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Microsoft takes 10 percent in TCS's China venture

It is an attempt to scale up operations to bag more outsourcing orders from the Chinese market, reports Venkatesh Ganesh.

india Updated: Nov 23, 2006 21:27 IST

Tata Consultancy Services (TCS) has sold a 10 per cent stake in its subsidiary, TCS China, to Microsoft Corp in an attempt to scale up operations to bag more outsourcing orders from the Chinese market. After the stake sale, TCS will hold 65% its Chinese subsidiary. Two Chinese software parks and two other local partners together hold 25% stake in TCS China.

TCS recently announced a decision to merge its China operations into the joint venture, TCS China. The venture, which was first announced in June 2005, has a total investment of $14 million, said N Chandrasekharan, head of global sales, TCS. Its existing Chinese operations will be merged with the new venture, which will have its headquarters in Beijing.

TCS forayed into China in 2002 and services 25 clients.TCS has already set-up a Global Development Centre (GDC) in Hangzhou and Shanghai, staffed by more than 95% local professionals.

TCS set up operations in China in 2002 and has more than 25 clients there. “This (stake sale) will enable TCS to ramp up operations quickly in China and considering that the company is servicing a lot of manufacturing and automotive clients in that region it would be in line with its global delivery model,” said an analyst from a leading brokerage house.

Another analyst said that that the deal allows TCS to bid for contracts related to application development maintenace, infrastructure management and business process outsourcing (BPO) work of China’s domestic companies.

Other Indian companies are also active in China. Satyam Computer Services recently launched its 100-seater development center in the Guangzhou Software Park, China.

TCS China has 600 employees and the company is looking to raise its headcount to 5000 by 2010.

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First Published: Nov 23, 2006 21:27 IST