Indian IT Gears Up To Invade Land Of The Dragon

[Guest guest]

Indian IT Gears Up To Invade Land Of The Dragon

 

Part I: What Makes China An Attractive Destination

 

Ashu Kumar & Indranil Chakraborty

 

New Delhi/Kolkata: The Indian infotech sector is finally getting

ready to invade the Middle Kingdom. Information available with eFE

shows that it is not only the top Indian software companies, but even

mid-size and small players that are preparing to enter China.

 

Tata Consultancy Services (TCS), Wipro, Infosys, NIIT are some the

big players, which have already announced their China initiatives.

However, smaller companies like Nucleus Software, ITC Infotech and

Ontrack Systems are also firming up their China plans.

 

The seriousness of intent on the part of IT players is evident from

the fact that delegations from all major industry associations have

visited China in the last few months. National Association of

Software and Service Companies (Nasscom), Manufacturers Association

of Information Technology (Mait) and Electronics and Computer

Software Export Promotion Council (ESC) have recently released

special reports on China.

 

In an effort to bring readers the latest on the China front, eFE will

carry a series of stories focused on the Land of the Dragon starting

today. The articles aim to answer vital questions about business

opportunities, challenges, environment and competition in China. The

content is based on discussions with business delegates who visited

China recently and with leading industry associations. The first

piece takes a look at why Indian software companies should head for

China. The next three, in that order, will focus on: challenges,

policy and legal environment and local competition.

 

In terms of business opportunities, China throws open four major

options of revenue streams to Indian software firms: Offering

services to multinational companies operating in China, developing an

alternate software development base in China, exploiting China's

domestic market and using China has a route to enter Japan and Korea.

 

TCS has started its subsidiary in China banking on the projects from

its existing international clients the company is servicing in other

countries like the US or in the UK.

 

Clearly, the relationship with global clients can be extended by

Indian firms to operations in China as most of the multinationals

there are looking for software service suppliers. However, the Indian

companies will inititally have to be satisfied with low-end work of

system and infrastructure maintainence or technology servive and

support operations. Experts feel it is worth the effort as Indian

companies will be able to save on marketing expenses beside getting a

long term revenue inflow.

 

NIIT wants to start a development center in China as part of its

strategy to distribute its development facilities across the globe.

The idea is to provide greater comfort to its global customers who

have questions about India's geo-political stability. Interestingly,

the China's proximity to Japan and Korea can be capitalised to create

a corridor to access and service these potential Asian markets. Most

of the experts eFE talked to, suggested Dalian situated on the

eastern shores of China as an ideal location as it is very close to

Japan and Korea (less than two hours by air). This location can be

used as a good mid-way resource base to service Japan. Japanese

clients prefer China over India because of proximity and cultural

similarities.

 

The local China market is seen as a huge business opportunity

particularly in terms of embedded software beacuse of China's

predominance in hardware. Moreover, the forthcoming 2008 Beijing

Olympics will also be a great opportunity for software services.

According to industry experts, China also provides a good market for

mid-range software service providers especially in banking, telecom

and retail sector.