Indias software MNCs look to China for cheap talent

["Raju Agarwal" <krantikari@hotmail.com>]

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This is an ominous development.

I would hope that Indian software companies put the national interest
first
and not outsource software development work to China.  Given the tax
sops
and various benefits the Indian software industry receives from the
Government, in my opinion, they have an obligation to maximize job
creation
within India.

Perhaps some Policy should be introduced that ties the above mentioned
sops
to a committment to not outsource work to other countries.
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India’s software MNCs look to China for cheap talent

Snigdha Sengupta
MUMBAI
IT IS still a far cry from India’s 300,000-strong resource pool but
China’s
fledgling pool of software professionals, estimated at a little under
30,000, is drawing more than a passing interest from the big guns of
Indian
IT -— Tata Consultancy Services, Infosys and Wipro.

Wipro, for instance, does not the rule out the possibility of
outsourcing
part of its offshore development work for US clients from China a year
down
the line.

TCS has gone one step ahead and set in place a `China Strategic
Initiative’
at its Bangalore offices. The initiative is headed by R Ramanan, who is
also
the regional manager of TCS’ Bangalore operations.

The company’s expansion plans in China are of strategic importance to
its
larger plans for collaborative ventures in the Asia-Pacific region. It
has
offices in Vietnam, Taiwan and Hong Kong.

A TCS spokesman in Mumbai said: “TCS is looking at China since the
company
has always taken a leadership in exploring new opportunities and
geographies
to maintain its leadership position. We are currently concentrating on
building relationships in that country and it is too premature to
provide
any details at this stage.”

Chinese Prime Minister Li Peng recently visited TCS’ facilities. Infosys
is
not fighting shy of China either. Speaking to The Economic Times,
Infosys
deputy managing director S Gopalakrishnan said: “We believe that China
is a
potential competitor in the future, and also a source for talented IT
resources. Hence, it is a potential location to set up a development
centre.”

The key factor behind this interest is the lower cost structure that
will be
available to Indian IT firms involved in outsourcing work for US and
European clients.

Language is the primary constraint China faces today in growing its
resource
pool to sizeable volumes. If all goes well with the Chinese government’s

English-teaching programme, in 2-3 years China will be able to build up
a
large resource pool of software professionals.

The good -- or bad, depending on your point of view -— news, is that the

Chinese professional will be at least 15-20 per cent cheaper than his
Indian
counterpart.

Today, a high-end Chinese software professional costs $20,000 per year
against the Indian rate of $12,000 per year. But according to Wipro
vice-president (corporate finance) Suresh Senapaty: “In a couple of
years,
when a larger resource base builds up, the cost structure in China will
be
lower than India by at least 15-20 per cent.”

Nasscom president Dewang Mehta predicts that Indian IT firms will
probably
start out with re-routing their low-end activities, like coding and
maintenance, to Chinese branch offices or subsidiaries.

Aptech managing director Ganesh Natarajan says China can, in the long
run,
also become a large farm for IT-enabled services and high-end software
development work.

Indian software exports are projected to touch $80 billion by the year
2008,
and this will require a resource pool of 2 million IT professionals.

© The Economic Times Online. All rights reserved.



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