Indian IT firms are reaping the benefits of international attention shifting to China after the global slowdown, as their Chinese operations finally move into the black. Infosys Technologies is the first to see some light beyond the Chinese wall, with a 64% jump in revenues ($79 million) in 2010-11, along with a net income of $8.73 million, after posting losses ever since it started operations in the neighbouring country in 2003. Encouraged, Infosys now plans to recruit 4,000 over the next 18 months in China, increasing headcount to 7,000.

Sensing the turnaround, Infosys? cross-town rival Wipro Technologies plans to add 2,000-3,000 over the next two-three years in China, while India’s biggest IT exporter TCS has decided to triple its headcount to 4,500 employees in the next three years.

Says Infosys CFO V Balakrishnan: ?Two years back we were making losses, but now we have become profitable in China. Once we scale up, we hope to increase profits. After the downturn, global companies saw their domestic markets plateauing and that’s when they started investing in China in a big way. This fueled growth for us in the last two years in China.?

Adds Pradeep Udhas, executive director and head IT/BPO, KPMG India: ?Considering the opportunity at hand, China might well turn out to be a profit centre for Indian companies,? citing a recent Goldman Sachs report that estimated Infosys? revenue from China to reach $200 million by 2013 and revenues for TCS China to touch $250 million.

Says Girija Pande, chairman (Asia-Pacific) TCS: ?The domestic IT market has been growing for over a decade, but only now do larger domestic companies recognise our need. Earlier, there was little name recognition of Indian IT companies.?

The bulk of IT spend in China comes from large state-owned enterprises. ?Chinese companies themselves have not yet taken to outsourcing. It’s starting to happen and when domestic outsourcing starts, I think there will be a very large opportunity,? says Pande. More than 25% of TCS? Asia-Pacific revenues come from China.

Till a few years ago, Indian IT brands were struggling to establish themselves in China. The relationship between the two countries has always been laced with mistrust and this had impacted business as well. Besides, Indian companies found it difficult to get talent at senior levels despite China’s large IT population. But the environment has started to turn around, and hence the new investments.

?We are very bullish, because most of our global customers are focusing on China, both in terms of IT services and products, and they want us to expand even more,? says Rajat Mathur, chief sales and operations officer (Asia-Pacific and Japan), Wipro Technologies. The company hopes to grow 100% per annum for the next three years.

However, revenue from China is still well under 2-3% for most Indian IT firms, which entered China to establish a base for off-shoring projects, particularly from Japan and Korea, because of cultural and language affinities. But now, verticals like manufacturing, retail and financial services offer Indian IT firms immense opportunities in the $30-billion Chinese IT market.