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Home > Business > Business Headline > Report

IT majors welcome move to China

Priya Ganapati in Bangalore | June 27, 2003 12:21 IST

Prime Minister Atal Bihari Vajpayee's speech in Shanghai on Thursday calling for an Indo-Chinese partnership in infotech has a willing audience among Indian IT companies.

Rather than see China as a threat, IT companies in Indiasmell opportunity and treat China asyet another market to help swell the bottom line.

In hisaddress totheIT summithosted by NASSCOM, the apex industry association for software and services companies in India, Vajpayee said, 'India and China have come a long way from being poor and industrially backward countries to emerge as leaders in cutting edge technologies, which drive today's knowledge economy. One of the main objectives of my visit to China is to impart fresh momentum tothe comprehensive bilateral cooperation, which India and China are seeking to build. If our economic cooperation is to break out of the traditional mould, knowledge-based technologies need to occupy a far more prominent position in our economic interaction.'

Indian IT companies will heed that advice as theylook to expand their operationsin China.

Tata Consultancy Services, India's biggest software company, plans to hire 150software engineers forits development center in China.

TCS establishedits China subsidiary lastyearandemploysover a hundredpeople. Nearly 70 percent of its employees are hired locally.

"We are looking at China for three strategic reasons. First, to be close to our global clients who are rapidly expanding in the Chinese market.Second,to service the huge domestic market in China. Third,to be ready for China as an offshore destination for projects from Korea and Japan," says Atul Takle, Vice-President (Corporate Communications),TCS.

Vajpayee suggested that India and China collaborate to spread IT education and initiate community level low cost computing, home networking solutions, more efficient use of bandwidth and e-marketing. Heurged Indian and Chinese companies to partner inR&D.

Though there is nopartnership yet between Indian and Chinese companies in these areas,China's domestic market is whatlures many Indian companies.

IT major Satyam Computer Services recently establisheda development center in China whichemploysabout 30 people.

"The Chinese market has tremendous potential. We have to be presentthere to get at least a small pie of this market. Many of our global customers whoset up operations in China tellusthey are looking for support services there.It is definitely a market that will boom in the future,"aSatyam executive told

Despite the hiccups thisis why companies are determined to set up shop in China.

For the last 18 months, Infosys has been tryingto establisha development center in Shanghai. But its plans are stuck in red tape despite a personal invitation by thenChinese Premier Zhu Rongji when hevisitedthe Infosys campus in Bangalore in January 2002.

Infosyshopes tomakeits presence felt in Chinathis year through a subsidiary.

Few other companies are willing to go all alone in the Chinese market. Alliances with local software companies areseen as the safest way to get a foothold in China.

Less than a year ago, whenZensar Technologies wanted to set up a center in China it decided to go in for a partnership with a local company. Zensar established a joint venture with Hong Kong-based Asia Logistics Technologies. ALT specializes in providing supply chain management and logistics technologies solutions and services.

Hanzen Technologies Consulting Limited -- the 50:50 joint venture between Zensar and ALT -- is the first Indo-Chinese software company to start operations in China.

The companyestablished its headquarters in Zhuhaiin south China's Guangdong province and is in the process of setting up a 'software factory' that would meet the requirements of neighboringmarkets.

"The Chinese mainland offers a great business opportunity. Zhuhaiis quite small, but it is amazing with its well-equipped technology parks, very good infrastructure and luxurious housing facilities. If a small place like Zhuhai is so good then you can imagine how aggressive and impressiveplaces like Shanghai are," says Zensar CEO Ganesh Natarajan.

Hanzen hopes to combine Zensar's global experience withALT's Chinese expertise to provide easy localisation and care to diverse customer requirements.

TCS too has opted for alliances with two Chinese companies -- eBIS, a provider of financial services solutions and Zoom Networks, which offers IT and telecom services.

"Chinese companies are still evolving project management and domain skills, which offers potential opportunity for ndian IT companies to enter into joint ventures with Chinese IT companies. This will also provide the opportunity to serve MNC customers of Indian companies whooperatein the Chinese IT market. Further, India can engage with China to enhance its manufacturing base and encourage local integration of hardware products. This will help bring downcosts significantly, helps domestic players; especially small and medium enterprises provide shorter sales cycle and faster local availability," saysNASSCOM Chairman Som Mittal, who is alsoCEO,Digital GlobalSoft.

WhileChina isone ofthe largest andfastest growing IT markets, Indiaonly exports $4.3 million worth of software to China.

"There is a large untapped opportunity for both countries to gain from collaboration and cooperation," saysNASSCOM President Kiran Karnik. "Indian companies can tapthe Chinese domestic software market; leverage Chinese talent in the area of chip design and telecommunications technology and set up offshore development centres in China to serve the Japanese market. Likewise, the Chinese can tapIndian potential in software services to their advantage."

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Number of User Comments: 4

Sub: Rebeginning ties with foes

The article certainly tells a lot about the Indian presence in the Chinese market.Very few people know about the eastablishments of Indian I.T Industries in ...

Posted by B.Sundeep

Sub: It's Great opportunity For india software industry

This is the time for the indian IT companies to concentrate on the global market other than USA. Obviously china will be a good option ...

Posted by sridhar

Sub: Good oppurtunity

It is a wonderful oppurtunity for Indian IT companies to tap new markets esp when they want to reduce dependence on US. Although Chinese IT ...

Posted by Ankur Gargi

Sub: Cooperation rather Competition

hi.. Soon India is to establish herself as the service hub of the world,and with Chinese manufacturing capablities there sure seems to be a scope ...

Posted by Anup babu



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