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Sierra Atlantic Joins IT Outsourcing Race To China

The company, which primarily works out of India, has acquired an IT services firm with strong connections to China.

Sierra Atlantic is the latest IT offshore outsourcing company to make a move on China. It announced Wednesday its acquisition of ArrAy Inc., a Boston-based software engineering services firm with 200 employees in Guangzhou and Shanghai.

"China is a huge and very strategic market for our customers," said Sierra Atlantic Chairman and CEO Raju Reddy. "Our manufacturing customers have a significant presence or plan to have one there."

Sierra Atlantic, for example, is providing software engineers to the Chinese plant of PPG Industries, a U.S.-based manufacturer of paint and chemicals, for help with an Oracle software rollout, he said.

The addition of ArrAy will bring the staff of Sierra Atlantic -- which is based in Fremont, Calif., but runs most of its operations out of Hyderabad, India -- to 1,500 employees. Reddy said Sierra Atlantic can bring some of the employee perks its honed in India, such as its "bring-your-parents-to-work day," to employees in China. In Asian cultures, parental input and acceptance of their children's careers is, in general, a much bigger deal than in the U.S.

Sierra Atlantic also realizes it can no longer rely solely on India for offshore outsourcing, and believes China is more viable than other alternatives, such as Eastern Europe. "We have to have more cost effective [options]," Reddy said. "India has been a significant center for that. We believe China is just about the only place that has both the quality and skills for the services industry for the long term."

However, Reddy said despite all the talk about growing competition for IT skills in India, the competition for Chinese IT professionals with good English-speaking skills is just as strong. While many Indians come out of primary school with solid English-speaking skills, that's not the case in China.

Sierra works with both end-user companies and software vendors, and a big part of its practice is in integration and deployment services for what it calls the "New Oracle Economy," or Oracle's collection of software from PeopleSoft, Siebel, J.D. Edwards, Agile, and others.

However, it's still hard to find people with the skills necessary for enterprise application integration, Reddy acknowledged. Skills generally relate to broader technologies such as Java and Microsoft .Net. Sierra Atlantic also provides outsourced product development and testing services.

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