Chinese PM opens floodgates for Indian IT cos.

IRIS

The Chinese premier Zhu Rongji is extremely keen to develop China as a global IT leader and Rongji`s visit to the Infosys campus and the instant approval of Infosys` plan is part of his efforts to leverage on the Indian experience in software. Rongji has called for Indian software professionals to work together with China to promote both countries and to progress together. Several Chinese delegations in the recent past have studied the Indian success story in software.

China, with its large pool of software professionals and good infrastructure, is drawing interest from Indian software companies. China is one of the fastest growing economies in the world. The vastness of its market, availability of cheap skilled professionals and good infrastructure has attracted Indian companies to the country. There are about two lakh Chinese IT professionals employed in software exports. Major Indian software companies seem to have recognised the potential of the country.

There are several business areas in the Chinese market that an Indian software company can explore. Indian companies could look at using Chinese resources for software development and offer services to companies in China. Training, too, could offer a big business opportunity. Also, Indian software companies are not necessarily looking at the domestic Chinese market exclusively for opening office there. China can be used as an outsourcing base to service neighbouring countries in south-east Asia, including Japan. Satyam Computer, Tata Consultancy Services (TCS), Infosys all are eyeing the regional market rather than only the domestic market of China.

Most major IT companies in India have taken note of the importance of setting up offices in China. Satyam Computer has a small sales office in Shanghai which the company plans to expand very soon. TCS also is keen on China and during the last few months, senior company officials have visited the country to assess the possibility of getting a foothold in the country. According to reports, TCS is considering a joint venture with a US multinational in China that will cater to the south-east Asian market. IT education major NIIT has also set up a software training centre in China.

There are certain problems with the Chinese market such as language and cultural barriers. Software skills also are not as developed as in India. Companies have raised issues about the legal system prevailing in China, which, according to the companies, is not strong enough. However, at the current moment, the positives of getting into the Chinese market seem to have outwighted the problems for most companies.

The premier has given an on-the-spot approval to Infosys Technologies to set up a facility in China. Rongji was on a visit to the Infosys campus in Bangalore on Thursday when Infosys officials submitted a letter to him asking permission to set up office in China. The Chinese premier gave the permission within 15 minutes drawing applause from Infosys officials for fast decision-making. This will be the company`s first office in China.

Later during the day, Infosys chairman NR Narayanamurthy remarked at a function in Mumbai that the Chinese branch will be used not only to cater to the Chinese market but also to markets in the Far East. He remarked that servicing the Far East market, including Japan, from China would be a cost-effective and efficient solution. Narayanamurthy said that Infosys would like to open a branch in China rather than go in for a joint venture. He did not comment on the specifics of the company plans saying that Infosys is still in the process of developing a plan and all options are open to the company.