Tata Launches Outsourcing Group in China

India’s largest software and services outsourcer, Tata Consultancy Services (TCS), on Tuesday inaugurated its outsourcing joint venture in China, which is likely to have Microsoft as a minority investor.

The joint venture, first announced in 2005, has TCS as a majority partner holding 65 percent of the equity, and three Chinese partners, including two software parks, holding 25 percent. Microsoft is expected to pick up 10 percent of the equity in the company, TCS said.

The joint venture operates at the Beijing Zhongguancun Software Park, and will address the domestic Chinese market and global markets. The software parks investing in the joint venture are Beijing Zhongguancun Software Park Development and the Tianjin Huayuan Software Park Construction and Development Co. The third partner in the joint venture is a software company, Uniware in Beijing.

The cooperative project has been initiated and supported by China’s National Development and Reforms Commission.

TCS and its Indian competitors, such as Infosys Technologies and Satyam Computer Services, already have software development facilities in China. Indian outsourcers are expanding in China both to service the Chinese operations of multinational companies and to target the domestic market, and neighboring markets like Japan.

China has also invited Indian companies to set up operations there to help develop its own software and services outsourcing industry.

By being part of a joint venture steered by a Chinese government agency, TCS may have an edge over Indian competitors for government business. The company announced Tuesday that it bagged an order to implement a currency trading system for China Foreign Exchange Trade System, an arm of the People’s Bank of China, the country’s central bank.