Is china is a threat to india in softwares?

there’s no doubt china’s competitiveness in sector, considering hardware , telecom markets bigger india’s. , in software, china has huge captive domestic market, compared india’s relatively tiny domestic market. there other alarming figures india: ratio of china’s spend gdp 5 times of india’s. if india’s current growth rate in doubles, still take 25 years catch china, , if china’s growth rate remains stagnant. d-link’s naik has evolved formula whereby indian industry have cake , eat

frankly, these numbers seem put huge question mark on india’s talked of aim of becoming superpower.

1) large domestic market
but, rather throwing in towel, there school of thought developing in india believes indian industry can convert apparent chinese threat opportunity. nasscom president kiran karnik 1 of main votaries of opinion. believes while china remain formidable competitor, policy of engagement rather policy of isolated approach perhaps better strategy. first, give indian companies door enter chinese domestic market today dominated mncs. plus, indian companies based in china can address other east asian markets japan , korea. view endorsed noshir kaka, principal, mckinsey & co.

established fact today indian firms have excellent opportunity waiting tapped in

chinese domestic market, estimated 4 times size of india’s. also, china becoming part of wto, local banks in china forced start upgrading technology. local players have not been able provide required expertise , technology in domestic market, chinese market dominated mncs. in offers excellent opportunity indian firms, development expertise no way inferior these mncs.

important aspect growing purchasing power of china’s 1.3 billion people in turn creating strong massive base build domestic technology companies. china expected largest market in world 2004 mobile phones , digital cameras, , second largest pcs after us. key reason why india miles ahead of china in software exports due simple fact efforts of chinese software firms spent in addressing huge domestic market (estimated worth $16.2 billion).

things change, china wants emulate india’s success in software sector , become major global force. china has initiated series of measures, include plans set specialist training institutions on lines of our iits , chinese firms following same strategy india’s majors did (bagging projects based on price) before going on become software majors.
infosys’ murthy believes china opportunity since industry cannot provide domestic needs

yet, there bigger opportunity indian players in china. one, according infosys chairman n r narayana murthy, chinese firms cannot meet full demand chinese domestic industry, resulting in government allowing foreign firms microsoft, oracle , ibm operate through joint ventures. in addition, kaka feels indian firms can take advantage of fact china offers indian firms lower trade barriers, lower taxes , excellent infrastructure. no wonder infosys on threshold of setting facilities in shanghai tap chinese domestic market.

2) window japan
second premise looking @ china opportunity can provide indian companies gateway japan, market hitherto virtually untouched. logic significant currently, japan world’s second largest economy-estimated worth gigantic 70 percent of entire asian market , contributes approximately 11 percent total outsourcing global market. there huge gap filled 4 percent of india’s software exports go japan.

significant gainer in japanese market china, has been favoured partner japan’s software imports. synergy easy fathom. one, japanese second language taught in northeastern parts of china, chinese companies located. also, chinese programmers familiar double byte system used generate chinese , japanese characters. location wise also, china offers great advantage japanese companies looking outsource projects. due these synergies, comes no surprise therefore japan continues china’s largest trading partner.

though indian firms have established bases in japan (the list includes likes of wipro, infosys , tcs , l&t information technology), remains tough market crack. reason being japanese companies have traditionally resisted external relating systems. gradual change happening. japanese economy, in throes of recession, surely catching on outsourcing mantra in big way. according industry estimates, spending on outsourcing exceed $15 billion in 2005. these figures 1 third of market size in us.

since china natural trading partner japan, makes more sense indian companies set base in china following strategy of partnerships local players have knowledge , expertise local markets. since japanese culture not open culture, tapping japanese market undoubtedly require lot of patience. experts say, once bonds established stay long time. hence, makes more sense indian companies tie chinese players china has been long-time preferred trading partner japan.

also, india’s edge on china come fact has record in quality , protection of intellectual property rights. global software majors wary of outsourcing projects chinese companies china has terrible record in software piracy. , on quality front, of december 2001, india had 36 companies @ sei cmm level 5 assessment out of 58 organisations worldwide, while china had none. win-win situation both indian , chinese companies organisations earlier wary chinese firms wanted avail of cultural , locational synergies, can in case of indo-chinese tie-up.

3) hardware angle
hardware sector gain china’s traditional strengths in segment. k r naik, managing director of d-link india proposes indian companies should set hardware manufacturing facilities technology know-how companies both in mainland china taiwan. of few manufacturing facilities in india today deal merely in assembling, , unless replicate chinese model of hardware development, mait-e&y estimate of $62 billion 2010 in hardware remain pipe dream. naik’s formula success: form jv chinese hardware major, procure technology expertise, r&d set , actual manufacturing in india. “you can supply chinese market, our labour force not cheaper more intelligent,” adds.

key part of strategy indian firms forge partnerships chinese firms , participate in country’s explosive growth. indian companies have done this. niit, instance, has seen huge demand courses due unique english , mandarin courses. kaka says, “going forward, indian software companies can outsource work chinese companies boost productivity, while maintaining strategic relationship client.”

indian software companies have exponential opportunity tapped in field of telecom software. currently, major telecom players in china zhongxing , huawei export telecommunications equipment india, while indian firms develop requisite software them. that’s great example of combining china’s strengths in hardware manufacturing india’s strengths in software. infosys receiving green signal set branch in china , satyam jump fray, future seems bright indian companies in china. while in best interests of indian companies view china formidable competitor, opportunities far outweigh threats. perhaps question should rephrased from, ‘is china threat?’ ‘is china land of opportunities?’ india inc’s sake, sure hope is.

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