As I’ve suggested previously, merging with a western firm is perhaps the most direct and effective way for Chinese outsourcing companies to build their business here.  The most recent transaction is iSoftStone’s acquisition of Seattle based Akona Consulting.

As is standard with these announcements, iSoftStone touts the potential expansion of their U.S. Operations and the opportunity to develop “strategic” services.  It sounds like they plan on using Akona as a front end for their China based teams.  From the company’s news release:

“Today iSoftStone Information Service Corporation (iSoftStone) and Akona Consulting announced they have finalized their agreement whereby iSoftStone will acquire Akona Consulting, a business and technology consulting firm headquartered in Seattle, Wash., USA. With the acquisition of Akona, iSoftStone will significantly grow their United States operations and expand their core offerings into strategic business services which include research, business strategy and interactive design.”

We’ve seen several of these deals recently, including:

• Darwin bought Suzsoft.  The company recently changed its name to Dextrys
• hiSoft bought Envisage
• Longtop Financial did deals with both Longtop International and Minecode (also Seattle based)
• I’ve heard that FreeBorders was created when John Cestar and his team combined a U.S. front end with an existing Shenzhen based software company.
• Sierra Atlantic (a Bay Area company with resources in India) bought ArrAy Inc.
• Softtek (a Latin American near shore outsourcing provider) bought I.T United

While these combinations have met with wide ranging levels of success, I’m convinced that they are based on a sound concept and that we’ll see a number of similar deals announced over the next 18 months. There are a number of discussions currently underway…

Technorati Tags:  China, China Outsourcing, Merger, Acquisition, M&A