India's Zensar provides Shenzhen solution
By Chen Hong (China Daily)
Updated: 2004-08-24 11:09

The Pune-based Zensar Technologies Ltd has decided to share most of its valuable software outsourcing management experience, global sales network and client resources with its new joint venture in Shenzhen, in which it takes 51 per cent with its partner, Broadengate Systems Inc, a major Chinese software outsourcing service provider, holding the rest.

Another 12 software companies will also benefit from the agreement, having joined a Shenzhen software offshore development coalition sponsored by Zensar last June in the Shenzhen Software Park.

"Zensar China will be a multi-million US Dollar Chinese corporation, adding tremendous value to the Shenzhen economy, generating employment and making Shenzhen a major outsourcing destination in the world," said Ganesh Natarajan, CEO of Zensar Technologies.

The Indian-listed company brought in US$60 million last year and provides IT outsourcing and BPO (business process outsourcing) services to quite a few Fortune 500 companies in the United States and Europe, like Cisco and ABN AMRO.

While transferring part of its outsourcing business from American and European clients to the Chinese joint venture, Zensar will develop new clients such as big foreign firms, multinational companies in China and some government departments with the joint venture, Zensar Technologies (Shenzhen) Ltd.

"We will have 500 software engineers in the Chinese joint venture in three years, and most of them will be localized," Natarajan told China Daily. "About 65 per cent of the staff will serve global clients while the other 35 per cent is for domestic clients," he said.

With the support of the Shenzhen Municipal Government and Shenzhen Software Park, the Zensar/Shenzhen joint venture had successfully inked a software outsourcing contract with US leading clothing maker and retailer Liz Claiborne Inc, said Natarajan.

The deal is expected to bring US$5 million revenue to the joint venture over the next two years, the company predicted.

"We expect the joint venture to achieve some US$1 million this year," said Natarajan. "But in three years, the revenue is projected to rise to some US$25 million, or nearly 20 per cent of the whole group," he forecast.

His optimism lies in three major elements: great government support, excellent software infrastructure and the quality of the personnel, he said.

But Zensar will firstly train a group of qualified engineers to provide international standard services to the clients, said Ashish Rahinj, CEO of Zensar Shenzhen.

In the next two years, 200 Chinese software engineers will be sent to the Indian headquarters to work or receive training for a certain period in batches, he said. Zensar's internal training system will also be introduced to its Shenzhen joint venture.

Boost for city's IT industry

Zeng Guozhong, director of the government-backed Shenzhen Software Park, said the co-operation with Zensar paved a new way for the city's software outsourcing business.

"Although Zensar is not a very big software company in India, ranking around 20th, co-operation is extremely valuable because it is willing to share its sales network and client resources with Chinese software companies rather than merely taking advantage of our less costly IT professionals," Zeng told China Daily.

"It's particularly important and helpful for local software companies, which are comparatively small, less informative and lacking an effective channel to reach foreign clients, to grow up and develop their own businesses," he noted.

He expected the software outsourcing business in Shenzhen could gain a growth rate of 50 per cent a year in the next few years.

According to official figures, the city has topped the country's software exports for three years by selling US$590 million worth of software abroad, including embedded software equipment. The software outsourcing business contributed less than US$100 million.

As a pioneer in software outsourcing, Indian companies have taken nearly 90 per cent of the US and European software outsourcing businesses. Software exports reached US$12 billion in the last fiscal year from March 2003 to March 2004, said Zeng. Meanwhile, exports China generated for outsourcing were about US$200 to 300 million, he estimated.

Appointed the country's software export base last year, the Shenzhen Software Park will get more than 100 million yuan (US$12.1 million) to upgrade its infrastructure.

"We will also apply for more resources from the local government to encourage software outsourcing," Zeng said.

The software park will take some innovative steps to link local software companies with global markets. "For example, we are considering acquiring some companies in the major outsourcing markets such as Japan or the United States, which will be used to bring in foreign companies to set up direct relationships with Chinese companies," said Zeng.

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