” In China, Neusoft has over 5000 large customers in telecom, manufacturing, government, healthcare, education, power utilities and the financial sectors.

In the international arena, its focus is Japan — in 2005, about 90% of its offshore revenues came from Japan, followed by those from the U.S.A, and very little from Europe. Some of its Japanese customers include Alpine, Toshiba, NEC, and Sony. In the U.S.A., too, it has had successful relationships with EMC, Motorola, HP, and others, while in Europe it works with Nokia.

When Motorola (U.S.A.) was looking to outsource the application testing for its mobile phones meant for the Japanese market, it needed engineers who could read — though not necessarily write or speak — Japanese. The specifications on the phones were written in Japanese, which obviously required Japanese engineers. However, on knowing the high-cost in Japan, Motorola’s president in Japan recommended Neusoft, which has a good reputation in the Japanese market, and offices in Tokyo and Osaka. Says Jim Wu, Program Manager, Motorola, “Japanese reading skills were critical for us. Engineers from our Japan office spent time with Neusoft to make sure that the people understood the work. Also, two to three Neusoft engineers are located in the U.S.A. to work with our embedded engineers here. This way I can communicate with Neusoft daily.” “I would highly recommend Neusoft,” he adds.

Now that Neusoft is firmly established in Japan, in 2006 it wants to concentrate on the U.S. market. They will begin by opening branch offices in both the West and East Coasts. The plan is to focus on large, promising prospects and develop long-term strategic relationships with these clients. Says Fang, “We will not go mass-marketing. Rather we will develop good one-on-one relations with large clients in the U.S.A. We have had fairly good success in working with the large U.S. clients, such as EMC and Motorola, so next year we are hoping to develop a handful of good quality, large U.S. clients.”

Walter Fang, VP and CTO, Neusoft

Another new area for Neusoft is BPO services — data entry, data processing, call centers — which was set up only in 2004. It has recently opened an Internet data center in the northern Chinese province of Dalian, which it plans to grow to full capacity in 2006. BPO revenue is currently just over $1 million. Neusoft expects to grow its BPO revenues this year, but because the base of BPO is still very small, the maturity will come from IT outsourcing.

In 2005, Neusoft’s offshore outsourcing revenue was close to $62 million — much higher than the $55 million target the company had set for itself that year.