May 2011 | Tata Review

Right-shoring innovation

With Chinese companies more open to external service providers for their IT needs, Tata Consultancy Services in China is leveraging its global IT capability to increase business opportunities with the aim of becoming the largest IT company in the country

Business operations
Tata Consultancy Services (TCS) pioneered the entry of the Indian IT industry into China in 2002, becoming the first Indian IT wholly-owned foreign enterprise in that country. China is an integral part of TCS’s Global Network Delivery Model™, which includes large delivery centres in India, Latin America, North America and Europe, providing quality service and a certainty of outcome that customers have come to expect from the company. TCS operates five global delivery centres in China (Beijing, Hangzhou, Tianjin, Shanghai and Shenzhen). TCS China is headed by Qiqi Dong.
 
In 2005, TCS was invited by the Chinese government to form a joint venture to create a large-scale global offshoring base in China. The joint venture, supported by the National Development and Reforms Commission, leverages the strengths of the different partners in technology, software development and consulting, including the best-of-class processes and practices of TCS. The company holds 75.64 per cent in the joint venture while the rest is held by local partners.
 
TCS China has more than 1,500 associates, of which 95 per cent are locals. It continues to hire talented engineers and IT professionals from surrounding regions and universities. The company has capabilities in providing services in nine different languages including English, Mandarin, Cantonese, Japanese, Korean, Thai, Indonesian, Bahasa and Vietnamese.
 
Strategy and challenges
TCS sees plenty of opportunities in China as Chinese companies are increasingly willing to consult external service providers on the management of their IT backbone. As they globalise their businesses, these companies will need more support in IT services, especially from service providers with global IT capability.
 
With the company’s vast trained manpower resources, big domestic market and positive government support, China has immense potential to develop its IT services and outsourcing industry. According to IDC, a global market intelligence firm, offshore software development from China is expected to more than double to $6.78 billion in 2013 from $2.72 billion in 2009.
 
TCS is looking to expand its operations in China and leverage its position as an innovation centre and a hub for the north east Asia region. The delivery centre in Shenzhen will initially serve Hong Kong businesses looking to outsource to Shenzhen, but will also become a base to cater to local businesses in south China.
 
Even as it offers unparalleled opportunities, China also poses plenty of challenges. For one, the Chinese market is currently skewed towards IT hardware. The industry is fragmented with many small players focused on the domestic market. And project management skills for large-scale and complex projects are often in short supply.
 
Accomplishments and vision
TCS China aims to become the largest IT company in the country. The company recently opened its fifth global delivery centre in Shenzhen. Its work in China has won it several accolades, including the outstanding HR management award. TCS China has been voted amongst the 100 Best Human Resource Management Companies listed by China’s premier job site, 51 Jobs, and has won the Best Performance Review Management award. Its CFETS Trading and Huaxia Bank projects won the Asian Banking Journal awards in 2010.

This snapshot was part of a special section on China that appeared in the Tata Review. The section also carried an interview with James Zhan, head of the Tata Sons office in China. Follow the links below to go to the interview and other company snapshots:

“China’s expectations have changed”: Interview with James Zhan, head of the Tata Sons office in China

Jaguar Land Rover: Building a second home

Nanjing Tata AutoComp Systems: Component competence
Tata Projects: Quality matters
Tata Refractories: First and flourishing
Tata South East Asia: Goodwill ambassador
Tata Steel Asia: Casting master alloys
Tata Steel International: Majoring in steel
TKM Global: Basketful of solutions
Wuxi Jinyang Metal Products: Weaving strands of success

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