Chinese wall falls for Indian IT service providers

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Until now, no foreign company was allowed to provide call centre services for Chinese customers. Until now, no foreign company was allowed to provide call centre services for Chinese customers.
SummaryRestriction on providing call centre services lifted at Shanghai free trade zone; others to follow.

The Chinese government, in a significant move, has informed Indian IT service providers that they can start providing call centre services to Chinese clients. Until now, no foreign company was allowed to provide call centre services for Chinese customers.

To start with, the restriction has only been lifted at the Shanghai Pilot Free Trade Zone. But there are enough indications for IT vendors that the restriction will soon be removed across all trade zones. This will come as a big relief for the $108-billion Indian IT industry, which has been facing stiff headwinds in China.

Foreign companies have always found it difficult to tap into Chinese state-owned enterprises, which account for a large percentage of China’s IT services market.

VR Rangarajan, head of Infosys China, told FE that positive signs have started to trickle in.

“We now hope that market access will increase for foreign companies and that progress in ties between India and China will help us in future,” he said.

Till now, the going has been extremely tough for Indian IT vendors in China. The last 12 months have been especially so. Chinese customers have not been liberal with budgets and the perception of information security risks and rising costs have also impacted growth. For instance, Infosys, which had entered the China market a decade ago, had posted a net loss of $1.8 million during the last financial year on revenues of $104 million.

According to another top official with a MNC player operating in China there have been some positive changes of late. There is some amount of moderate growth in business, he told FE.

The Chinese economy is still growing at a fast clip with 136 Global 2000 companies opening up to global standards of processes and systems. Also, Chinese subsidiaries of multinational companies have started to provide more work to Indian IT vendors.

The decision to open up call centre services at the Shanghai Trade Zone comes at a time when China is trying to adopt new business models and technologies faster. Big data, cloud, mobile technologies and social networks are finding great traction in

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