India can help Chinese IT sector expand overseas

Source:Global Times Published: 2017/6/28 21:48:39

Girish Ramachandran Photo: Li Qiaoyi/GT

Editor's Note:

Increasingly, China and India are mentioned together. As the world's two most populous nations, both are undertaking deep reforms, and are powering world economic growth. Providing some new thoughts on the cooperative yet competitive relationship between the two countries, Girish Ramachandran (GR), president of the Asia-Pacific region of Tata Consultancy Services (TCS), India's largest IT services firm, talked with Global Times reporter Li Qiaoyi (GT) in an exclusive interview on Tuesday during the "Summer Davos" World Economic Forum in the coastal city of Dalian, Northeast China's Liaoning Province.

GT: TCS' China operations are not as impressive as the company's operations in other parts of the world in terms of growth and market penetration, despite having entered China back in 2002. What do you think is the biggest cause of TCS' comparatively sluggish growth in China?

GR: I'm aware of the fact that the growth we've had in the last few years has not been that great compared to the global average. But having said that, I want to give another data point: In the last three months, we've added more people in our China operations than in the whole of the last three years. We have recruited a lot of people in Tianjin and East China's Hangzhou and we will add more in the next six months.

We are scaling up. When I took over two years ago, all of our centers were operating at around 60-70 percent utilization. Today, they are all full. We don't have space at all and we need more space in order for us to grow. That's a very positive problem to have. I'm very optimistic about our growth prospects here in China.

GT: What do you think are the most common problems Indian firms face when doing business in the Chinese market? Which Indian companies do you think should have, but haven't, made investments in China?

GR: In terms of regulation, we've not had any issues at all. We've always been openly welcomed by the Chinese government. The problem we might face is getting into the business for China's State-owned enterprises. We are working with multinational corporations that are in China.

I don't know about whether there are many Indian companies that will begin investment here. But those Indian companies that have invested here have stayed on. Nobody has moved out of China. They have continued to invest in China, because it's a large market.

GT: China has in recent years ramped up efforts to boost homegrown technologies and in this context how do you evaluate the growth opportunities in the Chinese market for foreign IT service providers?

GR: I personally think what China is doing is phenomenal. For example, a year ago, when I was in Beijing, I didn't see any bike sharing; but today if you go around, the city is full of shared bikes. Some of the technologies China has built are really world-class. I think the thing would be how you take it outside China and deploy it in other countries. That is where companies like us can partner with some of these Chinese companies to help them go global.

We should not think about only bringing solutions from other markets to China. We should see what solutions we can build in China and take to the rest of the world. I'm not afraid of competition from China's local IT service providers. Instead, I would love to see how we can work together.

GT: A growing number of Chinese tech companies have been expanding ambitiously in India, with some of the Chinese brands already well-known in the country. Do you think that Chinese tech companies have stayed well ahead of their Indian counterparts as measured by penetration into each other's markets?

GR: Where Chinese companies have done well is in terms of mobile phones. That's where I think you've got a heavy penetration into the Indian market. I'm very happy about it, because Chinese-made phones offer a very good price point at which Indians buy. Some of the products coming from China are unparalleled and no other global companies are able to come close to that. It's good for both countries. Some of the Chinese brands are now becoming popular, as they spend money on advertising.

That said, the Chinese companies are selling in a business-to-consumer market, while companies like us are in a business-to-business market. I don't see that as competition.

GT: According to research firm IDC, the IT market in a total of 64 countries along the route of the Belt and Road (B&R) initiative is worth approximately $200 billion per annum. Do you see any opportunities for Indian IT companies to capitalize on the huge growth potential along the B&R route?

GR: We have to assess it, because most of our business revolves around the private sector. The IT market in countries along the B&R route essentially involves building smart cities, Internet of Things devices, and building digital infrastructure for a particular region. As regards India's reluctance to join the initiative, I want to leave politics aside. India has its own reasons. I personally think it's a question of sitting together and solving it. And I certainly believe India and China have more shared interests than issues. So it's a question of understanding a few issues, taking the issues out, talking about what their interests are, looking at the interests and moving forward. I'm pretty sure India would also be keen on how we can help build the infrastructure along the route, especially on the digital side.

GT: What can China and India learn from each other in building an innovation-based economy?

GR: There are many similarities and both countries can learn from each other. For instance, Tencent's WeChat platform is so unique in the world that every country can learn something from it. India, in its case, built the Aadhaar Pay platform using just fingerprints to make payments.

When it comes to the shared economy, with the example of bikes, it's essentially about how to help people commute and China has solved it very effectively. Still, there need to be more efforts from China to reach the last mile in banking, which means giving more people in rural areas access to banking services.

GT: How would you compare the technological innovation capacities between the three countries - China, India and the US? Which country do you think will take the lead in driving technology advancement over the next decade?

GR: My personal view is that still if you look at higher education, the US scores above both India and China, because the US creates a whole ecosystem, which comprises not only universities but venture capitalists, new age companies, funding for these new age companies, and mentors. It's a good thing for India and China to see how we can replicate the model and build that model in specific zones in both countries. The good thing is that a lot of the work seen in the US involves Indian and Chinese people, so we can see how we can bring them over here and try to power the two countries as well.

I don't know which country will lead. I personally think whichever countries are able to solve our basic healthcare issues, basic problems on the ground using technology will be the winners. My own feeling is that there's a great opportunity for countries like India and China to lead in that particular area.

GT: How do you see the impact of the H-1B visa blockage under the Trump administration on the Indian IT sector and professionals?

GR: The Cambridge Group just published a report, which said that Tata Consultancy Services was the second-largest job creator in the US for the IT services sector from 2012-16. We're creating a lot more jobs in the US than what the press talked about. So whatever politicians might want to look at, the private organizations will find a solution. It will definitely have a short-term effect, but over a period of time, I'm pretty sure that we'll get past this particular issue.

Posted in: INSIDER'S EYE

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