Achievo looks to NASDAQ

Achievo plans to float on the NASDAQ stock market as early as the end of this year to become the first Chinese concept software and technology service outsourcing firm listed on the New York bourse.

Raymond Tong, president of Achievo, said in an interview on Monday that his company, headquartered in Dublin, California but with China as its most important base, may make an initial public offering (IPO) on the high-tech-laden NASDAQ by the end of this year.

Achievo, founded by some American Chinese in California in 2002, has almost 80 per cent of its workforce in China, from where the company delivers its services to customers in the United States, Europe and Japan.

"The IPO is only the first step in our expansion and our goal is to become an outsourcing company with 5,000 people in three to five years," said Tong.

He said that at present, the scale of his company is still quite small with just 1,000 employees, but by the end of this year it will have 1,500 people, making it big enough to qualify for a NASDAQ listing.

The New York listing would help elevate its brand reputation and bring more customers to the company, which aims to become an influential competitor in the global outsourcing market. A team of 5,000 engineers is the entry level for big outsourcing firms.

Several other Chinese outsourcing firms are believed to be considering issuing stocks on the NASDAQ, including the country's second-largest outsourcing firm HiSoft Technology International, invested by Intel Capital and International Finance Corp, and Beijing-based WorkSoft Creative, invested by Sequoia Capital, Doll Capital Management and Legend Capital.

In the software and technology service outsourcing business, business scale is usually measured by head counts. Revenue per capita in software outsourcing companies is around US$2,000 a month.

Tong said that his company's customers are mostly from mature markets, so the productivity of his engineers is usually higher with US$2,500 a month.

By the end of this year, Achievo is expected to have 1,500 engineers, so the revenue of the company could reach US$50 million.

The firm's revenue last year was about US$30 million, making it one of the top 10 outsourcing firms in China.

According to domestic research house CCID Consulting Co Ltd, China's software outsourcing market grew by 45 per cent in 2005 to US$920 million.

Chinese firm Neusoft, with 2,800 engineers working on outsourcing, was the largest player with revenue of US$62.70 million last year.

CCID predicts the market will grow at an annual average of 50 per cent from 2006 to 2010, with revenue amounting to US$7.28 billion.

Source: China Daily