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Cognizant goes to China

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CIOL Bureau
New Update

Doug Young

SHANGHAI: Indian-U.S. software maker Cognizant Technology Solutions Corp. plans to hire up to 100 people for a new design office in Shanghai by the end of 2005, joining a wave of outsourcing firms expanding beyond India.



Many are looking to China as an alternative to India's $12.5 billion software industry, lured by lower costs, good infrastructure and proximity to Western firms pouring record investments into the world's seventh-largest economy.



U.S.-based Cognizant, whose revenue grew 59 percent to $587 million last year, expects to have 50 to 100 people working in the center by end-2005 and 350 to 400 two years later, said Chief Technology Officer Srikanth Sundararajan.



It employs about 10,000 software engineers in India.



"The ramp-up will be linear for the first two to three years," he said in an interview on Thursday on the sidelines of a software conference. "After that, we would consider strategic partnering. ... We are committed to being here."



Cognizant is part of a trend in China producing rapidly expanding software exports, which grew at an average annual rate of 67 percent between 1999 and 2004 to hit an estimated $3.5 billion last year, according to official data.



Indian software companies active in China include industry leader Tata Consultancy Services Ltd. and Wipro Ltd.



Still, some outsourcing firms are coming up against a shortage of English speakers with the experience needed to work with overseas clients that can demand hundreds of engineers for a single project.



There is tough competition for the labor pool. Tata Consultancy plans to expand its workforce in China to 1,000 over the next year from 200 at the end of 2004.



Last week outsourcing specialist BearingPoint Inc. Reuters it could have as many as 10,000 software engineers in China -- up from about 500 at present -- within the next few years.



And venture capital-backed Freeborders plans to double its staff to about 700 by the end of this year from 325.



Sources said this week that home-grown player Kingsoft Corp. -- which bills itself as China's largest software developer -- is planning a $100 million to $300 million U.S. initial public offering to help bankroll growth.

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