Beijing: In the backdrop of the concerted efforts to persuade China to give greater market access to Indian IT and pharmaceutical products, software companies like Tata Consultancy Services Ltd (TCS) and Wipro are “ramping up” efforts to win business in the communist country, according to a media report.
TCS, India’s largest IT services company by sales, is leading the effort to expand the presence of the Indian IT industry in China, state-run China Daily reported. However, cracking the Chinese market may not be an easy job, the report said.
“Chinese companies are still used to the traditional global brands. They have not yet seen us. So it is also a question of brand-building for us,” TCS Asia-Pacific region head Girija Pande told the daily.
Unlike their Western counterparts, large Chinese companies usually have their own IT department and domestic outsourcing in China is yet to take shape.
“But when they start doing it and focus on their core business, then the Indian companies can bring value to China’s domestic outsourcing market,” Pande said.
With the trade deficit between the two countries expected to widen with record bilateral trade worth $60 billion in 2010, India has been pressing China to give market access for IT, pharmaceuticals, agro-products and engineering services in a big way, as they presume to have good scope to grow in Chinese markets.
During his recent visit to New Delhi, Chinese Premier Wen Jiabao had promised to facilitate greater market access for Indian goods and services. However, little action has been seen on the ground.
In recent years, TCS which has established a noticeable presence in China’s banking industryhas emerged as the largest Indian software company, servicing large Chinese state-run companies.
Four major Chinese banks, including Bank of China and Hua Xia Bank, use TCS’s core banking system, the China Daily report said.
Pande said TCS needs to further increase its presence in China and added the company is very keen on expanding into the sectors of government, insurance, healthcare and manufacturing.
“I think we have to get more Chinese large companies to see our capability,” he said.
TCS currently hires more than 170,000 people in 40 countries around the world, but it only has 1,200 people in China.
Pande said the company plans to increase its workforce in China to 5,000 people in the next three years.
He also pointed out that Indian companies which are used to working in the English based market need to shed the mindset that language is a barrier to business in order to have a fully-fledged operation in China.
Since the eruption of the global financial crisis in 2008, India’s IT companies have begun to look for business opportunities in emerging markets in order to reduce their dependence on US and European clients.
Pande said emerging markets now account for 20% of TCS’ business and the company has been growing by 40% for the last seven years in Asia.
About 6% of TCS's reported revenues of Rs 9,286 crore ($2.04 billion) in the second quarter of the 2010-11 financial year, came from the Asia-Pacific region, where Japan, Australia and China are key markets.
Wipro Technologies Ltd, a leading Indian software company, is also looking to expand into growing markets.
“China has become our preferred delivery centre for our Japanese customers,” said Gangadharaiah C P, vice-president and global head of Wipro Technologies’ testing services.
“We want to build our biggest research and development centre in Asia in the city of Chengdu,” he said.
Rajan Kohli, Wipro’s chief marketing officer, said the company plans to reduce its reliance on the mature markets in the US and Europe, as demand in emerging markets such as China is booming.
“China has yet to be the major market for us, but it will be one of the fastest growing markets for us in the next five years,” Kohli said.
In the meantime, China is promoting its own IT outsourcing sector to challenge India’s dominant position in the business globally.
Chinese companies are now increasingly picking up orders in the US and Europe, both traditional strongholds for Indian companies.
According to a survey by accountancy firm PG, China’s total outsourcing market will grow to $43.9 billion by 2014, more than double its size ($20 billion) in 2009.
“China will grow and there is no doubt about that,” Pande said.
“It isn’t an easy task to keep leading the IT industry, but competition keeps us all slim and healthy,” he added