Since last August, when recession-hit companies were stalling new investments, Paddy Iyer became a fortnightly flyer from Mumbai to a new IT venture in a second-tier Chinatown famed for pandas, red curry and earthquakes.
China’s Chengdu, 1,700 km southwest of Beijing, now wants to be known for its Indian techies.
The post-recession wave of Indian IT investment in China will be beyond Beijing and Shanghai in cheaper cities like Chengdu that are building Bangalores.
Local officials and Chinese CEOs of Chengdu, capital of China’s mountainous Sichuan state, carefully avoid the word ‘competition’ with Indian IT and prefer to say ‘collaboration’. The mayor wants to connect Chengdu to Bangalore by a direct four-hour flight next year.
“Know why Indian IT companies haven’t expanded as expected in China?’’ asks Christine Du, the Chinese GM of Chengdu’s software park located in a 37 km Tianfu New City being built on farms.
Chengdu officials told Hindustan Times that they caution Indian investors that it’s a ‘mistake’ to start China operations in Beijing and Shanghai instead of 40 per cent cheaper cities like Chengdu.
“Another mistake Indian companies make is not to hire top Chinese management. You gotta trust the Chinese or there’s cultural conflict,’’ Du said.
Five Indian companies are negotiating to consider Chengdu and a ‘huge number’ are asking for details like labour costs.
“Indian IT companies have no choice but to expand to China because their global markets now want them to,’’ said Victor Jansson, vice-president, Chengdu Tianfu Software Park. “You can’t put all your eggs in one basket.’’
The new Indians in Chengdu’s new city are learning these lessons.
Iyer is the chief operating officer (and lately, Mandarin student) of an IT venture called Elegon Infotech, short for elephant and dragon and a subsidiary of India’s 3i Infotech. Together with Chinese CEO David Wang, he prowls the yellow and green office as Chinese recruits process cheque payments for global clients. “The potential of China’s delivery capabilities and unexplored market is quite exciting,” said Iyer.
Nearby, Wipro GM and Mumbaiite Suchira Iyer was supervising a new global delivery centre while saying she misses samosas. NIIT also moved in this year.
China’s biggest outsourcing companies are smaller than India’s medium-sized IT companies. “All Chinese governments want a hard-to-get Infosys. We target the medium-sized Indian IT companies,’’ said Jansson.
He showed HT land already leased, rentals booked and competition for flashy signages — signs that cost-effective Chengdu prospered during the recession. This year, Chengdu bagged 35 global companies even as high-rises, five-star hotels, highways and a metro line are unfinished.
“Chengdu has immense talent, but IT maturity needs to be developed,’’ said Wipro’s Iyer. “Our Indian faculty flies to Chengdu for training. Eventually, Indians will be less than 20 per cent of Wipro staff here.” The new office now has about 100 staff and a capacity for 1,000.
Indian outsourcing remains ahead of China’s, according to a 2009 McKinsey study. “Despite churning out large numbers of IT graduates...talent is the key obstacle to overseas expansion,’’ the report said on China.
Outsourcing in Chengdu is less than a decade old but the city’s marketing its 42 colleges as skilled manpower. The park conducts evening English classes for Chinese recruits. A residential zone is being built within the software park to avoid commuting hassles that techies face in India.
When a foreign CEO demanded burgers and fries, Chengdu officials promptly installed a McDonald’s. Chengdu is marketing spicy Sichuan cuisine and not McDonalds’ to Indians. But after three months in Chengdu, Wipro’s Iyer, a vegetarian, misses shopping at an Indian grocery store. Don’t be surprised if it springs up beside the McDonald’s.
“We’re a perfect match with Bangalore,’’ Du told HT, adjusting her Indian shawl.
(Tomorrow: Is small-town China every CEO’s cup of coffee?)