No doubt China is an imposing name in a rapidly globalizing world. It has a daunting labor pool and one of the largest markets in the world, both for products and services. Yet, there are few IT-services companies that have bet on the Chinese card as much as Darwin Partners, a Boston, Massachusetts-based company. In April last year, it acquired Suzhou-based SuzSoft to become the first American IT-services company to acquire a Chinese company. The acquisition that was actively abetted by the Chinese government will become a showcase for the government and a springboard for the company's China strategy.

Dan Ross, CEO, DarwinSuzsoft

Now renamed DarwinSuzsoft, this company's China strategy is three-fold. First, China will be used as an offshore base for its U.S. operations. It has already started offshoring IT work for some customers like Marblehead , Agile Software, EMC on pilots to demonstrate its capabilities. A recent win from Boeing will go a long way in convincing customers about the stringent security compliance adopted by the company. Second, the company intends to follow its U.S. customers to China , arguably a market that no company can afford to ignore. Third, it plans to tap the $6.2 billion (2006 marketsize, IDC) domestic Chinese market, a market so huge that it has distracted Chinese IT-services companies from focusing on the export markets.

So convinced is DarwinSuzsoft about its China strategy that its new name reflects the acquired Chinese company. It does have a compelling proposition: combining the Chinese labor pool with Darwin Partners' presence in the U.S. market. During its 20 years of existence, the company has firmly established itself in the finance, insurance and health care verticals. What's more, this is the first of many acquisitions in China that the company will be looking at. Toward that end, the company has hired a new executive, Matthew Growney, in the role of chief strategy officer.

Yet, the company's vision is not entirely rosy. For one, integrating the two companies is indeed a challenge. One of the mandates of the newly hired CEO, Dan Ross is precisely this. Second, labor cost in China is not that cheap. While cost of programmers may be 10%–15% cheaper than India, project managers and supervisory roles are about 25% higher than India due to lack of management experience in China. Due to these issues, many advocate a China plus India strategy.

Ross believes one of the big pluses in the China market is its lower attrition. With its presence spread out across Tier 2 cities, Ross believes that the company will be able to attract top-notch talent, away from the global IT companies that are mostly present in the top tier Chinese cities.

The company currently has 1,400 employees equally split between U.S. and China . It plans to ramp up its China base to 1,000 people by the end of this year. Besides IT services, the company also plans to deliver BPO services from China focusing on finance and accounting processes, HR and legal services.