VanceInfo Technologies Inc. (VIT) is off to a strong start in the Chinese software outsourcing company's market debut Wednesday on the New York Stock Exchange. In early afternoon trade, its American Depositary Shares are at $9.80, up 15.2% from an opening price of $8.50. VanceInfo's initial public offering raised $65 million.
VanceInfo's venture capital backers include DCM and Sequoia Capital China, according to the company's registration statement, with Sequoia Capital China partner Kui Zhou sitting on the software developer's board. Other backers include Legend Capital, the corporate VC arm of Chinese information technology giant Legend Holdings Ltd.
DCM describes VanceInfo, formerly called WorkSoft, as the "leading China-based provider of IT outsourcing services to Asia Pacific, North American and European clients as well as multinationals in China." Software outsourcing is obviously a crowded field. In China, VanceInfo competes with players such as Achievo, Augmentum and Chinasoft International, while globally it's up against heavyweights including Infosys Technologies Ltd. and Wipro Ltd.
The company derives a big chunk of its business from only two customers: Microsoft Corp. and IBM Corp., which as of June collectively accounted for some 40% of the company's net sales. But VanceInfo has been working to diversify it client base, expanding the roster from 66 in 2004 to 187 as of Sept. 30. Today the company draws roughly 60% of its revenue from the its top five customers, compared with nearly 78% in 2005. And as software development picks up in China, VanceInfo looks well-positioned to grow.
See Dec. 11 story from Reuters
See VanceInfo's IPO prospectus
See Dec. 10 post from Seeking Alpha
See VanceInfo profile from Renaissance Capital's IPOhome