Software companies and continuously earned contracts

This preview shows page 1 - 3 out of 12 pages.

software companies and continuously earned contracts as these companies expanded their business in 1 ¥ = CNY = Chinese yuan; all currency amounts are in ¥ unless otherwise stated; ¥1.00 = US$0.16 on December 31, 2012. Authorized for use only by Darrin Tuminski in Integrative Accounting Seminar at Rowan University from Sep 05, 2018 to Dec 19, 2018. Use outside these parameters is a copyright violation.
Image of page 1

Subscribe to view the full document.

Page 2 9B17B016 China. This strategy helped Reike gradually increase its reputation in the software outsourcing industry. By 2011, the company had become one of the largest professional software outsourcing service providers in China. It had also built strong co-operative partnerships with some large international companies. CHINA’S IT OUTSOURCING INDUSTRY In the previous 20 years, the global information industry had gone through a gradual transition from a hardware-dominated industry to a software- and service-dominated one. Human resource cost was the key profitability factor for software service enterprises and accounted for 70 per cent of software development costs. An effective way to reduce software development costs was to outsource services to developing countries. Consequently, the main employers of the global software outsourcing business in North America, Western Europe, Japan, and other developed countries transferred their outsourcing services to Asia Pacific and other low-cost developing countries. According to a Gartner report, global spending on IT outsourcing (ITO) was around $251 billion in 2012 2 and reached $288 billion in 2013, 3 a 14.7 per cent growth. China was playing an emerging role in this global market. According to China’s Ministry of Commerce, China’s whole outsourcing market—including ITO, business process outsourcing, and knowledge process outsourcing—grew from $2 billion to $4.47 billion in contract size from 2009 to 2011, 4 for an almost 50 per cent average annual growth. ITO was the mainstream in the outsourcing market. By 2013, China’s ITO offshore market had reached $3.11 billion, with a year-on-year growth of 36.8 per cent. 5 Meanwhile, in China’s domestic software and services market, most industries’ IT systems were built using popular products from big western software companies. However, facing huge market demand as well as the great pressure of human resource cost, international software providers could focus only on their own products, not services. In other words, when selling products to an end customer, they needed local partners to do most of the customer development and maintenance work. This situation provided huge market opportunities for Chinese ITO companies. BUSINESS DEPARTMENT NO. 3: LEE’S PARTNERSHIP WITH SHENGHUI Lee was the manager of Reike’s Business Department No. 3. He had graduated from a famous university, and had both technical and managerial talents to reach sound decisions. He joined Reike from another software company in 2010. Under Lee’s leadership, the performance of Business Department No. 3 improved rapidly. The department created a lot of profit for the company, which was attributed largely to the co-operation with Shenghui.
Image of page 2
Image of page 3

{[ snackBarMessage ]}

Get FREE access by uploading your study materials

Upload your study materials now and get free access to over 25 million documents.

Upload now for FREE access Or pay now for instant access
Christopher Reinemann
"Before using Course Hero my grade was at 78%. By the end of the semester my grade was at 90%. I could not have done it without all the class material I found."
— Christopher R., University of Rhode Island '15, Course Hero Intern

Ask a question for free

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern