Chinese BPO Firms merge to Gain Economy of Scale

Two US-listed Chinese BPO firms – HiSoft Technology International Ltd and VanceInfo Technologies Inc – have merged together to bolster their positions in North America and capitalize on their global resources.

The new company will be named as Pactera Technology International Ltd and will be traded on New York Stock Exchange. Financial details of the deal have not been disclosed.

China Daily has stated that their merger ‘reflects fierce competition and harsh market conditions’ in the West.

Both companies’ share prices have risen significantly over the past two years but their market capitalization has plummeted more than 50 percent since 2010, the Chinese paper said.

“We look forward to capitalizing the larger resource base, more comprehensive breadth of service capability and more balanced geographic customer profile to provide a powerful array of offerings to our customers worldwide,” Tiak Koon Loh, CEO of Pactera.

HiSoft, whose major customers include IBM and HP, is headquartered in the coastal city of Dalian, one of China’s main software outsourcing hubs.

HiSoft provides IT consulting and outsourcing services through its delivery centers in China, the United States, Europe, Australia, Japan, Singapore and Malaysia.

Following the merger, Pactera will be listed on the Nasdaq and VanceInfo will be delisted.

Research firm IDC has ranked VanceInfo number one among Chinese offshore software development service providers in North American and European markets. VanceInfo’s offerings include R&D outsourcing services, consulting and solutions services.

VanceInfo’s revenue was $20.86 million in 2011, while HiSoft made $17.21 million.