Indian IT industry expands to China; the bilateral investment of 3 years reaches 1 billion US dollars

"On information technology cooperation, we two countries have a good start, and now, it is the time to push forward."

In the afternoon on September 1, V.Prakash, the Consul General of India in Shanghai, made this statement in China and India (Nanjing) IT Industry Cooperation Fair. The audience reached about 200 people, including the leadership of Nanjing, more than 50 IT companies in Nanjing, various districts in Nanjing, software parks, development zones, business representatives, and more than 10 Indian top IT companies.

V.Prakash was confident that in 2006, the global software outsourcing market would reach about 60 billion US dollars; in 2010, it would increase to 100 billion US dollars, so India and China had enough space to carry out effective cooperation.

All run to Nanjing.

In 2002, Tata Consultancy Services (TCS) in Shanghai became the first Indian single proprietorship enterprise investing in Shanghai. In the following five years, Indian IT companies are entering into the comprehensive development stage in China, and Nanjing, the second-tier city of China, will become a focal point.

The same day, Satyam, TCS, NIIT, INFOSYS went to Nanjing to search new partnerships and projects by the leading of V.Prakash---the Consul General of India in Shanghai, Gu Guangming---the Commercial Consul of India in Shanghai, China chief representative of Indian Industry Association.

V.Prakash stressed, "The reason why we consider Nanjing as our preferential partner in Jiangsu is that Nanjing has a good investment environment and Jiangsu is the biggest trade partner of India in eastern China."

According to Chen Shaoze, the Secretary of Nanjing Municipal Party Committee of the CPC, published that in 2007, Nanjing has got the titles of China Service Industry Outsourcing Base City and China Software Base Export Innovation Base. Also, the sales of the software industry in Nanjing have been keeping 50% increasing speed for 5 consecutive years, the sales of 2006 was 25.8 billion Yuan, of which contained the exports of 3.8 billion dollars. Chen Shaoze stated that Nanjing must strive to build the best software services outsourcing base.

SATYAM is also one of the first Indian IT companies which entered China. In 2003, it established its first company in Shanghai; in 2004, it quickly entered Dalian, Hong Kong, Beijing and Guangzhou; in 2007, it enters Nanjing and sets up its research and development center, then, its pattern rudiment in China is appearing.

SATYAM, which was founded in 1987, is the largest company of India in Nanjing. Currently, it has provided services to 570 global enterprises, of which 165 enterprises are from the world's top 500 enterprises. On February 8 in 2007, SATYAM signed into Nanjing, and established Nanjing Research Center to be the largest Indian research and development center out of India. Luo Wende, the manager of SATYAM in China, said, "We hope that our Nanjing Company is one of those who grow very fast, we have 500 employees in China, and 96% of them are the localized talents."

Chen Shaoze commented, "Recently, there are still a lot of Indian enterprises besides SATYAM, TCS and other enterprises having a strong interest to invest in Nanjing, and many of them are negotiating with each other to promote bilateral cooperation in more fields."

Indian IT enterprise representative said to our report that Nanjing had the low costs as Indian local IT professionals’ costs was too high; this was the important reason attracting Indian IT companies. The chairman of Qingtian Technology Inc. called on the Indian partners that "It is our huge advantage that Nanjing’s cost is about 20% lower than the frontline cities."

The Cooperation Space between China and India on Information Technology

Since 2006, President Hu Jintao had visited India, the cooperation between China and India has been greatly accelerated.

In 2006, India had become the 10th largest trade partner of China, and the bilateral trade had reached 25 billion US dollars. V.Parkash, the Consul General, expected in 2007, the bilateral trade could overcome 30 billion US dollars and over 400 billion in 2010; by the year of 2010, the bilateral investment would have each one billion US dollars of investment.

The information industry and software outsourcing services are the strong industries in India. In 1991, Indian information industry output value was 50 million US dollars; in 2007, the total import and export of information industry will reach 50 billion US dollars, while the global software outsourcing market only reached about 60 billion US dollars in 2006.

V.Prakash said that information technology was the area in which the two countries could cooperate, India was the world recognized power of information software, and China was the information hardware power, there existed great room for cooperation.

But during the five years for Indian enterprises invest in China, there are many problems need to face to. V.Prakash and Wood both said the most prominent main problem was human resources, talents losing rate was high. V.Prakash commented, "It is also in India, but the talents losing rate in Indian large enterprises is not as high as it is in China." The delivery manager of Tata IT company in Shanghai stated that in China, it was easy to find technical staff and engineers, but it was difficult to find managing staff, especially project management talents." Also, the language problem is the major problem second only to the talents problem. The reporter noted that people all had regret of the language communication after the Indian firms negotiation.

But Madrid Wu, the China chief representative of Indian Industry Association, stressed the information transparency was a big problem for Indian enterprises to invest in China; enterprises should reopen all the procedures of investing operation in different cities of the same province.

In addition, local enterprises in Nanjing worried about Indian IT outsourcing companies were also expert carriers, they would face to intensified competition. Withal, V.Prakash commented, "I have heard people worried about the competition; I think this is not necessary and the healthy competition is a natural phenomenon, it will make us more powerful."

V.Pakash stressed, "We do not regard China as a competitor but a friend, the world is so big that it is enough for us to become the aspiring countries."