Building An Outsourcing Company In China: Bleum CEO Eric Rongley (Part 5)

Sramana: How significant is the language issue?

Eric Rongley: Somebody with good English in China is someone who is higher up in the talent pool than someone who speaks good English in India. It is an issue that is definitely there. Indian companies have to institutionalize, in a manner, to deal with high attrition rates. We trade that problem for the English problem in China.

I have found that people who come out of the top universities read and write English fine. What they do not have is practice speaking. We have created an all-English environment at Bleum. A Chinese person speaking to a Chinese person must use English. I have found that within a couple of months someone can get to a comfortable speaking level, but it takes that level of commitment.

Sramana: Do you use any technologies such as GlobalEnglish to train your employees?

Eric Rongley: We have evaluated a lot of them, but we do not use them. Over the years we have developed a strong English department. We have an English system with five levels that have various competencies. Our program is very well oriented to our business. Every ODC will build a vocabulary for that ODC.

Sramana: What about attrition issues and wage inflation issues?

Eric Rongley: Attrition levels are historically lower in China than they are in India. Part of that may be demand, but I also think that India has a cultural issue which makes people think they must change jobs. Some people there think that you need to change jobs every 18 months to manage your career efficiently.

The average attrition rate for the IT industry in Shanghai has been between 15% and 20%. If you are a well-run company like we are, it is easy to be in the 5% range. In the past 12 months China inflated the bubble a bit to prevent itself from falling into the economic crisis. That has caused wage inflation. I think that is short term and that the Chinese government is publicly cooling down the economy.

Sramana: What has your growth trajectory been from 2001 until now?

Eric Rongley: The first couple of years were consumed with identifying the best market to serve. Our growth started at 48 months, and that was just a survival mode. By 2005 we had figured things out, and from then until now we have grown at about 100% a year. What we sell has a 12- to 18-month sales cycle, so we did feel the economic crunch a bit later, but today it is growing back to trend. We should be able to continue growing this way for another 10 years. We are in the $50 million range.

Sramana: What kinds of customers have you found traction with over the years?

Eric Rongley: Now that Bleum has more than 1,000 people, we have become acceptable to a new class of customer. In the past we found traction with companies that had already outsourced with India and wanted to move into China. They would look at the top vendors, and the ones that chose us did so because we represent the lowest-risk method of getting high results out of China.

We tend to be one of the more expensive options in China because we hire top talent, have a good management team, and have good offices. That cost structure means we will charge more than the other companies in China. We also deliver another class of result. Accordingly, we get customers like credit card companies that absolutely demand and expect results. Stopping their systems for five hours would cost tens of millions of dollars. They must choose quality over the cheapest options.

This segment is part 5 in the series : Building An Outsourcing Company In China: Bleum CEO Eric Rongley
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