Scaling: How China-Based VanceInfo Grows Big Fast

Scaling: How China-Based VanceInfo Grows Big Fast

By
Hayagreeva Rao, Pamela Yatsko
2009|Case No.HR34

When Chris Chen founded VanceInfo Technologies in Beijing in 1995, the firm had 25 employees and one low-end IT services outsourcing project for a U.S. multinational. By August 2008, through a combination of organic growth and acquisitions, VanceInfo employed more than 4,800 people, had numerous Fortune 100 clients, and enjoyed revenues exceeding $80 million over the preceding 12 months. Although small compared to more sophisticated Indian rivals, VanceInfo was well placed to capture an expected explosion in demand for China-based offshore IT services.

At the same time, rapid growth was straining the firm’s management personnel, systems, and resources. Headcount was slated to quintuple to 20,000 in four to five years’ time to keep pace with aggressive revenue targets. Old ad-hoc ways no longer could accommodate current or future needs. To succeed, management had to implement new financial, operational, and internal management systems, especially in the critical area of human resources where VanceInfo faced some of its greatest challenges. These included introducing effective processes for rapidly expanding, training, managing, and retainining its workforce. Moreover, in its quest to grow its workforce to 20,000 within five years, move into higher-margin business lines requiring new expertise, and beat out domestic and international rivals, management had to strike a balance between quick gains via acquisitions and potentially slower growth through organic expansion.

The case helps students think through the complexities involved in managing a fast growing company. Specifically, it asks students to analyze whether VanceInfo’s current strategy of growing organically and through selective strategic acquisitions will allow it to achieve its goals. It also asks them to analyze the company’s human resource challenges and its efforts to meet them.

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