外文标题：Chinese IT companies new mantra to counter Indian rivals
BANGALORE/MUMBAI: Chinese technology outsourcing companies, once seen as a rising threat to Indian software services exporters, are beating a retreat from US stock exchanges with the help of private equity firms, but the development also raises the spectre of stiffer competition in the fast-growing Asian markets.
During the last three quarters, at least five Chinese IT services companies, including iSoftStone, Pactera, AsiaInfo-Linkage, Camelot and Yucheng Technology have all announced receiving proposals from Private Equity (PE) firms, including Blackstone, to go private.
The push towards privatisation has been a response to US-listed Chinese companies facing accusations of weak corporate governance practices, leading to depressed valuations. But analysts are keeping a close watch on this movement away from investor scrutiny, with support from deep pocketed funds, because Chinese IT companies now have a chance to regroup and better compete against the Indian IT services giants, especially in emerging markets in Asia.
“Going private is a key part of the larger business strategy being adopted by Chinese IT service firms. This is aimed at rationalising the service portfolio to be more solution-oriented. This will definitely help them improve operational efficiency and access local capital markets with better price-to-earnings ratios,” Mike Liu, chief operating officer of Infosys China, told ET.
The Communist Party-led state intervention nearly a decade ago to promote Chinese software services sector was seen as the rise of a formidable challenge to India’s dominance in the global technology outsourcing market. But Chinese companies saw very little traction in markets other than Asia.
In the January-March quarter, iSoftStone, which is evaluating a $332 million (Rs 2,000 crore) takeover proposal from China Asset Management Company, saw its global revenue fall 13%, hurt by slowing business in the US and Europe. Pactera — itself a combination of three Chinese IT services players — received a proposal from private equity giant Blackstone in May that valued the company at more than $600 million (Rs 3,600 crore).
A consortium led by private equity firm CITIC Capital is taking AsiaInfo-Linkage private for about $900 million (Rs 5,400 crore). ISoftStone declined to comment for this story, citing its evaluation of the going-private proposal, while Pactera and others did not respond to emails seeking comment.
The Chinese IT services players have language and cultural similarities with several Asian markets, but have been unable to articulate their value proposition to clients in more mature and lucrative outsourcing markets such as the United States and Europe.
Some of this has been blamed on their plain-vanilla service offerings. The largest IT outsourcing company in China Neusoft reported revenue of about 6.96 billion yuan or $1.1 billion, about a tenth of India’s largest service —provider Tata Consultancy Services. iSoftStone, one of the largest players going private, had revenue of $381.1 million, less than that of mid-sized Indian IT firm Mindtree.
True Indian (Blore)
May be India is better in IT overall. But chinese companys product are getting famous, Say WeChat Badoo etc.. We couldnt make any influence so far..??
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competition in the iT sector is good for indian iT giants they may not be complacent and resort to modern means with innovations
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Prof K C Mehta (vadodara)
Indian companies should not be complacent. They need to probe the weaknesses of their Chinese rivals, howsoever weak, and try to exploit the same to capture their market share by their superior approach and skills.
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Shankar Malhari (Chennai, Tamil Nadu)
Chinese seem adept in adapting to situations. Going private must be a good strategy for them. Why aren’t the Indian biggies thinking about it too?
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smart thinking…lets what Indian IT companies do to keep themselves in market
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Abraham Dayasingh (Coimbatore)
The first thing we need to do is to stop buying Chineses Product…
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Manish Gupte PhD ()
Boycott china..they relied heavily on exports and manipulated their currency..when we stop buying their products, their currency will unwind..that will reduce their economic growth
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Ganesh Babu N R (Chennai)
As IT Salaries increase in India, so do value addition. In short term, pure vanilla application maintenance contracts will be gobbled up by Chinese firms. And India, with high salaries, will be looked upon to develop applications or integrate systems, etc. Eventually, in the long run, may be 15-18 years from now, India will be left with negligible IT presence.
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China has a long way to go!
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Beware India! Whatever needs to be done has to be done to ensure that Indian IT companies always occupy the top spot. Let China try its best, India should do everything possible to stick on to that spot.
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everyone knows the product quality of china……n so do the softwares will be….!!
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Save Indian manufacturing industry, Create more jobs for Indians. Stop buying cheap Chinese goods.
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Sandeep Sp (Unknown)
one companies has guts to deploy Chinese IT solution ‘s in their workable environment .
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What ever the dragon does in software ,only India can lead the world in soft ware! In future due to encouragement of hardware by India by establishing electronic clusters all over country ,it will beat in hard ware exports as well! Next few months no need to import cheap China mobile phones! We r going to manufacture cell phones and TVs in India itself!
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Lambert Alvares (Mangalore)
THINK TANK OF INDIA TIME TO INTROSPECT
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Sudhir N K ()
The best way to counter this is invest a lot in manufacturing industries. If we show more interest in manufacturing industries and gain confidence in international market, we can very well develop as a manufacturing alternative for foreign companies. Some pro-active steps should be take by Government to bring in lot of manufacturing companies with easing the establishment policies and creating more economic zones. Only providing service wont take us so far with ASEAN countries becoming faster alternatives for cheap IT helpers.
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Saurabh Srivastava (Lucknow)
Chinese software…use and throw..sorry, use and uninstall…. 😛
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Vijay Thirugnanam (Bangalore)
We have beaten Chinese in corporate governance (with respect to stock market). Now, we have to beat corporate governance in employee relations. Companies like TCS and Infosys should try to become the most admired company to work beating software giants like Microsoft and Google.
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strategic speaking (India) replies to Vijay Thirugnanam
Boy, I dont know why so many people disagreed with your comments. What you said is so true…..
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Ganesh Babu N R (Chennai) replies to Vijay Thirugnanam
Indian IT managers need more maturity to handle people, more technical skills to handle technical challenges and leadership need to develop 7th sense to foresee future gadgets and challenges, to take Indian IT industry to the next level. Massaging Numbers in Excel sheets, will not help beat China !
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What the hell. Companies from super power china retreat from US stock exchanges. I thought companies from super power china will kill Indian IT industry in 30 days but they are beating a retreat, So bad. This is a sad development for companies from super power china and chinese people. Now they will avenge this in Laddakh. Super power china coming soon for more rasgullas.
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Forget IT. We should plan to challenge China in manufacturing. But for that we need nationalistic leaders at the helm who can bring passion, entrepreneurship, and belongingness to the country. We currently have a government at the center that does not even move an inch when five of our soldiers are killed by Pakistani cowards. With this kind of government, China will soon surpass India in every field including IT. We need nationalism in India and a decent and patriotic government. People who see no definition in India (like Arundhati Roy) need to be sidelined.
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