In 2003, after a brief retirement from the Taiwan-based Advanced Semi-conductor Engineering Inc., the world’s leading and largest chip package testing enterprise, Leonard Liu launched a start-up at the age of 62. In the US IT industry, Liu was a key force at the vanguard. Since Joining IBM in 1969, Liu had been the vice president of IBM Global, and then president of Acer and the ASE Group, dealing with large servers, databases, PCs, and software and chip business. In his 30-odd years of professional life, Leonard Liu gained rich resources in the US and knew it would not be difficult to build a start-up there. To the surprise of many, Liu finally decided to start a software development company in the Chinese Mainland, a move many thought was inexpedient.
Liu understood the doubt. The best-running software companies are all headquartered in the US, while India has the lion’s of the software outsourcing market. China is at a disadvantageous position in terms of English proficiency and IPR protection. How could Liu and his company in China compete against those in the US or India? “It’s like buying stocks, when everyone else buys in, it’s time for you to sell. You’ll always be the follower if you just follow on the heels of others,” explains Liu.
Leonard Liu has always hated to follow rivals. He believed that with his influence in the US IT industry, and decades of management expertise, he could build up a first-class Independent Software Vendor (ISV) in China. He did not look for any venture capital investment. With the partners he had, he incorporated Augmentum, Inc. in Shanghai in August 2003 to jack up outsourcing to a new level. Unlike the other software OEMs in China, and other countries like India, Augmentum does not focus on the low- and medium-level programming, testing and localization. Rather, it takes on the entire project-system design, system development and testing. They are complex tasks, but Liu has plenty of confidence.
2006 saw Augmentum revenues rise to about US$21 million. Both its number of employees and sales double every 12-18 months; it now has 850 programmers. Liu is delighted that 60-70% of his company’s businesses comes from the total solutions provided to Intel, Microsoft, Motorola, and other high-end clients. It’s a good start, but Liu is clear that Augmentum is not well matched in scale with the Indian counterparts. He’s betting on China’s fast expanding market.
Starting with the Basics
Leonard Liu is extremely ambitious. At present, the competitiveness of Augmentum mainly comes from the contacts and close relationships he has cultivated through many years in the IT industry. To gain stronger competitiveness, Augmentum has to start with the fundamentals.
Liu spent his 2003 Christmas vacation in a university in Wuhan. It was a major stop for Augmentum’s campus recruitment drive. Early in the morning, Liu came to the conference center, where the “job day” was supposed to start at 9:00. But by several minutes after nine, only one student had shown up. Liu was puzzled about the meager turnout. In fact, he forgot the night before was Christmas Eve. He continued to wait. Two hours passed, and some 60 students showed up. Introducing the corporate profile, collecting resumes, and distributing the test papers, Liu kept busy until the afternoon. It was hard to believe that the former CEO of a major company was sitting in a conference center trying to recruit perspective employees. But Liu insists on recruiting each employee himself. He wants to build an outstanding team for his company by taking advantage of his own experience.
For a software OEM, talents are its major assets. The quantity and competence of programmers determine the kinds of projects the company can take on. Given Augmentum’s current size, it is capable of delivering projects of several million dollars at most. Liu spends 40% of his time in the Chinese Mainland, where he’s mainly responsible for recruitment. Liu devotes major efforts to university recruiting. Each year in October, Augmentum launches its “recruitment season”. Over the next few months, Liu travels to several universities, launching publicity campaigns on campuses and introducing graduating students to his little-known company. Since becoming the chairman of Augmentum, he’s become the most enthusiastic salesman in the company.
Liu has spent half of his professional life dealing with software. At IBM, Liu led a group in the invention of a popular relational database language, SQL. He’s now an expert in software development. “Software development is not like making shoes, or building desks, as it is a process requiring intelligence and communication. To deal with US companies, we have to communicate fully with the US software development group. It’s not something that can be solved with simple measurements.” So, when it comes to recruiting, Liu reviews an applicant’s technological competence, but he is more concerned with their ability to learn in a team environment. He also concentrates on that person’s ability to carry out a task, and the ability to communicate. All these skills are necessary to software development. But unlike some foreign-run companies, Liu does not demand the applicants be fluent in English. “Some of our new employees are poor in English, but it’s not very important. As long as they are in a pure English-speaking environment, their oral competence can be improved rapidly.”
The English training program designed by Liu is simple, but pretty tough. Most Augmentum clients are American firms whose primary working language is English. When new employees come in, they find themselves thrust into an English-only world, and they have to adapt to it. In Augmentum, Leonard Liu encourages “apprenticing”, and every veteran is required to train the apprentices. Considering that most Chinese graduates are lacking in practical experience, Liu has arranged a three-month internship for new graduates. The internship might be the toughest time they ever have at Augmentum.
