January 30, 2002
Indian software giant Satyam has opened an office in Shanghai, firing local hopes that cooperation with India will allow China to give its more advanced neighbour a run for its money on the global software market.
The official launch in mainland China late Tuesday comes in the wake of Chinese Premier Zhu Rongji’s visit to India two weeks ago, where he stated the countries should become economic partners and not rivals, especially in IT.
The decision by Satyam Computer Services, India’s fourth largest software exporter, to set up an office in Shanghai, has begun what many in China hope will be a new wave of Sino-Indian software links.
While India has powered ahead to become a world centre for outsourcing software development and produces some of the globe’s best software engineers, economic giant China has lagged behind in the technology stakes.
But both Satyam executives and the head of the Shanghai Pudong Software Park (SPSP), where the Satyam office will be located, said they expected that to change, with the Indian firm also hoping its early arrival will give it a head start.
However according to some reports officials in India are worried close software cooperation with its giant neighbour could see Chinese firms learn the secret of the Indian firms’ success, and eventually undercut and usurp them.
Satyam chairman Ramalinga Raju dismissed the concerns, saying his company “would not be where we are today”, if developed countries had thought like that when Satyam began life 10 years ago.
The company has operations in 35 countries, 300 corporate clients and employs 8,500 highly-skilled workers in development centres around the globe.
For Indian executives, China offers cheap talented labour, as the country’s universities churn out hundreds of engineering and mathematics graduates, while offering a low cost base for research and development.
“We realize China is not only a huge market, but also a place where we can find talented engineers to develop software for domestic and regional markets,” said Raju.
India’s strengths in the software industry, namely outsourcing software development for major manufacturers, training software engineers, and business management, were China’s weaknesses, said Hu Hongliang, head of the SPSP.
Hu said China had built up expertise in integrated chip manufacturing, anti-virus programs and developing encryption software, the latter something the government had made a priority because of national security concerns.
Shanghai’s development of its software industry was moving so fast that comparisons with Bangalore, India’s IT hub, would be realistic by the end of the year, he added.
“I would ask you to look at how fast we have moved by the end of 2002 and make comparisons with India then,” Hu said.
Indian software titan Infosys is also expected to set up operations in China after Premier Zhu gave the firm the green light during his visit to India.
Though China and India started their software industry around the same time in the 1980s, India is currently among the world’s top software exporters, with an annual revenue of 6.2 billion dollars last year.
Meanwhile, China’s exports are a fraction, with Shanghai’s software exports reaching just 100 million dollars in 2001.
Meanwhile, India’s IT hardware industry is capable of growing 12 times its current size to attain a turnover of 62 billion dollars by 2010, according to a study released Wednesday by consulting firm Ernst and Young.
The study, commissioned by the Manufacturers Association of Information Technology (MAIT), said the breakdown of the estimated revenues were 37 billion dollars in the domestic market and 25 billion dollars from exports.
India could generate revenues of 11 billion dollars from contract manufacturing alone, the report said.
“The size of the global contract manufacturing industry is expected to be over 500 billion dollars by 2010 from 103 billion dollars in 2000,” it added. (AFP)