China takes Indian route to their global brand building

In its bid to beat her closest rival in the business, China is planning to go the Indian way. When it comes to cutting edge software, China would rather go with the Indian providers than the local firms. Top Chinese enterprises such as Bank of China and China Telecom are currently undergoing a global brand building process. In their ambition of acquiring a global presence, the Chinese companies are ready for a make over with upgraded infrastructure. When it comes to procuring software solutions for modernizing the existing system, the Chinese entrepreneurs have a clear preference for the Indian IT firms like IBM and TCS. In the process, the state-owned and local Chinese software services providers are expected to lose some of their businesses. The leading local IT service providers like Digital China Holdings and Neusoft have a rather big customer base in the country. But an emerging trend involves a clear shift of focus to Indian IT firms for big and complex outsourcing contracts.

The Chinese software firms lack in experience and the Chinese companies with global aspirations are in no mood of taking any chances. The Indian IT outsourcers have a long success story behind them and Chinese enterprises are ready to invest any amount to cash in the Indian expertise. “Apart from scale, local service providers also lack experience in handling large outsourcing contracts, something global and Indian firms are really good at,” said Patrick O’Brien, senior analyst at the UK-based research firm Ovum.

A $10-billion IT services market waits for the Indian IT firms in China. Compared to the rest of the world, Chinese banking sector is still in its nascent stage with only 10% of the country’s banks offering online banking and only one ATM machine for every 10,400 citizens, compared with one ATM for every 735 citizens in the US. Large Chinese banks are planning to invest in core banking software, that will help them centralize their retail and wholesale banking operations. This in turn will help them efficiently manage the expanding lending market.

“Banking and telecom customers in China want vendors with global expertise, we recently advised one of the top three phone firms in China to go with IBM and TCS,” commented an outsourcing consultant on condition of anonymity. Until recently, most companies in China were running homegrown ERP and other systems, however, many of them are now planning to deploy standardised solutions from SAP and Oracle, this is where we have better expertise,” said Girija Pande, head of TCS’ Asia business.

Last year, IBM hit the jackpot with a $690 million project from China’s emerging IT market. TCS and Wipro are also close behind. A major breakthrough for TCS came in form of an over $100-million deal for implementing a core banking software at Bank of China. Infosys’ core banking software Finacle was also able to make some progress in China by sealing deal with the clients like China Bank and ABN Amro’s operations in Greater China. IBM, TCS and Infosys---all three bigwigs are vying for a larger share of pie in the Chinese market. It is to be seen now, which of the Indian vendors can really make it in China.