downloads.jpgChina isn't that different after all, not even when it comes to public-sector IT contracts.

Sinosoft,
a small Chinese software house, has reported its first set of interim
results since listing on London's AIM market earlier this year.

Just like countless other IT companies, Sinosoft has run into a delay on a key contract and, “as a result, revenues and profits in the first half are lower than expected”.

Sinosoft's
fortunes hinge disproportionately on one big customer, China's State
Administration of Tax, which has contracted Sinosoft to supply the
software for managing export taxes nationwide.

But drawing up
technical specifications and a timetable for the roll-out of the
software has taken longer than expected. Hence, Sinosoft is taking a
more “cautious view” on achievable revenues for the full year. However,
the long-term outlook remains unchanged.

Its familiar language
and the sort of profit warning that could — and regularly do — get
issued by any software house working on a big project. And that, I
suppose, is the point.

Writing software for China's tax
department is not really that different from public sector work in the
west — or any other type of big IT project, for that matter.

For
that reason, I'm surprised that the west's big systems integrators and
software houses have not shown more interest in China. After all, they
have unrivalled experience in managing complex projects and their
“global delivery” model lets them develop software in low-cost
locations like China.

I'm also surprised that China's tax
department apparently entrusts this contract to a single small software
house — Sinosoft's revenue in 2005 was just over $6m.

However,
the public sector has traditionally been the last bastion of
protectionist procurement policies — in the west as well as in China
— so I suspect that that it will be a while before Beijing considers
letting Accenture or IBM design its new tax system.

So Sinosoft's future contract flow seems assured — at least for the time being.

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