US and EU clients are estimated to account for 44% of revenue for Chinese outsourcing service providers , vs. an average of 80% for the top 3 Indian providers .  While this is partially due to higher market penetration by Chinese providers in the Japanese and the Chinese domestic segments, US and EU markets remain large and attractive.  Large corporate clients in these markets are also among the hardest ones to win over – once a relationship has been established, however, these treasured credentials boost confidence in the eyes of potential clients and are invaluable in future business development efforts.

There are several obstacles for Chinese firms to start a new outsourcing relationship with a US or EU-based Fortune 500 client:

An outsourcing contract with such a client is typically a multi-year, multi-million dollar commitment which is both complex and costly to exit prematurely.  Risks along the lines of the supplier’s capability, capacity, and financial stability will need to be carefully assessed through a due diligence process which is by no means bullet proof.  Client decision makers are taking on significant risk, both to the client organization and to their own professional track record, to award the contract to a new provider, particularly one that’s at a pre-IPO stage.

Clients in these segments are heavily targeted by sophisticated competitors including leading Indian firms as well as top international providers.  Take the latter group as an example, they often have entrenched relationships with the client at multiple levels, consulting capabilities to help shape business / outsourcing strategy, strong project management practices, and proven success in transformational projects, all highly valued by corporate clients.

Interaction between Chinese business developers and western audiences are often awkward due to language and cultural issues.  Having to deliver a sales pitch in English often distracts a non-native speaker to the extent that he or she becomes ineffective in stating thoughts precisely and in full and in quickly interpreting the client’s feedback, explicit and implicit. Certain relationship-building practices common in China are also inappropriate with western corporate clients which may leave some sales person at a loss.

Now to the real question: how do we overcome the odds to build a new, significant relationship with a large, western corporate client?  I don’t purport to have an authoritative answer to this, but here are some ideas adapted to a BD framework.

Engage

First and foremost, get the right person to lead the business development effort.  He or she must be customer-oriented and yet able to hold his own ground.  An exceptional ability to articulate a value proposition in the client stakeholders’ language, most likely English, with a deep understanding of western culture, is an absolute must.  On the other hand, this tends to be where domestic firms lack the most.

Develop a network of client-sourcing contacts and proactively engage them to showcase your capabilities, through introductory meetings, delivery of center visits, etc.  Share important industry developments and your organization’s insights into the client’s industry with them to demonstrate added value.

Build upon these relationships to reach business stakeholders – remember if Sourcing has made the introduction for you, they’ve put their own credibility and influence behind you, so tap into them regularly for guidance.

Learn about the client organization – in a mature organization, there tends to be a multi-dimensional matrix structure which can be difficult to grasp and navigate – bootstrap from a growing network and map out decision makers and influencers.

Market

Offer to do something for the client that’s valuable to them, perhaps an opportunity assessment or a pilot project for free.  The client has nothing to lose and your investment would allow you to better understand the client’s organization and challenges.

Develop a targeted value proposition – as a domestic provider, you generally must demonstrate cost competitiveness as the going-in assumption of western clients will be that a large Indian / international provider has higher quality.  Remember you’re building a new relationship – if you feel you need to obtain special approval for a lower margin target, do it.  Meanwhile, demonstrate to the client you have sound corporate governance, a strong financial situation (or ready access to funds for a pre-IPO firm), solid PM and delivery methodologies, and an ability to attract talent to ease concerns in these areas.

Create a “burning platform” by illustrating how these challenges have, in real-life situations, limited the client’s ability to achieve high performance and why your company’s solution can help overcome these obstacles.

Try to identify who the competitors are and differentiate your service offering accordingly.  Spell out why you are the right partner for this particular project. Outsourcing is a people business.  No matter how prestigious a competing brand may sound, remember you always have a shot at winning business away from them by proving your people are just as good at what they do, and your customer service is even more client oriented, while being a lot more cost effective because you have a nimble organization.  If you are competing with vendors whose costs are even lower than your own, then you must prove that your costs are low enough and your strengths are well worth the small premium.

Customize your message to stakeholders at different levels – describe how this project fits into the overall functional strategy to executive business leaders, demonstrate convincingly to sourcing you have offered a good deal.

If you’re short listed to participate in a pilot project, over invest in the project – it is now yours to lose.

Is there a product from the client that’s valuable to you?  A mutually beneficial relationship can be a powerful incentive for the client to work with you.
 
Grow

Congratulations! You have now signed a contract with a large corporate client.  It may just be a 3-person staff augmentation deal, but that’s ok - you’ve established your beachhead.

Deliver, deliver, deliver – now that they’ve given you a chance to try, you really must deliver 100% – and don’t forget to seek regular feedback from multiple angles.  Demonstrate you also have the ability to adopt industry best practices and quality frameworks to continuously improve upon the services.

Look at what processes you now own and where they fit within the end-to-end process.  Identify upstream / downstream opportunities and continue to engage new stakeholders and repeat the Engage / Market cycles above.

The largest domestic outsourcing providers active in the China offshoring industry today are predominantly in the ITO business.  This is for a good reason as large clients will be much more willing to experiment with outsourcing IT development to a new partner than outsourcing a business process closer to the core of its operations.  As Chinese providers progress inevitably toward a more comprehensive set of offerings and expand their client bases, I hope the above points can provide some assistance and induce more insights from the many thoughtful minds in this industry.

(The author is Director of Asia Pacific Global Outsourcing, UBS.)

(Reproduced from "ChinaSourcing" magazine)