Infosys Takes Outsourcing to China

[HenryTo]

More evidence that the old idea of nationalism is gradually going away. I really like Pete's idea of "taking the road less travelled" so to speak:
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Infosys Takes Outsourcing to China
Elizabeth Millard, newsfactor.com

In a twist on global outsourcing, Indian-based software firm Infosys Technologies is setting up development centers in China. The firm will invest US$65 million over a five-year period and will hire some 6,000 engineers there, a dramatic increase from the 250 employees it has in China already.

The new centers will be located in Shanghai and Hangzhou and will focus on software development and I.T. services as well as training and research. Both centers are slated to have projects started by early 2006.

Country Side

India and China have come to be seen as competitors for information services, as U.S. and European companies look to those countries for programming talent, customer service and other outsourced work.

But leading Indian companies like Infosys, now eyeing China as a partner, have been expanding into that region to tap into local talent and to cozy up to Western companies that have a presence there. The planned centers should help Infosys garner more outsourcing orders from Japan and Southeast Asian countries, which hitherto have not used many Indian firms for such work.

Currently, Infosys employs about 40,000 people and writes software for some of the world's largest companies, including Apple Computer (Nasdaq: AAPL - news), Cisco Systems (Nasdaq: CSCO - news), Toshiba (PNK: TOSBF.BK) and Nortel (NYSE: NT - news).

Asia Major

"China is the hotspot right now, obviously for its enormous market opportunity," said Yankee Group analyst Laura DiDio. "If you're a technology company and you're not thinking about China, then you're already behind."

Within the past six months, in particular, major companies have been expanding their presence in the country or launching new initiatives there. Intel (Nasdaq: INTC - news), Microsoft (Nasdaq: MSFT - news) and IBM (NYSE: IBM - news) have been especially keen on capturing Chinese customers.

But it is possible that as companies like Infosys deepen relationships in China, political issues could become more acute.

"It's a communist country, and that will come into play at some point," said DiDio. "It will be interesting to see how politics and business mix as these firms keep pouring money into China."