BEIJING: Satyam Computer Services, India's fourth-largest software company began construction of a major software development centre in the Chinese city of Nanjing, on Thursday. When complete, the centre will be Satyam's largest outside of India itself, employing 2,500 people.

Satyam's decision to ramp up its China operations comes at a time when other Indian IT majors are planning similar expansions. Infosys Technologies has announced plans to open two development centres in China that will employ 6,000 people, while Tata Consultancy Services is working out a joint venture agreement with three Chinese partners and Microsoft Corp.

Virendra Aggarwal, a senior vice-president and Satyam's regional director, told The Hindu that the Nanjing software development centre would function as an offshore site for the company's customers in the U.S. and Europe, offering them an alternative site to India and hence cater to their needs for diversification.

In addition, the centre would help Satyam service its Japanese clients better, one of the main objectives behind Satyam's China operations.

Moreover, it would provide services to the company's existing multinational clients with operations in China and finally would help Satyam break into the notoriously difficult domestic Chinese market itself.

According to Gartner, a research agency, Indian companies could in time come to account for some 40 per cent of the lucrative $30 billion domestic Chinese market for software. But Indian companies have so far found making a breakthrough tough.

The reasons are many. Mr. Aggarwal highlights the fact that Indian companies still have low brand recognition in China. Moreover, foreign-owned companies are kept out of the really large, multimillion-dollar deals at the state-owned enterprises that prefer to go with local firms.

Nonetheless, Mr. Aggarwal is bullish on China. The decision to expand in the mainland he says is partly aimed at offsetting rising costs in India and developing an alternative base of skilled workers. China is the only other country comparable to India in terms of the size of its human resource base.

At present Satyam has close to 500 employees in China at centres in Shanghai, Beijing, the southern city of Guangzhou and the northeastern city of Dalian.

While the company will begin operating out of temporary facilities at the new development centre within the next few months, the campus is expected to be fully functional in just over a year's time.

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