Dr. Liu first offered his view on the current state of the software industry's development and in particular software outsourcing to China. Software prices and margins continue to drop. Coupled with this reality is Liu's view that "only 10-15% of software development is truly innovative and therefore suitable to be developed in Silicon Valley". As software development platforms and communication technologies, especially the Internet, become ubiquitous and affordable, distributed software development is becoming the rule.

China's challenges and advantages in software outsourcing

Compared to India, the leader in software outsourcing, China has its own distinct challenges. Chinese software companies have almost no U.S. customers for a number of reasons: language barriers, different working styles, customers' concern for software piracy, and the lack of experienced programmers and technical managers in China. Yet, China also has its advantages. Not only does it have a rapidly expanding domestic software market, but it also has a large pool of fresh engineering talent. "The key, therefore," asserted Dr. Liu, "lies in someone creating the right environment to train and build a local team to be able to develop and deliver world-class software products."

Augmentum's software development goals

This is what Augmentum has set out to accomplish. "...[W]e want to build a world-class, distributed development team for software product development... like the ODM model in the PC world..." declared Dr. Liu. Based on this vision, Augmentum's strategy hinges on its insistence to develop software for top US customers, such as Motorola, Business Objects, and PalmSource--and to rely primarily on local Chinese engineers. Explained Liu: "We want to make sure that the center of most of the people of that team is going to be in China, even though the locomotive, the teachers, is in the U.S., because that's where the leadership is in the software product development world."

Drawing on decades of experience developing top software teams at IBM and other companies, Dr. Liu detailed his company's efforts to attract the brightest local engineers and train them to be even better. He explained, "Culture and team is the true differentiation of Augmentum.... The real...challenge is to build the right culture with the right core team." The company insists on having no expatriates in their China operations but promoting close interaction between experienced mentors in the U.S. and the young teams in China, sometimes using some creative approaches for recruitment and training. For example, Augmentum puts all of its new hires under "a stress test" after hiring and proactively maintains an "upfront churn of at least 30%" in the first three-month period." Their end goal: "a world-class software development team that can bridge the East and the West but still has a cost structure comparable to local companies."

Liu's focus for the future

Despite experienced leadership, ties to leading U.S. companies, and strong young software teams, Augmentum faces real challenges. Liu acknowledged skeptics who question the ability to build a world-class team through working on the "crumbs of companies" of "projects they don't want to work on themselves." Nevertheless, he is confident in the trajectory of Augmentum's future growth, as the company is expecting to double its employees every year for the coming few years. In addition, Dr. Liu's vision includes a landscape beyond Augmentum. "I have a very simple focus. I want to train a lot of world-class software developers in China to serve the world. Many of them will not be working for Augmentum. It is fine...I want to bring my experience to there to make it happen. And the best vehicle to do that at this moment and time, the wave [that] I want to jump on is outsourcing, because it is growing the fastest."

Biography of Leonard Liu

Leonard Liu has spent 30 years in the systems industry, with a track record of developing innovative computing technologies into successful businesses. Most recently, he served as president of ASE Group, a leading provider of IC test and packaging services, having held roles as Chairman and CEO of Walker Interactive Systems, COO of Cadence Design Systems, and President of Acer Group. He was an early champion of outsourcing to India and China at Cadence and Walker. Dr. Liu began his career at IBM where he was responsible for the creation and implementation of SQL and the management of CICS, SNA and AIX, eventually overseeing the worldwide Database and Language lines-of-business. He received his undergraduate degree from Taiwan University and his Ph.D. from Princeton University.

Focus on Innovation and Entrepreneurship in Greater China

SPRIE is a multidisciplinary research program at Stanford University that focuses on innovation and entrepreneurship in leading high technology regions in the United States and Asia. SPRIE has an active community of scholars at Stanford as well as research affiliates in the United States, Mainland China, Taiwan, Japan, Korea, Singapore, and India. During 2005-2006, SPRIE is expanding a new initiative on the rise of leading high technology regions in Greater China and their impact on the global knowledge economy. Specific research topics include globalization of R&D, executive leadership, university-industry linkages, venture capital industry development and leading high technology clusters in Greater China. In addition, industries of ongoing research at SPRIE include semiconductors, computers, telecommunications, and software.

SPRIE Graduate Research Fellows: Research Assistantships & Support for International Field Research

As part of its new initiative on innovation and entrepreneurship in Greater China, SPRIE will select outstanding Stanford students as SPRIE Graduate Research Scholars. SPRIE Graduate Research Scholars will work with SPRIE faculty and senior researchers at Stanford for two (or more) academic quarters in 2005-2006 to gather and analyze data, conduct interviews in Silicon Valley, contribute to publications, and advance progress on the overall project agenda. During summer 2006, they will conduct SPRIE field research through interviews or surveys with business and government leaders in Beijing, Shanghai, or Hsinchu. As part of SPRIE's international research team, they will have the opportunity to interact closely with project leaders and visiting scholars at Stanford as well as partners in Asia, such as the Ministry of Science and Technology, Tsinghua University, or Zhongguancun Science Park in Mainland China or the Industrial Technology Research Institute (ITRI) in Taiwan. They will also participate in SPRIE's public and invitation-only seminars and workshops with academic, business, and government leaders. The financial award will include RA support at 15-20 hours/week (or equivalent) plus summer stipend to cover travel, living expenses, and research.

How To Apply (limited to current Stanford graduate students)

Successful candidates will have demonstrated a track record of superior analytical ability, strong oral and written communication skills (including full fluency in English and Chinese), knowledge of high technology and entrepreneurship, high motivation, and willingness to be part of a dynamic international research team.

Applicants should submit:

1. A brief statement (not to exceed two single-spaced pages), which describes the candidate's interests and skills,
2. a curriculum vitae
3. contact information for 2 references, preferably recent professors, advisors, or employers

Send applications to:

SPRIE
Encina Hall - East 301
Stanford University 94305-6055

or by email to George Krompacky. Questions? Please contact George Krompacky, Program Coordinator, by email or call 650.725.1885

Deadline for receipt of all materials: December 30, 2005

Applicants will be notified of decisions in January 2006

The Stanford Project on Regions of Innovation and Entrepreneurship (SPRIE) is a multidisciplinary research program of the Shorenstein Asia-Pacific Research Center at Stanford University that focuses on innovation and entrepreneurship in leading high technology regions in the United States and Asia. SPRIE has an active community of scholars at Stanford as well as research affiliates in the United States, China, Taiwan, Japan, Korea, Singapore, and India.

Fellowship Program

As part of its initiative on Greater China, SPRIE will select two outstanding post-docs or young scholars as SPRIE Fellows at Stanford for the academic year 2006-2007 for research and writing on Greater China and its role in the global knowledge economy. The primary focus of the program is the intersection of innovation and entrepreneurship and underlying contemporary political, economic, technological and/or business factors in Greater China (including Taiwan, Mainland China, Singapore). Topics of particular interest include, but are not limited to, globalization of R&D, executive leadership, university-industry linkages, venture capital industry development and leading high technology clusters in Greater China. In addition, industries of ongoing research at SPRIE include semiconductors, computers, telecommunications, and software.

SPRIE Fellows at Stanford will be expected to be in residence for at least three academic quarters, beginning the fall quarter of 2006. Fellows take part in Center activities, including research forums, seminars and workshops throughout the academic year, and are required to present their research findings in SPRIE seminars. They will also participate as members of SPRIE's team in its public and invitation-only seminars and workshops with academic, business and government leaders. Fellows will also participate in the publication programs of SPRIE and Shorenstein Asia-Pacific Research Center. The Fellowship carries a stipend of $40,000.

How to Apply

Applicants should submit:

1) A statement of purpose not to exceed five single-spaced pages which describes the research and writing to be undertaken during the fellowship period, as well as the projected products(s) that will be published;

2) a curriculum vitae (with research ability in Chinese preferred); and

3) 2 letters of recommendation from faculty advisors or other scholars. All applicants must have Ph.D. degrees conferred by August 30, 2006.

Address all applications to:

Stanford Project on Regions of Innovation and Entrepreneurship,

Shorenstein Asia-Pacific Research Center,

Encina Hall - East 301,

Stanford University

Stanford, CA 94305-6055

Questions? Please contact George Krompacky, Program Coordinator

Deadline for receipt of all materials: January 13, 2006

Applicants will be notified of decisions in March 2006