As Chinese firms such as Bank of China and China Telecom plan to globalize their operations, they are turning to Indian multinational outsourcing firms, including IBM and Tata Consultancy Services (TCS), for deploying and maintaining standard software solutions, giving them an edge over local service providers.

While state-owned and local Chinese software services suppliers, such as Digital China Holdings and Neusoft, continue to work with the country’s large customers, IBM along with TCS and others are being preferred for large, complex outsourcing contracts by customers such as China Telecom and Bank of China. “A fragmented local vendor landscape and a domestic market dominated by wholly foreign-owned enterprise customers means that it will be the major western and Indian outsourcing vendors that will reap the rewards. 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.

While IBM earned nearly $690 million from China’s almost $10 billion IT services market last year, both TCS and Wipro have started making progress as well. TCS on its part has recently won several large contracts beating local Chinese rivals, including over $100 million deal for implementing a core banking software at Bank of China.

“Until recently, most companies in China were running homegrown ERP and other systems, however, many of them are now planning to deploy standardized solutions from SAP and Oracle, this is where we have better expertise,” said Girija Pande, Head of TCS’ Asia business.

Chinese banks have not yet made significant technology investments, compared with their U.S. counterparts. While only 10 percent of the country’s banks offer online banking, there is only one automated teller machine (ATM) in China for every 10,400 citizens, compared with one ATM for every 735 citizens in the U.S. A core banking software based on modern platforms from TCS or Infosys will help these Chinese banks centralize their retail and wholesale banking operations, and also enable them to cope up with increased lending activities, as required by their government.

For Indian tech firms, such as Infosys and TCS, the past experience of working with large customers in the U.S. and Europe is paying rich dividends. “Local Chinese outsourcing providers have not been providing services across the IT/BPO services spectrum, but are gradually trying to move up and address multiple market needs,” said Srinath Batni, Board member of Infosys’ Chinese subsidiary.

Apart from local Chinese customers, Infosys is also able to serve its global customers rolling out their operations in the country. For instance, Infosys’ core banking software Finacle has made some progress in China with significant wins at China Bank and ABN Amro’s operations in Greater China. Companies such as IBM, TCS and Infosys are also able to bring their project management experience to serve large Chinese customers.

Source: http://www.siliconindia.com/shownews/China_turns_to_Indian_firms_for_software_solutions-nid-63222.html#