China no threat to Indian IT: Infosys

Tags: Infosys, IT
China’s burgeoning IT industry is not a threat to the Indian software industry yet, but it is well entrenched in the domestic market to make the Indian majors sweat to gain entry, says a top Indian IT official.

"Our $100 billion software industry is under no threat from China," says Rangarajan Vellamore, CEO of Infosys, China.

The Chinese IT is no threat in overall terms because it is not yet investing big in the US where Indian software firms are well entrenched, Rangarajan, who has been working in the Chinese market for the past seven years, told PTI in an interview, providing a broad view about the status of the Chinese software industry.

Chinese IT companies are not investing in the US as they are unable to understand the nuances of the market penetration and has given up their efforts making it secure for the Indian firms at least as of now, Rangarajan said.

The exchange rate also made difference. Costs have gone up due to appreciation of RMB against dollar compared to few years ago, he said. The RMB appreciated over 25 per cent in the last few years over dollar.

Instead the Chinese IT firms focussed more on the local markets where they are well entrenched.

Also the current US-China internet war further complicated the situation for American companies to view China as preferred offshore destination, he said.

Rangarajan also said that the size of the Chinese IT market is far smaller compared to the US markets and profit percentages are not high which is why the Indian IT firms pay not so high interest.

"If you look at the Chinese IT industry per se overall addressable market spending is about $150 billion on the IT space. It is about $14 billion per annum is the addressable space" which is not big for Indian firms, he said.

"From an Indian company’s perspective it is not big market anyway" because the addressable market size of US market is about $600 billion and the Indian companies reaped more benefits there as they expanded on hardware, he said.

"In terms of purchasing power parity, US will have a revenue productivity of two and half times compared to China. There itself it is very high. It translates the market size by less than two and half times," he said.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • E-auction and eventual privatisation of coal industry are welcome steps

    The government’s decision to privatise the scam-ridden coal industry through a presidential ordinance will eventually end the monopoly of public sec

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Tushar Gandhi

Sustainable model for rural sanitation

Prime minister Narendra Modi has promised to build a toilet ...

Rajgopal Nidamboor

Synchronous balance is vital for one and all

Imagine that you are playing an electronic game, or actually ...

Shona Adhikari

When women to birds become a painter’s muses

This week the focus is on renowned artist Amitabha Banerjee, ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture