Project Title: Creating and supporting a software development center for a Japanese technology company

The Challenge

ValueCommerce is a global provider of innovative, high quality Internet business solutions headquartered in Tokyo, Japan. For the second consecutive year, ValueCommerce has received an award as one of the Fastest Growing Tech Companies on Deloitte Technology Fast 50 List of Fastest Growing Tech Companies in Japan. With revenue growth of 219% over the past three years, they are a rapidly emerging company, at an exciting stage of development. Artezio had been serving ValueCommerce for over a year as a contractor and had successfully completed two Web portal development projects, before the relationship between the two companies crossed into a new dimension.

ValueCommerce next frontier in Russia was streamlining of their existing operations by making them more solid and more predictable than a simple contracting relationship and better managing of risks associated with the delivery of their flagship software solutions and products.

ValueCommerce needed to establish its presence in Russia in order to exercise a greater degree of control over the production process. ValueCommerce was looking forward to taking advantage of its own offshore software development department, while letting Artezio take care of infrastructure, technical environment, security, legal and logistical support, human resource development, and personnel hiring.

The customer wanted to start enjoying benefits of their own software development center and to focus on technology and software development without the burden of setting it up and running its day-to-day administration in an unfamiliar business environment. For this major organizational shift, ValueCommerce suggested an aggressive timeline and expected to invest minimally while leveraging the existing Artezio resources and re-using the business processes that had proved to be useful while working together in the preceding year.

The Solution

The right organizational blend that closely matched client’s expectations and was compliant with Russian and international tax, labor, and intellectual property law was a combination of the representative office as a legal form of client’s presence in Russia and a service level agreement between the client and Artezio to govern all aspects of services being received and supplied. Representative offices require lower set up costs and enjoy tax breaks compared to limited liability companies. Representative offices conduct marketing research and "represent and protect" interests of a foreign entity in Russia. The production part remains on the Artezio side and is regulated by the service level agreement.

Some of the prerequisites that spelled success for the new undertaking included a history of Artezio and ValueCommerce successful completion of two software development projects and Artezio’s proven track record of creating an offshore development center for another customer. Earlier, Artezio had put effort into improving its quality management system and had received the ISO 9001:2000 certification.

Once the contract phase for setting up a software development center was over, Artezio quickly provided computer equipment, rented additional office space, renovated the premises, purchased office furniture and equipment, signed up for additional telephone service and Internet access bandwidth, reinforced on-site security guard service, modernized the existing alarm system, and added resources to system and database administration support.

Developers who had already worked on ValueCommerce account for over a year naturally became "charter" employees of the new software development center. Artezio actively interviewed new candidates to fill in remaining vacancies in the newly created development center. It reinforced its own HR department and hired a new HR department manager to accommodate Value Commerce’s future need for high quality personnel.

To assist Artezio, ValueCommerce managers came to Russia to run a "boot camp" for the employees of their new development center. They stayed for a few weeks in Moscow to conduct a series of seminars and to mentor their offsite peers (e.g., the ValueCommerce test manager trained the Russian software development center test manager). Once training was completed, three ValueCommerce managers stayed permanently on their offshore assignments in Moscow to ensure that software development lived up to the required organizational and quality standards.

The ready availability of all required resources allowed a fast software development center launch. ValueCommerce started full blown operations 8 weeks after making an agreement with Artezio. Currently the software development center has 50+ developers and some ValueCommerce managers. Personnel are supposed to grow in the near future. The new center is involved in software development, maintenance, and 24-hour tech support of ValueCommerce customers.

As a result of cooperating with Artezio in launching and operating their own software development center, ValueCommerce has realized benefits including cost savings, significant risk reduction, little need for long-term investments, and a highly scalable workforce. With a rapid progress of Web hosting business in Russia, a further benefit could be the identification of Russia as a potential market for ValueCommerce services and solutions.

Tools and Technologies

• J2EE 1.4 platform
  
• Caucho Resin XML Application Server
  
• LDAP
  
• Oracle Database 10g
  
• MySQL Database Server
  
• Red Hat Linux
  
• Microsoft Windows 2000/XP/Server 2003

Related links

www.valuecommerce.com

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