India's top software services companies are making a beeline to China, lured by its huge market, but they face an uphill battle against language, culture and regulators.
Among the firms knocking on the door are three of India's four largest exporters of software services: unlisted Tata Consultancy Services, Infosys Technologies and Satyam Computer Services.
China is expected to spend $9.4 billion on technology services by 2006, up from $3.74 billion in 2002, according to the research house IDC.
At a private school in Beijing, eyebrows squeezed in concentration, dozens of aspiring software programmers practise computing languages on a sultry summer day.
Those in difficulty consult handbooks translated into Chinese by a joint venture between Peking University and Aptech, India's second-largest technology training firm.
"The Chinese market has huge and unfilled demand for practical programmers, not just those who can spew theory," said Liang Jun, a director at Beijing Aptech Beida Jade Bird Information Technology Co Ltd.
"India has a very successful software industry," he said at the firm's headquarters above a bustling computer market in Beijing's university district. "China may catch up in a few years or so."
Technology ties are expected to be a major topic this week as Indian Prime Minister Atal Behari Vajpayee meets Chinese leaders to discuss trade between the world's two most populous nations, and try to warm a relationship strained since the 1962 border war.
Challenges
But Beida Aptech, founded in 2000 and now with annual revenue of 210 million yuan ($25.4 million), is one of the few success stories from the relationship.
The profitable firm was one of the first ventures by an Indian technology company in China, underscoring India's resolve to gain a foothold in Asia's fastest growing software market following a spending slump in the United States.
Infosys, India's second-largest software services exporter behind Tata, said in March that its plans to open up a development centre in the financial hub of Shanghai, were wrapped in red tape despite a personal invitation by former Premier Zhu Rongji in 2002.
An Infosys spokesman told Reuters that other efforts to set up a branch office that would allow them to conduct the full range of business had proved futile so far.
"We are working with them to create a basic framework, but the execution of the framework requires a lot more time than anticipated," he said.
Tata and Satyam have also tried to set up branch offices without success.
A spokesman for Satyam, which has a development centre at the Pudong Software Park in Shanghai catering to firms in Japan and China, said the firm had hired many Chinese employees to overcome language and cultural barriers.
Analysts said that Indian firms must also compete with 7,000 to 8,000 domestic software companies with a home advantage even though their services may be slower and less professional.
Despite the challenges, the Indian firms said they were committed to China, which boasts high domestic demand, low labour costs, a potential army of software engineers and better basic infrastructure than India.
(Additional reporting by Arif Sharif in New Delhi)
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