According to a recent report, Shanghai Wicresoft, a joint venture between Microsoft and Shanghai Alliance Investment Company, will be merged with Hong Kong based Comtech Global Engineering & Management Services Ltd. to form a new company.  Comtech is a unit of Insigma Technology Company.

Based in Hangzhou, Insigma is closely affiliated with Zhejiang University, and was formerly known as Zheda Innovation Technology Company.  Insigma trades on the Shanghai Stock Exchange under the symbol (600797:SS).

Microsoft owned 49% of Wicresoft, while the government affiliated Shanghai Alliance Investment Company owned the remainder.  Once the transaction with Comtech is complete, the story reports that Comtech will receive 40% of the new company and Wicresoft will receive 60%.  The story also indicates that Insigma will inject US$6.66M into the new company and will become the new company’s largest shareholder.

Wicresoft’s main focus used to be providing support for Microsoft products in Asia.  If I recall correctly, they were a significant resource for both phone and e-mail support.  They also had some capability to do software outsourcing, but we found that their software development outsourcing teams were somewhat challenging to work with.

Zheda Innovation was one of the domestic outsourcing pioneers in China.  While they have been quite successful within China and dealing with MNC’s in the region, they haven’t yet pursued a leadership role in outsourcing to the west.  We tried repeatedly to work with them during the Zheda Innovation days, but we couldn’t match them with any projects from our western clients.  One wonders whether this combination will make Insigma more aggressive in pursuing American & European business.

I’ve long predicted that China’s outsourcing industry would see a major wave of consolidation, so maybe this is one of Insigma’s moves to roll up some nice business.  I think that it’s also a validation for the BPO market in China - at least the smart guys at Insigma appear to believe in it.

Updated: Wicresoft has apparently changed the address of their English language site. The link should be good, now.

Technorati Tags:  China, China Outsourcing