The Hindu Business Line : Going for the heights

Indian IT players are looking at a China base to scale up — and out — of traditional geographies. Anand Parthasarathy caught a whiff of the action, on a recent visit.

C.V. Subrahmanyam

Scaling up from base camp.

It is noon on a Friday — and there are no tables to be had at the Yingjia Road restaurant of Indian Kitchen. This is one of four run by the group in Shanghai; the brand known for reasonably priced Indian cuisine, with a strong southern selection, runs a dozen other eating places in China. I can overhear the group at the table next to mine — consisting of both Indian and Chinese: It is tech talk of a kind no different from what I would hear in a Coffee Day or Ba rista in Bangalore, sprinkled with phrases such as ‘TCO’, ‘SaaS’ and ‘Vista SP1.’

“No surprise,” says my host, when I point delightedly at this IT-driven activity. “Shanghai is the favourite base for Indian technology companies who have set up a base in China. Satyam, Wipro and Infosys are headquartered here for their Chinese units. TCS is in Beijing — and has an operation in Hangzhou, not far away. When the superfast railway line to Nanjing is opened next year, Suzhou will be just half an hour away — and you will see a rush of Indian companies setting up there, and in Hangzhou and Nanjing. It will work out more cost-effective than Shanghai.”

The last time I visited Suzhou it was a 90-minute drive from Shanghai airport, and the only Indian players I could recognise were first-comer IIHT; and Datamatics Corporation, which, about a year ago, set up a software and services facility in the Suzhou Industrial Park with a local player DarwinSuzsoft. But in China everything happens at Internet speed — so I believe my friend. He is Prakash Menon, President of NIIT China, and both he and his company were celebrating 10 years in China that week.

Food for thought

As we tucked into our paper masala dosas, the restaurant’s Operations Manager Siva came by to see if we had everything we wanted. It may not be high tech — but the Indian Kitchen saga is, if anything, even more telling evidence of Indian ingenuity on foreign soil.

The chain was started in 1985 by a son of Chettinadu who today goes by his local name — Anthony. Forced to fend for himself for a few months in Macau, he started a small snack bar which grew and grew… to become a China-wide chain with 18 franchised partners, mills to turn wheat into atta; a school that turned out Indian chefs.

Earlier, it was Mango Festival. This week Siva and his super speed team of chefs, visible behind glass walls, needed to be specially creative. Basmati rice was in short supply, key spices and condiments were held up in a logjam of bilateral trade rules — yet they managed to dish up the authentic taste of India every day for customers who stuck with them for years.

Across the Shanghai River from Indian Kitchen, and from the 350 metre-high observatory desk of the world’s third largest structure, the Oriental Pearl Tower, Shanghai’s own Silicon Valley, Pudong, is spread out below — a sea of architecturally exciting high-rise structures housing some of the biggest names in global technology.

Keeping these corporations primed with trained manpower is a challenge: China produces 6,50,000 engineers a year, almost half as much again as India — but only a tiny fraction of this number is immediately employable, even at home.

Which is why, when an Indian player with a strong tradition in training, such as NIIT, came to China in 1998, it seemed like an idea whose time had come. Led by Prakash Menon, the small Indian team slowly won the confidence of their host country and in province after province set up IT training centres, where the teaching was done in Chinese, by Chinese.

Eager to provide their students the benefits of an internationally recognised training package in computer and communications, many universities were happy to ‘outsource’ the IT courses to NIIT, providing core infrastructure. In many cases, students completing the GNIIT modules obtained credits in their regular courses.

“The NIIT inside model, where we embed our curriculum into a university’s Bachelor Degree programme, shows how pragmatic the Chinese are. If you have something better, they want it. We also have an engagement with a province called Jiangsu (near Shanghai) where the government vision is for NIIT to train 2,00,000 students in five years. Both in Chongqing and Wuxi, the governments have come forward and given us the complete infrastructure for free, student dorms included,” Menon explains.

Wuxi is NIIT’s most visible face: a striking nine-storeyed circular building houses its own unit inside the Software Institute of Servicing and Outsourcing. But its most heartening success might lie in the directly administered city of Chongquing, 1,200 km to the interior from more popular coastal centres of the high-tech industry, and laying claim to being the world’s largest city, with a population of 13.89 million.

NIIT’s Chief Executive, Vijay Thadani, has been appointed Economic Advisor to Chongqing City by its Mayor, with a mandate to help the city bootstrap itself into the big league. It has four franchisee-run centres in the city and on June 18 will open its own centre.

With challenges like these, NIIT redefined its vision from an IT training provider to being a Global Talent Developer, actively looking at moving into educational spaces for the service industry in China, which is all set to grow in the next 10 years.

Recent months have also seen NIIT enter into alliances with Sun, CA and Cisco to do most of their training in China.

Each choosing their way

At least two Indian IT players decided to take the joint venture route for their forays into China. Pune-based software services provider Zensar Technologies entered into a 51-49 partnership with BroadenGate, one of China’s top 20 software houses.

Zensar uses the Shenzhen base — and BroadenGate’s presence in Beijing and elsewhere — to service clients in China as well as Japan, Korea and the US.

After going it alone, initially, TCS entered into an arrangement in 2007, where it retained 65 per cent of control and shared the 35 per cent with three Chinese partners. Its 2,000-sq.m facility in West Beijing is a striking symbol of Indo-Chinese techno-cooperation. It has two other delivery centres in Shanghai and Hangzhou, according to TCS (China)’s CEO, Johnson Lam.

Wipro has tended to use its foothold in Shanghai to serve its global roster of clients rather than to chase after business within China. It seems to be a strategy that is paying off: it has announced a roadmap to grow its 200-plus strength in China ten-fold within two years.

“We see China as another resource for talent and plan to set up development centres to address Chinese customers,” A.L. Rao, Wipro’s Chief Operating Officer, said recently, addressing the Foreign Correspondent’s Club in Japan.

Infosys came to Shanghai in 2003, and put in two swift investments of $5 million each to create a team of nearly 1,000 China-based consultants and feed the IT/BPO business — including its own banking software, Finacle. It also has a presence in Hangzhou.

For Satyam, China represents its largest development facility outside India, with over 2,500 seats in the Nanjing Software park alone. By year end, Satyam has said, it plans to scale up to 3,000, having ploughed in $60 million. It has come a long way from the days in 2002 when the Hyderabad-based IT leader came to Shanghai. (source IDG news)

Cognizant Technologies, MPhasis, Evalueserve, HCL Technologies, Sasken and Monash Software in Shanghai; IIHT in Suzhou; Aptech and AIIT in Beijing, Hanzen Technologies Consulting in Zhuhai…. The lists, helpfully provided by the Indian Embassy in Beijing’s Web site ( http://www.indianembassy.org.cn/

Indian_Companies

_in_China.htm) as well as by the India-China Economic and Cultural Council ( http://www.icec-council.org/china/ind-comp.htm) of Indian companies setting up operations in China, grow slowly but steadily with every quarterly update.

Mohamed Saquib, Secretary-General of the ICEC, has helped project destinations such as Suzhou to potential players based in Bangalore or Hyderabad. In April 2008 alone, nine companies or organisations signed MoUs with the blessing of the Suzhou municipal government for joint development projects: CapGemini, Patni group, Bangalore Chamber of Industries, Zaza Technologies, Standard Chartered, Logistic Solutions, Sunpa Shobha Software, Hero Mindmine and Excelerate Technology.

On its part, the Indian Semiconductor Association has been exploring opportunities for cooperation between India and China in the chip and embedded applications business. “There is obvious scope for synergy between our members who are semiconductor software and application developers based in India and the mature silicon manufacturing industry in China,” said the ISA President, Poornima Shenoy, soon after returning from Souzhou as part of a fact-finding mission of the ISA.

Some Indian ventures in China have gone boldly where no player has gone before. eWorld reported earlier this year (IT’s triple play time! March 31, 2008) on an enterprising Indian — Kanwaljit S. Talwar who ventured into mobile and smart phone manufacture in China, after entering into a partnership with Shenzhen B&K Electronics. Now his Indian end — Asia Mobile Alliance, in Delhi, is set to unleash affordable made-in-China iPhones in India that promise all the functionality of the Apple model — and some more.

The Bund, Shanghai, is a relic of colonial times… its waterfront row of sturdy early 20th century buildings still bear the names of banks and western financial institutions that came here over a hundred years ago to make it the most bustling ‘mandi’ of the East.

Today, another trade wind is blowing eastwards, a virtual cyber hawa — and those who make landfall earliest in China’s pockets of ‘technopportunity’ may be the ones who stay to enjoy the trust (and the business) of the host. In the niche of Information Technology at least, it is a safe prediction that some of the more innovative, meaningful examples of cooperation on Chinese soil will have a very Indian flavour — as Indian as the succulent desi fare that Indian Kitchen dishes out nightly for its Chinese patrons.

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Going for the heights