The Hindu Business Line : HCL Technologies steps into dragon land

Dalian (China), Sept. 7 HCL Technologies is the latest Indian IT heavyweight to set shop on Chinese shores. The company is close to finalising three collaborations with local Chinese partners in the fields of enterprise software, engineering and application testing, according to its President, Mr Vineet Nayar.

HCL is relatively a late comer to the Chinese market. India’s big four — Tata Consultancy Services (TCS), Infosys, Satyam and Wipro — have already established a presence in China, as have a slew of smaller companies such as iGate Global Solutions, Newgen Software and Zenzar Technology among others.However, Mr Nayar is confident about the potential for success in HCL China’s differential approach that will focus on partnership. “We don’t want to do it alone. We want to subcontract our operations thereby circumventing cultural clash and other issues. We will define clear deliverables and time lines and team them up with our processes and systems,” he said in an interview on the sidelines of the World Economic Forum in Dalian.

HCL China will look to servicing its existing MNC clients. For these clients, an HCL presence in the mainland will be appreciated as it would help them to diversify their risks.

Tapping domestic market

The Chinese domestic market for software will be the next target. Although, in the past, this potentially lucrative market has proved tough for Indian companies to break into, Mr Nayar believes that as more and more Chinese companies attempt to develop a global footprint, they will require global IT solutions, the business HCL is looking at.

Natural choice

The policy environment for IT in India is no longer conducive to growth. The increasing number of taxes are choking profitability and pushing companies to look elsewhere for growth options. China, with its large market and labour pool and low costs, is the natural choice, Mr Nayar said.

HCL’s China foray comes at a time when the other Indian IT majors are planning to ramp up their China operations. Infosys Technologies has announced plans to open two development centres in China that will employ 6,000 people, while TCS has recently set up a joint venture with three Chinese partners and Microsoft Corp. The TCS joint venture plans to employ at least 5,000 people over the next five years, scaling up from its present strength of 800 employees in that country.Earlier this year, Satyam Computer Services also began construction of a major software development centre in the Chinese city of Nanjing which when completed will be the company’s largest such centre outside of India, employing 2,500 people.

Modest beginning

HCL will begin more modestly. It has already established a programme office in Shanghai that can seat 150 employees. It will look to expand to Beijing and Dalian in the future. And while it is difficult to say with certainty how successful HCL will be in scaling the Great Wall, what is clear is that the cross-Himalayan IT engagement is heating up.

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