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Dow in China: IT builds pathway to Asian workforce

Dow is training an elite workforce in China that it fully expects to rise to the uppermost ranks of the company. The starting point is an IT center in Shanghai. But does it make sense? One analyst, at least, is skeptical.

Information technology is often accused of being a step behind the business. But a new IT center established by The Dow Chemical Co. in Shanghai, China, claims to be blazing the path to an elite Chinese workforce for the $42 billion company, one smart, enthusiastic, hard-working graduate at a time.

"The idea is we can pick up extremely talented individuals and grow them to be leaders in all areas of the organization, not just IT," said Tony Beynon, who oversees the Dow Project Support Center in Shanghai.

When you are trying to train up people, you beg, borrow and steal the time and materials from your existing organization, but we had no organization in Shanghai to borrow from.
Tony Beynon
Shanghai IT center leaderDow Project Support Center
Dow Chemical does $2.7 billion in annual sales in China. Today the country is the third-biggest revenue producer for Dow, behind Germany and the U.S., and it's catching up fast. When sales started growing at a blistering 30% in 2005, Dow realized it would not be able to sustain that growth, especially in the IT area.

"So the CIO suggested we put an IT center out there to support our growth in the Pacific and China, but also to kick-start other areas," Beynon said.

Why start with IT?

Dow is work-process driven, Beynon explained. "The employees starting in IT will learn the IT technology utilized in our work processes but also the work processes themselves that are used by other functions, such as supply chain, purchasing and customer services."

Dow's strategy is to expand its business in emerging geographies. "IT paves the way for Dow's growth in these areas, and that's why it leads this effort," Beynon said.

Dow's Project Support Center has grown to 230 employees, 80% fresh from China's top universities and 20% recruited from the "experienced hire market," the scarce and sought-after Chinese IT professional. About half of the college graduates have IT or related degrees; the others include engineers, scientists, linguists and economics majors. "We were really looking for people with an aptitude in IT and logical thinking," Beynon said.

The application development and IT support done in Shanghai is similar to that at Dow's support centers in Michigan and the Netherlands. The Shanghai center's current project is an upgrade of a Siebel CRM system. When Dow converts from a legacy SAP system to mySAP, the Shanghai team will be part of that as well. "This is not a help desk, or standard coding," Beynon said.

'Hey these guys are pretty smart'

Two hundred and thirty employees out of the 43,000 Dow workforce worldwide does not sound like much, no matter how smart the cohort. But the Shanghai incubator has become the "poster child' for Dow's ambition to tap the talent pool in other geographies, including India, Beynon said. "Being able to say we went from zero to 230 people in 18 months is something. Business leaders look at this and say, 'Hell, if IT can do this, why can't we?'"

Language was not the barrier it is often said to be in China, perhaps because of the caliber of the recruits, Beynon said. In any case, English comprehension -- "if not beautifully conversational" -- was a prerequisite for getting in the door, he added. Unlike other global companies that might use English "when they have to" but do business in the local language, Dow "works in English," he said. A decision was made early to conduct all training in English, so the new Chinese employees were immersed in English from Day 1. The attrition rate is less than 3%, and the group is gender balanced -- nearly 50% men and 50% women.

Still, getting a foothold in China was no slam dunk. The biggest hurdle was the time zone.

"When you are trying to train up people, you beg, borrow and steal the time and materials from your existing organization, but we had no organization in Shanghai to borrow from," Beynon said.

Moreover, Dow's extensive library of training materials is designed for an environment where trainees can turn around and ask an experienced colleague for help. Rather quickly, Dow decided to send trainers to Shanghai. At the peak, Dow had about 30 people on site to train the first 100 recruits. Bringing experienced Dow trainers to Shanghai had another benefit. "It was effective to have these people coming back to North American as advocates, saying, 'Hey, these guys are pretty smart, we don't need to worry they can't do the job,'" Beynon said.

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Maybe so. But Paul Roehrig, an analyst at Forrester Research Inc., questions the cost/benefit of the venture, both from an IT perspective and as a vehicle for grooming Chinese employees for leadership roles at Dow.

"This is something I would fully expect a service provider like Hewlett-Packard or Wipro to do. I just wonder why Dow is doing it," said Roehrig, who covers outsourcing, IT management and delivery operations at the Cambridge, Mass. based firm. "Unless Dow Chemical strongly feels that having its own internal IT management gives them a competitive advantage, I'd have to question the investment."

He's also not sure why the IT support center is an efficient way to groom an elite Asian workforce, given the time and effort spent on training. "How many application developers do you know that move into director-level business positions?"

But Roehrig did not dismiss the venture altogether. "They're basically buying their way into the market, which does make sense. It buys you a footprint in China, it helps build brand loyalty, and you're developing a presence there."

Adrenalin junkies

With less than two years under its belt, the Shanghai workforce can not yet handle all of Dow's business processes, but the expectation is the center will soon "be building the work processes and the IT solutions of the future for all of Dow," Beynon said. "Success for me is to have an organization here that has all the skills and all the knowledge of an existing organization in a mature geography."

How long that takes is the "$64,000 question," but the limitation will not be the innate ability of these "best and brightest," he said, but how fast Dow can get them the work to build the skills and knowledge.

Beynon said one of the important lessons for him was understanding the "incredible talent pool" in China. "They are incredibly smart, they are prepared to work extremely hard, they are prepared to learn as fast as they can, and they are very team oriented, which works well for Dow, because we work in teams," he said.

As for his own experience? "It is the most fun role I have had in 17 years with Dow," he gushes. "I call my team the adrenalin junkies. Shanghai is a big city, everything buzzes. Our whole environment buzzes. It's tough not to have fun."

Let us know what you think about the story; email: Linda Tucci, Senior News Writer

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