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As Indian software becomes a global brand and starts getting noticed everywhere, a diverse collection of countries are making a keen pitch for a piece of its overseas investment.
These countries are sensing growing business as the newly emerging needs of business continuity and disaster recovery prompt Indian software companies to open centers outside of India.
Singapore, Hong Kong, two German regions (Bavaria and Frankfurt) and the United Kingdom have in the recent past been aggressively peddling themselves as the hot stops for Indian IT firms.
The recently concluded IT.Com, the annual IT show in Bangalore which is also the largest in the country, brought together teams from many of these countries.
Singapore, with its top class infrastructure, is selling itself as a state of the art location which provides key global access.
According to Mohan Mirwani, Country Director (India), Infocomm Development Authority of Singapore (IDA), "India is known to be the offshore centre for many global multinationals. There is a strong emphasis on setting up business continuity and disaster recovery centres and Singapore is the ideal place for that. The Singapore government has provided a simple process to set up shop there and hence the inflow of companies."
Among the 300-odd Indian companies that have set up shop in Singapore are Satyam, Polaris, TCS, i-flex, VMoksha and NIIT. Though Indian companies operate in numerous verticals, there is a preponderance of IT centric companies among them.
Some IT companies like Satyam, however, are by themselves in several verticals.
The e-governance implementation of Singapore is another attraction for Indian companies. Singapore has been described as the "most e-governed country" by Harvard University. Hence, its government's keenness to replicating its e-governance model in other countries.
Singapore is not only providing its expertise to e-governance projects in India, it is offering its own e-governance infrastructure as a case study.
It is asking Indian companies to set up shop there and see and study for themselves how e-governance has been implemented before setting it up in India.
Singapore's e-governance implementation has reduced the time taken to process a permit from 2-7 hours to just two minutes.
Initially a government application required about 35 documents; that number has been now reduced to just one.
"IDA is co-coordinating with four Indian state governments to implement e-governance solutions. These projects are being pursued by some of the leading Singapore-based companies that have excelled in developing and deploying the Singapore model across the world. These companies are essentially the execution agents that take over after IDA completes its role as a facilitator," adds Mirwani.
National Computer Systems of Singapore is currently in talks with about five state governments in India to work out their e-governance plans.
This will provide citizens with a single window to approach departments like police, education, utilities and infrastructure. NCS is also working on a World Bank aided e-governance project in Sri Lanka.
The German city of Frankfurt, Europe's financial capital, is talking to Indian companies by marketing itself as the gateway to Europe.
According to Sibylle Herforth, executive director, Frankfurt Economic Development, "Frankfurt banks on the fact that it has the world's largest airport and hence the best connectivity. Economically too, it is one of the strongest cities in Europe. While we do help companies set up shop by providing the right direction, there is no such thing like a tax holiday. All companies are treated equally in Germany. There are already over 40 Indian IT companies in Frankfurt. This includes some of the biggest Indian names like Infosys and Wipro."
However, Herforth cautions that Indian companies need to understand the cultural implications that would affect their business in the long-term.
"Just because we look like Americans does not mean that we think like them. Very often Indian companies think along these lines. It is also important to understand that Germans are happier with their partners and service providers closer to them. As a result, one must never invest until one knows the terrain and it is better to go slow. The 20:80 model of partnership with local players is advisable," she adds.
Munich-based gotoBavaria, which was set up in 2000 as the German state Bavaria's marketing and inward investment agency, has emphasized a new angle for investing there.
It has been arguing that the United States may not be the most preferred destination for Indian IT companies anymore. The persistent sluggishness in the US economy (until lately), coupled with the weakening dollar, is making the European market attractive for Indian companies.
Over 35 Indian companies are already operating in Bavaria, with 16 of them beginning operations in the last 18 months. Of these, four companies have even picked up a stake in Bavarian companies.
While the focus of the Bavarian government so far has been on IT and information companies, it will soon extend the focus to other sectors.
Bavarian is known for its clusters of automobile and aviation companies. The growing Indian expertise in these areas can find new business opportunity in these clusters.
"By locating themselves in specific clusters and being part of the vendor community, Indian companies would automatically get a greater business opportunity. We have conducted seven seminars in India in the last eight months. These seminars were directed at CEOs and were aimed at provided all information on Bavaria," says John Kottayil, executive director (India), gotoBavaria. Some tax sops are also available, but only for specific geographical areas.
Britain, which has been the longest in the game of canvassing Indian investment, is currently going a bit slow because of the deceleration in the country's IT and ITES market over the last couple of years.
The market is expected to revive from this year and post a 1 per cent growth in 2005.
An eight-member British Trade Commission, accompanied by officials from UK Trade & Investment, made a presentation during IT.Com on the benefits from locating in the UK.
Phil Codling, analyst, Ovum, pointed out that the healthcare sector was substantially adding to opportunities in the UK.
Among the upcoming mega deals is the National Health Services contract for a national programme in IT. Estimated to be worth 2.3 billion pounds, Indian majors like TCS, Wipro and Patni Computers are key contenders for this contract.
"Valued at over 20 billion pounds, the UK software and computer services industry is among the strongest in Europe. UK is the ideal investment destination for Indian companies seeking a foothold in the European market. The contribution of Indian software companies to the growth of industry in the UK is well-known," Stephen Lillie, director for trade and investment, British High Commission, New Delhi said.
There are over 450 Indian companies with a base in the UK. Of them, nearly 350 are in the ICT/software sector. About 40 per cent Indian overseas investment flows into Europe compared to 20 per cent to the US.
More than one-third of Indian investment into Europe is concentrated in the UK.
The delegation also highlighted the fact that UK is headquarters for over 20 per cent of the top 500 European MNCs.
Hong Kong has tailored its sales pitch to include elements of what Singapore and European countries have to offer.
John Rutherford, associate director-general of investment promotion at Invest Hong Kong, highlight's the area's "state-of-the art IT infrastructure, business-friendly regulatory environment, rule of law, access to finance and a free flow of information." These are roughly what Singapore also has to offer.
Hong Kong additionally offers a gateway to China, just as European countries offer a gateway to Europe.
"Hong Kong's proximity to Mainland China provides a wealth of opportunities for technology companies. China's membership in the World Trade Organisation and the recent signing of the Closer Economic Partnership Arrangement between Hong Kong and the Mainland make it easier for Indian companies, especially SMEs, to expand their business into one of the fastest growing economies in the world," adds Ruterford.
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