Having arrived in India’s financial capital of Mumbai on Tuesday, Chinese premier Li Keqiang was whisked from the airport to visit Tata Consultancy Services, the country’s largest IT developer by revenues. But a software campus tour designed to showcase high-tech wizardry in one of the country’s most celebrated export industries also brought attention to a less welcome fact: the limited successes of India’s outsourcers in China itself.
TCS was the first of the major Indian groups to set up a Chinese division, following a deal with Microsoft back in 2002. It remains the country’s largest entrant too, with a staff of roughly 3,000.
Others including Bangalore-based Infosys and Wipro have also opened operations, although progress is slow: Infosys earned revenues of just Rs5.7bn ($103m) in China during the last financial year, a tiny fraction of its global total.
Most of this limited business tends to come from servicing existing western clients that have Chinese operations.
Selling to Chinese companies, which often means winning over China’s government too, has proved tougher, says Siddharth Pai, Asia-Pacific president of research group ISG – although for economic rather than political reasons.
“The basic proposition that I can do this job for less if I move it to India often just doesn’t work in China, because Chinese costs are more or less on par with India for IT services,” Mr Pai says.
The Indian IT groups keep trying nonetheless, viewing Chinese growth as part of a wider push into emerging economies, as they try to diversify away from slower-growing markets in Europe and America.
N. Chandrasekaran, TCS chief executive, remains hopeful too, telling the Financial Times in an interview last year that he hoped to increase his headcount quickly in the country. But China was hard going even so, he admitted: “It has been much tougher than we thought.”