How We Run our Offshore Development Center

Shenzhen has grown rapidly from a small fishing village in 1980 to a major city of 13 million people today. I don’t know of any other city that’s experienced such meteoric growth in a similar time frame. To put it in perspective, in 2005 Shenzhen’s population was the size of Chicago. Now it’s a stunning 50% larger.

With such rapid urbanization, there isn’t much history to the city nor does it have many people who have lived there a long time. It’s a gleaming, new city that’s emerged de novo in a short time. It will take more time for it to develop character, its own traditions, and history.

We chose Shenzhen as the site for Morningstar’s first offshore development center in 2003. Because it’s just across the China border from Hong Kong, it was easily accessible for our global staff. We were able to attract many talented employees, and it has a lower total cost of operation.

We operate our development center differently than many multi-national firms. Many view offshore centers primarily as a way to reduce costs and invest little in them. Workstation sizes are small and their density is high. The work environment is often not pleasant. For many global companies, their offshore center office standards are different from their global standard.

We take a different approach. We have a “One Morningstar” philosophy and strive to operate the same way globally. So our China development center looks and feels like our Chicago headquarters. We have the same furniture solutions, layout, and generous use of common space. People from our global offices who visit our Shenzhen office feel at home.

We perform database compilation and application development in Shenzhen. These operations are integral to our global business and integrated into them. We work on developing talent and career paths just as we do in our other offices. Many of our Shenzhen staff move around and work in our other offices globally.

We purposely created our offshore center as a wholly owned subsidiary so we could invest in the staff and deeply integrate it into our operations. We didn’t pursue the common “BPO” or business process outsourcing model where a company contracts with a third party to run the offshore center. While the BPO model may have short-term cost advantages, there’s less incentive to invest in the operation because it is owned by a third party. It creates a different mindset and aids integration when the offshore center has employees who are on equal footing with our global staff.

We want to make Morningstar a great place to work in every location where we do business. Our Shenzhen team is very open about giving us feedback about how to improve the workplace—and we act on it. That includes paying competitively, providing career paths, giving people a strong sense of our company mission, celebrating successes, and having an open, transparent culture. There’s also a host of social events to create bonds between people and foster a family feeling. When I visited in June, we held an employee Town Hall meeting, and I went over company strategy and answered questions. I also kicked off the two-month long “Fun Games” event series that offers sporting competitions each week for the next two months.

We are one of the larger multi-national employers in the city. Over the past year, we received significant government tax incentives. We received these incentives because we are the type of company Shenzhen wants to attract—a progressive, high-technology firm that treats people well and develops talent. Shenzhen is home to Chinese high-tech titans like Tencent, Huawei, and BYD.

I’m sure if we operated our development center just to minimize costs, we would not have received these benefits. We don’t operate this way to receive the tax benefits. But it’s reassuring to see that doing the right thing ends up being good business.

Photo: Morningstar