Deputy Manager: Caven Ran

[Q 1]: Approved by the Ministry of Commerce, Ministry of Industry and Information Technology, as well as Ministry of Science and Technology of PRC, Chongqing has been granted the honorary title - "the Base City of Service Outsourcing in China". Meanwhile, as the fourth municipality directly under the central government, Chongqing has been strongly supported by a series of policies which includes setting bonded area in Chongqing. The government even organizes debates on TV concerning topics such as High Technology Industry and Industrial Production, which is more important for Chongqing's growth? Could you please talk about what advantages do you think the software outsourcing companies in Chongqing have compared with those in other cities in China?

[Caven]: I believe the prospect of offshore service market in Chongqing is very optimistic, since there are two main objective factors: first, enormous governmental support; second, increasing market demand. Growing in the fastest pace, Chongqing is confronting a huge challenge that is to adjust the industrial structure to meet the market demands. Currently her industrial structure gives priority to the traditional mechanism industry. At this point she has to change this style of industrial structure into a sort of all-sided, multiple industrial structure. As a matter of fact, Chongqing Government has prepared some systematic plans of action, and put forward that the priority should be cultivating and supporting the five pillar industries in Chongqing, one of which is the information industry. As a significant part of information industry, offshore software development service benefits a lot from the government's subvention each year which is mainly spent on market expansion, supporting software companies, attracting and cultivating talents. Therefore, surrounded by such favorable environment, the software outsourcing industry must grow very fast. The predominance of software outsourcing companies in Chongqing is that abundant in IT talented resources, they have very nice cost performance. Large numbers of IT talents graduate from a mass of colleges and universities in and around Chongqing every year, which supplies Chongqing IT market with available resources on a continuous basis. Besides, attracted by Chongqing's rapid development and favorable environment, plenty of IT talents from other cities and provinces come to Chongqing in pursuit of better development of their capabilities and potentialities. Because of sufficient supply of well-educated IT resources and competitive price in comparison with that in the coastal cities, I believe software outsourcing industry will definitely prosper in Chongqing. As the first branch that the headquarters has established, NOVA has not only learnt a lot from the headquarters' experience but also accumulated extensive experience from the business practice. Specializing in .Net which is a very popular technology nowadays, Nova also advocates her employees to update their knowledge in the realm of software development. I am looking forward to the cheerful prospect of NOVA.

[Q 2]: As is known to all that software outsourcing service has been developing very fast in India. So what do you think are the advantages of Chinese vendors engaged in offshore software development service?

[Caven]: Being diligent and sure-footed are the characters that Chinese people have been advocating and aspiring after since long ago. With strong sense of responsibility, equipped with positive attitude, friendly manner, fast learning ability and decent coordination skills, Chinese are very trustworthy. Besides, provided with good infrastructure, software outsourcing companies in China seldom encounter unpredictable incidents such as power cut and network disconnection, etc. In addition, the exchange rate of RMB is comparatively stable compared with that of Rupee. Thus the fluctuation in the exchange rates will not have great impact on the hourly rate that we charge, which I believe is very helpful for long-term relationship. Large population in China has made good foundation for the development of High Technology Industry in China. Also the government has been making a push to help the software industry join in the pillar industries in China. Through hard work and persistence, I believe we can exceed Indian software outsourcing industry.

[Q 3]: As we know RMB appreciation has endangered the export of software development service. Like many other companies engaged in export business, offshore software development service in China does not have the same significant price advantage as it did before. Based on Nova's current condition, how do you think can we eliminate the impact of RMB appreciation on service outsourcing industry?

[Caven]: Our hourly rate didn't increase with RMB appreciation, so the problem that price advantage is weakened does not exist in NOVA. RMB appreciation does have impact on the export industry. Without exception, NOVA is suffering from the fluctuation of exchange rate which is influenced by China's economic growth. I think it is time for us to paint blueprint for changes; otherwise our gross profit will decrease. We'll take measures to dispel the blight. On one hand, increase our service quality by enhancing software development efficiency and reducing the expenses of subsequent maintenance work. On the other hand, reduce the internal management cost by standardizing our management methodology.

[Q 4]: In addition to the pressure from RMB appreciation, there comes another pressure. That is the increase of CPI, because of which the employees are asking for increasing their salary. Under this pressure, the gross profit will be hard to increase because the company disburses in RMB, but charges in US Dollars. Just as you mentioned we need to make changes, I am assuming NOVA is going to extend its business. But how do you leverage the business extension and profit as well as cost?

[Caven]: I reckon you are thinking investment on the business extension will increase the cost and decrease the profit of enterprise. How to leverage the extension cost and gross profit, actually this is the problem that every company has to face. My advice would be taking two factors into account: one is the economic situation that NOVA is facing, and the other one is NOVA's strategic development plan. If there is large space for development and many opportunities in the market while NOVA's development plan is a sort of expansionary strategy at the same time, I think the total amount of investment should be large because in this case temporary lower profit margin can win long-term proceeds and some risks can effect extended economic stabilization in the long run. Contrariwise, if the market is tight, we should pay more attention on short-term investment so as to get small profits and quick returns. All in all, it depends on the market condition and we should consider this matter in all its bearings. As for the salary increase that you mentioned, I think we should make a difference between the superexcellent employees and ordinary employees. All the staff are extremely important for NOVA's development. Currently NOVA's development pace is much faster than the CPI' increasing pace. For the superexcellent employees who are developing at the same speed of NOVA's, properly increasing their earnings can promote their go-aheadism, inspire their creativity, light their passion, and arouse their enthusiasm of work. For the ordinary employees, their earnings should increase with CPI so that their satisfaction index toward living condition can be kept in the same level. For the unqualified employees, they will be eliminated through selection and contest if they don't strive for better performance. As for NOVA, our competitors and clients are also confronting the global inflation at present. I mean comparatively, increase of CPI is not a big problem for NOVA.

[Q 5]: Just as you mentioned, promoting the employees' go-aheadism, inspiring their creativity, and lighting their passion is a must for NOVA. In addition to the project management and software management, human resource management is also playing an important part in running a successful offshore software development company. Could you please share your strategy of human resource management?

[Caven]: Basically we can summarize human resource management methods by four Chinese words: Xuan, Yong, Yu, Liu. That's strict recruitment, proper assignment, instructive cultivation, and talent retention. We recruit the most suitable persons by carefully reviewing every aspect about them; we assign appropriate tasks by exploring the employees' potentials in consideration of their current capabilities; we cultivate them by organizing training programs; we retain the talents by ameliorating working conditions and equipment and paying more kind attention on individual development.

[Q 6]: How to increase technical content in the offshore software development service?

[Caven]: Keep improving our technical capabilities and work efficiency. .Net domain has become more and more popular and advanced. We should keep track of the latest high technology and the up-to-date development methodology and make use of the right one at the right time.

[Q 7]: Recently we've set up a project management team. Please briefly introduce the objective of this team, and their work content. What do you expect to get from this team?

[Caven]: The objective of this team is to enhance the management skills and coordination ability of each project team; meanwhile to consummate and optimize the criteria of project management. The work content of this team is to inspect and supervise how the project teams implement the criteria, find the deficiencies and make adjustment accordingly so as to further ensure project success.