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Tata-MS China venture to start in July

Tata is moving into China in part to support the local and Asia-based operations of many of its customers.

india Updated: Jun 15, 2006 12:10 IST

Tata Consultancy Services expects its China outsourcing venture with Microsoft Corp to start in July and help it win government deals, boosting revenue as it steps up a global acquisitions hunt.

The Indian firm, which has secured a number of major contracts and deals over the past year -- including one worth more than $800 million in revenue over 12 years with British insurer Pearl Group -- plans to quicken its pace of acquisitions.

"Deals are always in the works," Tata Chief Executive S Ramadorai told reporters after a presentation to Hong Kong businessmen. "What we do in the UK with the Pearl Group, those are something which we will certainly accelerate."

Tata is moving into China in part to support the local and Asia-based operations of many of its customers, including the likes of Motorola Inc and General Electric Co, as well as Chinese-speaking customers in Taiwan and Hong Kong.

Its rapid expansion comes amid a build-up by most of the world's major offshore designers, including Indian rival Infosys Technologies Ltd, which has its main shop in Shanghai.

The company has 400-plus staff in Shanghai. It hopes the new joint venture with Microsoft and three Chinese government-owned firms will win more business.

"The Chinese government wants to create a role model for China," said Girija P Pande, who heads up TCS' Asia Pacific operation. He said the company had several deals with the Chinese government in the pipeline but would not elaborate.

It has about 400 software engineers in China and, through the venture, hopes to expand to up to 5,000 employees in the next four to five years.

China's software export market is now worth $1 billion versus India's $12.5 billion, but is growing rapidly as design houses look to diversify from India and serve a growing base of multinational clients with major locally based operations.

Foreign companies like China because of its abundance of software engineers and relatively low labour costs.

Ramadorai said India's outsourcing industry is expected to grow by up to 28 per cent annually, while Tata's revenue has been increasing at an annual rate of more than 40 per cent.

"Our growth might stay at industry growth for sure, or better," he added.