SINGAPORE: Tata Consultancy Services (TCS) will merge its China operations into a new joint venture company it has formed with three Chinese partners and Microsoft, according to Girija P. Pande, Head & Regional Director, Asia Pacific, TCS.

"Within one year, we will merge our company into the joint venture," he told a group of visiting journalists in Singapore last week.

TCS was among the earliest Indian information technology companies to enter the Chinese market when it set up operations in 2002 through a wholly owned subsidiary. It has 25 active customers in China.

More recently, it bagged the mandate to partner Chinese government agencies to set up an IT company that is meant to be a role model for the growing Chinese software industry. TCS will hold a 65 per cent stake in the joint venture — TCS (China) Co — while three Chinese companies — Zhongguancun Software Park Development Company, Uniware Company and the Tianjin Huayuan Software Area Construction and Development Company — will hold 25 per cent and Microsoft the balance 10 per cent. Tata Consultancy Services Asia Pacific Pte, a TCS subsidiary, signed a shareholder agreement in July for establishing the joint venture and obtained the licence last month.

According to Mr. Pande, the joint venture hopes to get some of the Chinese domestic market, which, he estimates, is five times that of the Indian market and growing. The Chinese domestic IT market is estimated at $40 billion against India's $8 billion.

He said that with the joint venture in place, the number of TCS employees in China would grow from 650 to about 5,000 in five years.

The joint venture would not confine itself to the Microsoft platform alone. This centre would help the company tap to a greater extent the Asia Pacific market.

In the last two years, according to Mr. Pande, China has overtaken India in the number of IT graduates, thus offering the company the scale to increase its operations. The wage differential is still in India's favour, while the attrition rate — number of employees quitting the company — is also higher in China than in India. TCS has bid for two large IT contracts in China, including one from the Bank of China.

Mr. Pande also said that TCS was close to finalising another acquisition in Australia. The acquisition was of a "reasonable size" and would happen soon was all that he would say.

He said that TCS had set up a centre for banking technology in Singapore, in a bid to tap the growing business opportunities in the country. The Singapore government was keen to promote the country as a centre for wealth management and banks look to IT companies such as TCS for providing near-shore solutions.

The company had set up a 50-seat centre in Singapore and Deutsche Bank had offered business to the company. TCS, Mr. Pande said, was also looking to increasing its Japan business.

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