Does This Tell Us Something About Dextrys?
An associate forwarded a link to this post. I haven’t heard anything to substantiate this, so please take this with a grain of salt. It’s apparently from a Suzhou based Dextrys person.
“I was told about a week and a half ago that they were eliminating the marketing department at Dextrys since there is nothing for us to do during these times of economic crisis.”
I’ve heard anecdotes about growth slowing down for some of the Chinese software outsourcing firms, but this is the first thing that I’ve seen about outright staff reductions. Of course, being a Chinese company, the first thing that they’d cut is marketing.
Technorati Tags: China, China Outsourcing
I used to work for Dextrys and have many contacts there. About 3 weeks ago, Francisco Partners apparently required that they get rid of $3M in payroll. A top sales VP and an Executive VP of delivery were let go, along with many others. From the outside, it seems the business is imploding.
Comment by Larry Tanner — 2008.10.27 @ 06:00
Hi Larry- Thanks for the confirmation and the additional information. I wondered how long it would be before Francisco Partners became impatient… http://chinaoutsourcing.blogsome.com/2008/02/29/darwinsuzsoft-has-a-new-name/ and http://chinaoutsourcing.blogsome.com/2008/05/08/dextrys-darwinsuzoft-names-brian-keane-ceo/ — I hope that Mr. Keane knew what he was getting into.
Comment by deans — 2008.10.27 @ 10:27
I have been hearing numerous stories coming from the Dextrys teams in Shanghai and Suzhou. A lot are coming from disgruntled employees as that above. However, the common thread is that they have laid off 100 - 200 people in the past 4 months, including most of the foreigners working out of Suzhou, specifically all non-native English speaking foreigners were laid off. There are a number of reasons given for the cutbacks, including:
- Cutbacks in available visa’s given by the government
- Requirements as part of their new funding
- The economy
However, here is what I think. Dextrys has been focusing mainly on headcount growth over the past three years, hiring anyone who is willing to work for a lower than market salary, and taking on any project they could win to grow headcount, no matter how small the margin.
As with many outsourcing companies in China who have been competing on price and not value, their margins on many projects have gotten razer thin especially with the higher RMB.
I suspect that the new investors are requiring an X% profit coming from the China operations, which means cutting back on any projects or customers who aren’t profitable. Probably a good long term move for Dextrys but the customers who thought they were getting a great deal by choosing the lowest cost vendor are about to learn as many others have that in China, cheapest isn’t always the best deal.
Comment by James Wheeler — 2008.10.29 @ 15:26