Indian IT Firms Try to Tap China Market
When Indian Prime Minister Atal Bihari Vajpayee visits
China for a 6-day state visit on June 22, he will have
more than 50 Indian business leaders in tow looking for
business opportunities.
Most significantly, he will be bringing senior executives
from Tata Consultancy Services and Infosys Technologies,
two of India's largest IT firms, to Shanghai and Beijing.
This marks a significant change in the attitude of India's
software industry to China. Only three years ago, the
Indians considered China to be an up and coming threat
to its software industry, which developed as an offshore
software development resource for Silicon Valley firms.
Now, the Indians see China more as an opportunity than
as a threat.
In every industrial sector except software, China is
far ahead of India. Foreign direct investment to China
in 2002 was US$53 billion, placing it at number one worldwide.
Official figures for India in 2002 are not yet available,
but rough estimates suggest that it is less than one-fifth
of the figure for China.
In comparison, China's software exports for 2002 totaled
US$1 billion, while India's were $9.5 billion. In 1999
Indian firms got a significant amount of business handling
Y2K projects, reprogramming legacy software so that it
would not crash when the year 2000 came around. Then when
the US Internet and IT companies started their long crash
in March 2000, Indian firms initially benefitted when
US firms chose to out-source large projects to India in
a move to cut costs. But lately, projects from the US
have fallen off, and Indian companies are looking for
new customers so that they can start booking their technology
staff for significant enterprise-level projects.
Initially, Indian firms were afraid that the Chinese
would attempt to steal business after learning how the
Indians handled enterprise software projects. Now, the
general business climate has changed to such an extent
that they have decided to set these misgivings aside.
Alone worldwide, China has significant state-run infrastructure
development projects in the pipeline, and the Indians
want a piece of the pie.
Technically, the Indians would need to learn how to handle
double-byte coding, which is necessary in Chinese language
software development. Once they learn this, which is not
technically difficult, they will be able to gain greater
access to the enterprise software markets of Japan and
South Korea, which are very significant.
Then, the challenge for Indian businesses will be learning
the enterprise software sales and marketing side of the
business, so that they can close deals in these countries.
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