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TCS sets up software unit in China

The Tata group, which owns India's largest software exporter, Tata Consultancy Services, has set up an IT subsidiary in China to tap its huge market and diversify risk after India's recent tensions with Pakistan.

It said clients like General Electric and insurance giant American International Group wanted local software support for their huge Chinese operations.

"If you look at it from a global perspective of business continuity planning, then it's an integral part of being able to address that issue," Phiroz Vandrevala, executive vice president of TCS, told Reuters.

"We have new work from our existing multinational clients. GE has a significant business in China. They need tremendous amount of support," he told a news conference.

But Vandrevala said that the unit would simultaneously seek business from new global clients and from Chinese companies.

Unlisted TCS, a division of Tata Sons, the holding group of the Tatas, India's second-largest business conglomerate by revenue, has over 19,300 software employees and more than 1,000 global customers.

It spent about $1.5 million initially in setting up the group's China venture, called Tata Information Technologies, which will be a wholly-owned unit of Tata Sons.

Indian IT services companies, facing a slowdown in business from their main US market, are aggressively eyeing other regions, including China, for new business.

The official China Daily newspaper said on Wednesday TCS had a contract worth about $100 million with GE Medical Systems, a unit of GE, which called for work in China.

But TCS would eventually need to target large and lucrative Chinese enterprises, said Louisa Liu, software analyst at Gartner Group based in Shanghai.

It will have to battle Oracle Corp and SAP, already in China for several years, and fast-growing domestic players including Digital China Holdings, Liu said.

Satyam Computer Services, the India's number four software exporter, already has a branch in Shanghai and plans to set up a development centre in China.

CHINA BASE

The Tatas' new Chinese unit will have a presence in three cities: the headquarters in the commercial city of Shanghai, a marketing office in the capital Beijing and a development centre at Hangzhou. It will have 150 staff in one year's time.

TCS is widely expected to launch in the near future what might be India's largest initial public offering.

Vandrevala was unable to give the exact timeframe of the IPO but said TCS was in the process of aligning its financial reporting to American accounting standards.

He said TCS posted a net revenue of Rs 41.87 billion ($856 million) for the year to March 2002 while net profit was "comparable to all the scale players in India".

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