Chinese firm eyes tie-ups in Kerala for $7-bn IT business

Written by M Sarita Varma | Thiruvananthapuram | Updated: Mar 28 2009, 05:23am hrs
Shenyang IT, rated a China Top 50 by Asiapacific Region City, is out to tie-up its $7-billion IT business with India, particularly with the Kerala hub-and-spoke IT model. Nasscom, in its turn, has offered support in the form of access to trained manpower and infrastructure from the neighbouring states of Tamil Nadu and Andhra Pradesh.

"We are on the lookout for Indian business tie-ups with Shenyang firms, especially from Kerala" says Liu Huiming a Shenyang official. "We will also make all initial liasions and visa formalities smooth for our potential business partner, one which will undertake IT manpower support," says Liu Huiming, also the secretary of Shenyang Huanggu District Communist Party Committee.

A major reason for Shenayang inviting top IT honchos from Kerala to share its huge business pie is that besides common Left-leaning political ideologies, the Chinese province is comfortable with the Kerala's high HDI (human development indices). The North East province, with a $58-billion GDP, commands $7 billion in IT revenue. Of this, $4 billion is from IT product manufacturing and $3 billion from the software industry.

So far, the Chinese government has offered tax exemption only to BPO businesses. Now, a new tax policy is in the pipeline, by which animation is also within the tax holiday ambit, said Surinder Kumar, chief interpreter, quoting the 8-member Chinese delegation.

IT business captains, who participated in the seminar at Technopark, held the first round of talks with the Shenyang Information Industry Bureau (SIIB) team. Even SME players, who cannot afford fancy interpreter services, need not shy away, since low-cost services to break language barriers, are available at Shenyang, said Yang Hongfeng, director, SIIB.

Indo-Sino co-operation is proposed in five areas: 1) in sharing BPO business for Japan, South Korea and Mainland China; ( 2) for firms offering software-exporting and outsourcing service for Japanese, South Korean, American and European markets to Shenyang, especially companies who can provide embedded software outsourcing services; (3) educational institutions which plan to train on software outsourcing; (4) companies that pan to run animation-outsourcing business and (5) firms in related fields.

Kerala's IT industry, a hub-and-spoke model, enjoys a 70% export CAGR (compounded annual growth rate), says Ajay Kumar, IT secretary, Kerala. Although the state had an early start, it had lagged behind in scaling up at the right time, making it miss the momentum enjoyed by places like Bangalore.

Nasscom had recently placed Kerala among the top non-Tier-1 IT destinations. The abundant talent pool is another lure. Kerala churns out about 25,000 engineers and 2,00,000 graduates every year. Siddhardh Bhattacharya, CEO, Technopark and Infopark, claims that the state retains a 35% cost-advantage in operation expenses. The relative momentum of IT businesses in Kerala has been robust, in spite of the slowdown, according to Nasscom regional director (Chennai) Purushottaman. Since about 464,000 students graduate in technical fields annually in India, there is no dearth of talent, only specific training is needed to employ them, adds Purushottaman.