[photopress:it_tata_consultancy_services.jpg,full,alignright]There is a new joint venture between India’s top software exporter Tata Consultancy Services (TCS) and three Chinese partners. The writer has always been immensely impressed with Tata since it took over the Steel Company of Wales and revived a corpse and made it profitable. In an interview one of the Tata managers explained how it was done: ‘We fired all the middle management. They still thought that they came from a superior caste. Probably went fox-hunting at the weekend.’
Not sure about the fox-hunting but the end result was a company run from the shop floor and making a solid profit one year after it was taken over.
So this move into Zhonguancun Software Park, Beijing’s showcase high-tech zone, bodes well. It is possibly the first real example of the long-hyped potential for Sino-Indian collaboration in information technology (IT).
Yes, the Indians have been coming for a while. But even after four or five years in the country, the majority of Indian IT heavyweights in China remain surprisingly light, with an average of 300-600 employees.
The lucrative domestic Chinese market for software, valued at $50 billion plus, has remained out of reach for most Indian companies.
Jonathan Lam, CEO for TCS (China), said, ‘For a foreign company in China there is the question of lacking relationships with key decision makers in government. He added that language and cultural barriers are obstacles as well. Moreover in the IT sector, foreign-owned companies have usually been kept out of the really large deals at the state-owned enterprises.
The new TCS joint venture (JV) has strong government backing and partly Chinese ownership and, as well, the management expertise of Tata. A company that is not used to failure.
The joint venture was formally established in February with TCS taking a 65% stake. A further 25% is owned by three Chinese partners — Beijing Zhonguancun Software Park Development (where the joint venture is located), Tianjin Huayuan Software Park and Uniware. The remaining 10% is expected to be taken up by Microsoft.
Already TCS (China) is winning substantial domestic contracts including a $100-million one for providing banking solutions to the Bank of China. Plus another multi-million dollar contract to implement a comprehensive international trading system for the China Foreign Exchange Trade System (CFETS), a sub-institution of the People’s Bank of China.
Jonathan Lam said, ‘We are finally being able to make real inroads into the banking and financial sectors in the domestic market in China.’
He further said that China wants the joint venture to act as a ‘role model for Chinese industry that sets the standards and which other local companies can then imitate.’
The joint venture plans to employ at least 5,000 people over the next five years (up from its current workforce of around 1,000) which would make it one of the largest IT companies in China.
The market intelligence firm IDC predicted in a report out earlier this year that when it came to the software sector ‘Chinese cities were nipping at India’s heels’ and would overtake Indian cities as the preferred destination for offshore back-office functions by 2011.
Perhaps this is the start of it although Jonathan Lam is not in agreement. He said, ‘The day China can catch up with India is the day that customers feel as comfortable that they will get the same quality and security in China as in India and that day is not close.’
Source: The Hindu