India Can Cash In On Chinas IT Market

Bangalore: | Updated: Jul 26 2002, 05:30am hrs
India could gain a major edge over China in the coming years by leveraging its IT services potential wisely. The IT services market in China is going to be worth $10 billion by 2006, up from the current $1.3 billion, according to a survey by the IDC.

IDC India president Ravi Sangal in his keynote address on China, IT and WTO session at IDC directions 2003 seminar said that India had great potential in areas like finance, communications, transport and government and India had the USP of global expertise and functional and domain knowledge to tap this huge market.

India can overcome problems like language by partnering with local firms in China and having a good mix of Chinese and English speaking employees, making good contacts in governments, etc.

Computer hardware comprises a major chunk of the Chinese IT market with a 70 per cent share, but the trend is changing, and by 2006 it would be less than 50 per cent, whereas other segments like packaged software and services would see potential growth, Mr Sangal added.

The scenario in China shows a major boost in manufacturing of hard disk drives and key boards with many manufacturing facilities shifting base to China from Japan, Taiwan and Korea. Chinas share in the world production of these items has been increasing steadily, even as it is decreasing in other Asean countries.

This will have a major impact on the manufacturing of low value items in India like key boards, cabinets, switches, etc., of which 90 to 95 per cent would come from China post WTO, Mr Sangal said.

India has an edge over China in terms of IT industry growth especially in IT services, as it does not have any real strength in software services, and has weaknesses like language and inexperience. The Chinese governments focus on implementing WTO reforms would also be detrimental to the growth of IT in the country for next few years.

However, the main threat to India from China is the cost pressure and the fast pace in which the country is growing. India also lags behind China in terms of proactive policies from the government and has to improve a lot in terms of quality and quantity in IT education.

China is also ramping up its IT education, it has a disciplined hardworking and trainable manpower and a large domestic market.