For example, L10N and G18N (localization and globalization) are almost always sub-contracted. And contractors (as individuals) are hired on a routine basis. But sub-contracting to other firms for higher-end work tends to be problematic: It’s potentially creating and/or strengthening a competitor. Hence, it’s not so common to see this. The exceptions tend to be other firms where there are very high level guanxi-based relationships, e.g., a CEO of one firm sub-contracting work to a firm owned by his brother-in-law.

At Startech, we take very high level work from others. As the outsourcing hub for Tsinghua University, China’s MIT, we have access to some EXTREMELY high-level talent — but not talent that most IT outsourcing firms would want to keep on their permanent staff. It tends to be very highly billable work.

Matter of fact, the sub-contracting tends to often be at the extremes: Low-level L10N/G18N and high-level algorithm development. Some stuff “in between” can be sub-contracted as a part of a firm’s staff augmentation. Alas, staff augmentation is really what most ITO in China is all about, especially for ISV clients like Microsoft and IBM.