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China May Beat India In IT, With Help From Guess Who ?

Last fortnight, I ended by saying that the only possible feel-good in China for the serious Indian visitor is the reception that local IT companies give you. The story ended at Beijing’s own Silicon valley, the Zhongguancun Software Park, as we were listening to a presentation being made by the CEO of Beyondsoft, a Chinese IT services company.

But there is more to this story and its about the somewhat unpredictable future. Can China beat India in IT ? Does it matter whether they will ? The answer to the second question may not be very relevant but the foundation for the first is very much in place in Zhongguancun or Z Park as it is called on the north west end of the city.

Z Park is not and does not claim to be all that China has to offer for IT services. But its an important showcase, like Bangalore is one. The pace at it which it is growing is noteworthy and is all controlled, unlike Bangalore. The official taking us around explained that the park was a total of 1.4 square km of which two-thirds was completed.

Next year, they would start construction on a second stage (across the road so to speak) with an acreage of 1.6 square km. Most of the big brands including Microsoft, Oracle and Lenovo are here in force. And so are now, Infosys and TCS.

Can Planning Do It Here Too ?

The question I’ve been asking myself is, a country like China has done so much through focussed, purposeful and determined planning, can it repeat the same miracle with IT as well ? It’s a question to which I wish the answer were simple but it’s not. China is a bulldozer economy that somehow seems to succeed in everything it sets out to do. One of its many focus areas is IT and its pretty clear it wants to get ahead here too.

The Z Park in specific and this part of Beijing city represents everything that any state with a single minded focus will achieve once its identified the ingredients. Some of the physical ingredients are clear to see, a sprawling `park’ with a garden-like environment (roughly 55% of the park) with birds, pools, lakes, swimming pools that you are encouraged to `jump into’ and on-campus gyms.

The distinguishing part about the campus here in contrast to those back home, to this writer, was the lack of fortress like walls, stern guards and large captive generator sets and so on. You turn off the main road, pass a little kiosk and a largish tombstone with the park’s name and a etched map and you are in. In any case, all infrastructure is shared, unlike in most parts of India where every company (wanting a large set up) puts up its own food courts and the like.

Can The X Factor Help Us ?

Rajeev Purnaiya, who successfully ran telecom solutions company CyberBazaar before selling it to Webex was with me as we gazed in wonder at a scaled down model of the Z Park in the main reception area and offices. “I don’t know,” he said as I asked him the inevitable question, “It’s the X factor that this place does not have and Bangalore does. It’s the spark which drives the story back home.” He has a point. Its tough to disaggregate at a later stage but the missing link is what holds it all together.

But again, the Chinese seem to be pouring in the intangible ingredients for the X factor at a huge pace. First Z Park is surrounded by some of China’s best universities, Beijing University and Tsinghua University, the latter being more science and technology inclined. Last month, the university, which has designed two satellites and claims a host of inventions, saw at least three VIP visitors ranging from 2000 Physics Nobel Laureate Zhores I. Alferov who addressed students on Quantum Electronics to California Governor Arnold Swarzenegger (follow your dreams) and finally Nasdaq President & CEO Robert Greifeld on entrepreneurship.

The stress on the soft side, a critical ingredient for young workforces is high. Z Park brochures speak of 200 restaurants with cuisine from all over the world nearby, ranging from French foie, Mexican fajitus to local Peking duck. And of course, if nothing else, you can land up at Bar Street near Houhai in central Beijing, a long line of live music bars and speciality restaurants which offer a complete international experience, as we discovered.

Would India Dare Advertise Its Nightlife ?

The only perhaps jarring note on Bar Street are the somewhat aggressive beggars outside, but it didn’t appear like the culture police were circling the area waiting to crack down. It struck me then that no Indian IT company will dare advertise nightlife in Bangalore or Chennai. For a simple reason, its there one day and not the next. Or for that matter that their campus is 55% landscaped gardens and pools for fear of someone asking, “What do you need gardens and pools for, are you producing software or gardens?”

The other point worth noting is that the Chinese education system seems more welcoming to Indian IT education players (A piece focussing on this thought is coming soon) like NIIT and Aptech (each following a slightly different model) in allowing them to not just set up shop but also work with universities in tuning their curricula. Note that there is no talk or fear of educational imperalism.

For the record, total Indian IT market in 2004 was s $17 billion (projected at $22 billion for 2005) but that includes IT services ($9.2 billion), BPO and domestic ($4 billion). The China IT exports figure is only $2.8 billion and that includes embedded software exports, so IT sourcing is small. And yet, China’s overall software sector (including domestic) is expected to reach $36 billion this year, way ahead of India.

Don't Ask, Just Watch Where Infosys Is Going !

The story is not as much about software as it is, once again, about deciding on something and going after it. Indian IT entrepreneurs are obviously convinced of the China IT story. Infosys has said it will hire 2,000 people in China by next year and aims to take that to 6,000 in five years. TCS, Cognizant, Satyam and Patni will follow with large numbers.

Incidentally, TCS and Infosys employ close to 50,000 people each today whereas the largest Chinese IT services company employes under 7,000. So, chances are that the Chinese may well overtake Indian IT by 2010 or whenever or for sure come bloody close. The only difference is that the Indians will help them do it.

The author was part of a CII-Young Indians delegation to China last month. He can be reached at govindraj@datelinebombay.com. This piece also appeared in the Hindustan Times's Bombay edition on Tuesday. You can reach him at govindraj@datelinebombay.com

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