Posts Tagged ‘China’

India prods China on IT, ITeS access

May 28th, 2015

New Delhi will soon send a reminder to Beijing on the hurdles faced by Indian IT/ITeS firms in getting greater market access in China. This follows concerns raised by industry bodies Nasscom and CII in meetings with the Union government about the difficulties in qualifying for bids put out by Chinese government and state-owned enterprises (SOEs) for IT/ITeS projects.Outsourcing10

In the aide memoire to be sent to China, sources said, India would also urge China to strengthen its intellectual property (IP) regime to protect Indian firms’ IP rights.

As per the 2013 Nasscom-KPMG study, of the estimated $46-billion Chinese IT/ITeS market, India’s share is less than $1 billion, despite its global reputation as a major export of IT-related services. China’s IT/ITeS market could cross $84 billion by 2020.

An aide memoire in diplomatic parlance means a note summarising in an informal manner (sans the usual courtesy phrases) the discussions between both sides. It is meant as ‘an aid to memory’, and a gentle reminder, seeking the necessary action on the points discussed. Indian IT firms operating in China include TCS, Infosys, Wipro, HCL, Tech Mahindra, NIIT (Education), Zenzar, Geometric, Mphasis, Mindtree, Birlasoft and KPIT.

In China, the government (at the federal and state/local levels) and SOEs are among the largest buyers of IT-related services. The Nasscom-KPMG study says by 2020 demand from SOEs is likely to be 45% of the total Chinese demand.

To qualify for bids of large projects, an applicant company needs to show that they have helped in the implementation of Chinese government/SOE projects of similar size. “We have suggested that China should ascribe more value to the experience of companies in government projects of similar sizes outside China, ” Gagan Sabharwal, director (global trade development), Nasscom said.

India had, on many occasions earlier and even during Prime Minister Narendra Modi’s recent visit to that country, taken up these issues with China. However, the fact that Beijing was yet to respond favourably to New Delhi’s concerns was recently discussed at a meeting held by the Indian commerce ministry, official sources told FE. The ministry then prepared the aide memoire and forwarded it to the Prime Minister’s Office to be sent to the Chinese authorities, they said.

Nasscom has also suggested that India and China should, on a reciprocal basis, allow easier movement of highly skilled professionals through long-term visas and work permits to enable Indian and Chinese companies to send across such experts to work in each other’s territory.

CII had pointed out that insistence on local entities in some provinces in China to avail subsidies was reducing competitiveness of Indian IT/ITeS firms. Besides, CII said, Indian IT/ITeS firms are facing challenges in staff mobility between provinces in China due to the ‘hukou’ system (a system of household registration that restricts internal mobility of people and ties their future prospects to their place of residence), necessitating local offices in each project area.

To showcase technological expertise of Indian IT firms, CII said certain pilot projects can be chosen to be jointly executed with Indian and Chinese companies. Also, both sides can jointly develop a platform on policy updates and business opportunities for Indian and Chinese companies, it said.

CII and Nasscom also want India to push for a totalisation agreement (on social security payments) with China. This, they said, will help avoid social insurance fees being paid twice by companies for Indian employees being deputed to China — once in India and then again in China. These industry bodies also want New Delhi to take up the issue of the lack of clarity in withholding tax imposed on repatriated profits. Among issues affected the Indian outsourcing firms, CII has pointed out resistance to outsourcing within China due to lack of understanding of benefits and perceived job loss fears in SOEs.

Entering the dragon
* Size of Chinese IT/ITeS market = $46 bn
* India’s current share = below $1 bn
* China’s IT/ITeS market size projected to be $84 bn by 2020
* Chinese govt & soes among potential big buyers of IT services
* By 2020, soes to make 45% of Chinese demand
* Indian IT majors in China: tcs, Infy, Wipro, hcl
* India seeks long-term work visas for IT workers in china
*  Totalisation pact with china proposed


China’s IT Outsourcing Sector Set to Grow by 25% Annually

December 2nd, 2014

China’s IT outsourcing industry has been forecast to grow at record pace over the next few years, with western businesses continually expanding their bases in the world’s second biggest economy to capitalize on the developing markets of the Asia-Pacific region.Outsourcing8

According to a study by technology market research firm TechNavio, China’s IT outsourcing sector is on course to grow at 25% annually until 2018.

The report comes barely a day after Beijing announced plans to bolster its outsourcing industry. According to Reuters, the Chinese government is going to reduce corporate income taxes to 15% in a number of cities and set up tax-free zones for international outsourcing service providers.

Additional measures to cut the bureaucratic red tape and offer financial support to domestic outsourcing firms also figure on the agenda drawn up for boosting the sector.

Analysts say the low-cost labor and the supply of a large pool of computer science professionals work in China’s favor.

Outsourcing will not only help China diversify away from its carbon-emitting manufacturing industry but also generate millions of jobs for its youths who are increasingly hooking up to the web.

“China offers tremendous business opportunities for social media, mobility, analytics and cloud computing technology, which is expected to be a significant cost-effective key factor for the growth of this market,” says Faisal Ghaus, Vice President of TechNavio.

Today, according to TechNavio, the major players in China’s technology outsourcing sector include Digital China Holding, IBM, Accenture, Fujitsu and HP.
China’s red-hot growth and large consumer market have long been irresistible lures for western companies. Now, engaging with a Chinese IT company can help them gain a larger foothold inside Chinese territory.

The research firm says China’s Internet population has grown significantly and will grow in excess of 8% in the coming years.


China to push growth of outsourcing industry

November 27th, 2014

China will develop international outsourcing of high-value-added services to create new advantages in foreign trade, its cabinet said on Wednesday, according to the official government website.Commercial and residential buildings stand in Beijing

The State Council will reduce corporate income taxes to 15 percent in a number of cities to encourage development of the high-tech, high value-added services outsourcing industry.

The goal is to move Chinese industry away from relying on low cost manufacturing to be globally competitive.

The effort will focus on developing software and IT services, research and development, finance, and government services, the State Council said.

China will trial a tax-free or zero value-added tax policy for international outsourcing services and provide various kinds of financial support and public financing. It will also cut red tape for dealing with foreign exchange.

Government departments also will pay for more services.


Outsourcing nations turn hot for UK freelancers

October 7th, 2014

The number of UK freelancers selling their skills to clients based in countries regarded as outsourcing hubs, like India and China, has leapt by 234 per cent, an e-marketplace says.Outsourcing53

In the last year alone, the number of short term projects for firms based in East Asia, Eastern Europe, India, Pakistan and the Middle East has more than doubled, said PeoplePerHour.

Japan is the biggest end-client, as over the period there has been an eight-fold surge in the stock of UK freelancers registered with the website who have an invoiced a business there.

The last year also saw a four-fold increase in the number of UK freelancers invoicing businesses in India, and about a three-fold increase in the numbers invoicing firms in China.

Pointing to India, PeoplePerHour said the nation’s small businesses and start-ups were “booming,” explaining why such nascent firms were inwardly investing in their own growth.

This move by Indian entrepreneurs to expand their own businesses appears to be eclipsing their traditional focus – “offering support to help western businesses grow,” the site said.

But it explained: “For these businesses to grow, there is a greater need to find people with specialist skills; skills such as business planning, design and copywriting, that are in short supply amongst the local workforce.

“Now with greater financial support/investment behind them, businesses have the resources to look beyond the local labour market, and find global talent that matches their development needs.”

The sub-text is that firms in the East are turning to freelancers and micro businesses in the West because, while such European firms cannot compete on costs, they are skills-rich.

“This burgeoning freelance marketplace, which enables UK professionals with specialist skills to export their talents, could radically change the way businesses operate in the future,” said PeoplePerHour’s founder Xenios Thrasyvoulou.

He added: “Thanks to the evolution of the online marketplace, this pool of highly skilled freelance professionals are now in a position to sell their skills to businesses across the globe.”


Is outsourcing killing us?

July 17th, 2014

The U.S. is experiencing a different kind of “reshoring.” China, the world’s largest air polluter, is sending us via the jet stream a fair amount of their harmful emissions. And, according to a recent study published in the Proceedings of the National Academy of Sciences, much of it is our own fault.Outsourcing25

Researchers say a large part of the emissions are due to Chinese manufacturers making goods for foreign consumption. For years, American companies have been outsourcing production to China to take advantage of low labor rates. So all the cheap appliances, toys, and electronics we’re hooked on may be coming back to bite us, in an indirect way.

Making many of these products takes a lot of energy. Chinese industry relies on coal as its main source of power, and emissions controls on power plants are often limited or outdated. Further, the general level of manufacturing technology and energy-efficiency standards in particular aren’t as advanced as in the west, so it takes even more energy to make these goods in China.

The study says 36% of the sulfur dioxide, 27% of nitrogen oxides, 22% of CO, and 17% of soot emitted in China are due to production of goods for export. About a fifth of those pollutants were attributed to goods headed to the U.S.

Atmospheric models used by the researchers indicate that this accounted for a quarter of the sulfate pollution over the western U.S. in 2006, and increased surface sulfate concentrations by up to 10% and ozone by 1.5%.

According to the U.S. EPA, scientific evidence links short-term exposure to high levels of sulfur oxides with an array of adverse respiratory effects, including bronchoconstriction and increased asthma symptoms, particularly in children and the elderly. Longer term, it can cause or worsen respiratory diseases such as emphysema and bronchitis, and can aggravate heart disease.

A second NAS study claims computer models show that pollution from Asia, particularly fine aerosols, could be intensifying Pacific storms headed to the U.S. and altering weather patterns over North America.

Simulations showed that aerosols alter the distribution of moisture and heat in the Pacific storm track, a relatively narrow zone where cyclones form and travel and a major driver of weather in the Northern Hemisphere. These tiny particles suspended in the air can change weather patterns because they scatter or absorb solar radiation; and water vapor condenses around aerosols, a process that alters cloud formation and makes them denser and higher. The results, according to the model, are more precipitation, stronger cyclones, and more heat moving from the tropics toward the arctic.

Researchers didn’t predict how this affects U.S. weather, so we have to cross our fingers that it doesn’t exacerbate the Southwest drought or Midwest storms.

What is pretty clear is that air pollution in China isn’t a regional problem. Thanks partly to outsourcing, what we save in cheap goods we’re paying for in lower air quality and, possibly, worse weather.


IBM forks out $100m for China’s next generation of data scientists

July 9th, 2014

IBM announced today its plan to donate US$100 million worth of big data and analytics software to 100 Chinese universities in the hope of helping toOutsourcing12 create the “next generation” of data scientists.

According to IBM, the effort aims to reach up to 40,000 students per year to gain expertise in big data and analytics — a skill that the company says is increasingly in demand in China.

The plan follows a memorandum of understanding that IBM signed with the Chinese Ministry of Education in the first quarter of this year, with a focus on addressing the big data and analytics “skills opportunity” in the country.

“IBM is privileged to extend its collaboration with the Ministry of Education and universities in China,” said D.C. Chien, chairman and CEO of IBM’s Greater China Group. “Together we will be able to accelerate the nurturing of skills in big data and analytics and help prepare future business leaders to apply [big data and analytics] technologies to tackle complex societal issues, from health care to transportation and public services.”

Under the new initiative, IBM will set up big data and analytics technology centres, and provide technical training to professors and faculty, in areas ranging from information management, data mining, social media analytics, and risk management.

Big Blue has already been in collaboration with seven universities, including the Beijing Institute of Technology, Fudan University, Guizhou University, and Huazhong University of Science and Technology, which are among the pilot schools that will rollout new programs in their education system in the coming academic year.

The company plans to bring 40 new universities on board to this program by the end of this year. In fact, according to IBM, the application guidelines will be issued to all qualified academic institutions later this month, with the program rolled out to all 100 universities in mid-2015.

The agreement comes at a time when the United States’ use of big data and analytics for surveillance purposes has the Chinese government on edge — following the publication of documents leaked by whistleblower Edward Snowden last year.

Over the past few months, Beijing has reportedly pulled Microsoft’s Windows 8 from all new government agency computers, and called for private industry to replace US-made IT hardware and software with domestic alternatives. Reports last month suggested that the government was even urging the country’s banks to remove high-end IBM servers from their operations.

Despite this, IBM has brokered not only its university big data donation deal — dubbed IBM U-100 — with the Chinese authorities; it has also struck an agreement with, a prominent subsidiary brand of Chinese education solution provider, Uniquedu Corporation.

The deal with will see IBM set up an “IBM zone of big data and analytics”, and according to IBM, the agreement will deliver online courses to students in order to help prepare the next-generation workforce with the skills and expertise needed to embrace big data as the “next frontier for innovation for the coming decades”.

“Big data is big business, but its rapid growth has outpaced colleges’ and universities’ ability to develop and implement new curriculums,” said Li Shu Chong, president of China’s largest research, consulting, and IT outsourcing service company, CCID Consulting. “IBM’s extensive initiative is poised to help develop new talent in China that will be needed to realize the full potential of big data.”

According to CCID, the big data technology and services market in China will continue to grow from US$2.3 billion in 2014 to US$8.7 billion in 2016.


China no threat to Indian IT: Infy

June 17th, 2014

China’s rapidly growing IT industry is not a threat to Indian software services firms yet despite a major policy push towards outsourcing. “Our USD 100 billion software industry is under no threat from China,” Rangarajan Vellamore, CEO of Infosys, China told PTI.  This is because Chinese firms are not yet investing big in the US where Indian software firms are well entrenched.Outsourcing6

Chinese firms haven’t yet made an impact in the global IT services market as the industry reaches saturation point amid severe competition among global and Indian firms.

Global IT spending is expected to rise by 3.2 per cent to touch USD 3.8 trillion in 2014, according to technology research firm Gartner Inc.

Rangarajan, who has been working in China for the past seven years, said Chinese IT companies are not investing in the US as they are unable to understand the nuances of the market penetration and have given up their efforts making it secure for the Indian firms at least as of now.  The exchange rate has also made the difference, he said.


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