China may have proved to be a tough nut to crack for Indian software vendors so far, but Infosys looks determined to scale the Great Wall. Though most Indian software firms have barely managed to keep their heads above water in the Communist country, Infosys believes it?s all about perseverance and intends to hire 2,000 more employees, despite attrition rate climbing to an unusually high 20%.
Infosys China employs around 3,500 at present.
?We will have to do better to keep Chinese employees interested,? Infosys executive co-chairman Kris Gopalakrishnan told FE in an exclusive interaction on Monday. ?Attrition rate is extremely high, because the Chinese believe a 10-12% annual raise is not good enough. That?s quite unlike India, and we will have to think of new ways to keep them hooked,? the Infosys co-founder said.
Eight years after it opened its China office as an additional base to serve global customers, India?s second-largest software player is eyeing the Chinese market for growth. Currently, Infosys China earns most of its revenues from offshore services, and the rest from services carried out for subsidiaries of multinational companies. In 2011, Infosys China had posted revenues of nearly $80 million.
n Infosys creates new service lines to drive growth, Page 7
?China contributes much less than 1% of our revenues,? says Kris. ?But it is important for us to stay invested.?
Here?s why. Chinese software industry revenues have risen nearly 30% year-on-year for the past three years and the industry is valued at around $150 billion. That?s too attractive to walk away from.
China is of strategic interest for all IT vendors, despite the lack of a level playing field. The country?s policies almost always prefer domestic companies over foreign firms. Only IBM has succeeded in penetrating the country.
?The good thing is that Chinese colleges produce world-class talent just like us. So, there are plenty of options. It is all about retaining good employees and giving them a variety of challenges,? says Kris. ?Like Japan, China too is a very difficult market to win contracts from.?
Infosys, however, has shown considerable intent of late. Recently, it signed a MoU with the Dalian High-Tech Zone, to establish a branch that will focus on software development. The new facility can seat 700 employees. It is also setting up a Shanghai facility at $125 million.
Infosys? intention to expand in China is in sharp contrast to the stance adopted by mid-tier players like MindTree, which is now looking to alter its strategy in the country. MindTree has decided to focus less on China, sensing the degree of difficulty in doing business. It had entered China in 2009. However, Infosys? peers like TCS and Wipro continue to have strong ambitions in the country, with the latter looking to double its headcount there.