India-China Pact Could Make Asia The Next IT Hub

Efforts by China and India to cooperate in developing their computer industries could greatly enhance Asia's influence on IT products and standards throughout the world, a panel of experts said Tuesday at the InformationWeek Spring Conference at Amelia Island, Fla.

"The combination would create a trading region in which trade between the countries would be larger than each country's trade with the United States," said University of Michigan business school professor C.K. Prahalad. That would translate into enough economic clout for India and China to impose IT standards throughout Asia and greatly influence technology adoption globally, he said.

"First Person Accounts: The View From India-New Perspectives on Outsourcing": From left to right: University of Michigan business school professor C.K. Prahalad, Sunil Mehta, VP at the National Association of Software & Service Companies, and Varun Jha, CIO at India's Tata Steel Photo by Sacha Lecca

Over the weekend, Chinese Premier Wen Jiabao visited the Indian tech hub of Bangalore as part of a campaign to establish closer links between India and China and to smooth over border disputes. "I strongly believe that if we join hands together, we will certainly be able to set a new trail in the IT business world," Reuters quoted Wen as saying. Wen envisioned an alliance in which China concentrates on hardware and India focuses on software. Prahalad said such Indo-Chinese cooperation would "create real issues for the U.S.; it would reduce U.S. leverage in the region."

China is in the process of choosing standards for radio-frequency identification, encryption and other key technologies. The U.S. government, prodded by vendors and big commercial IT users in this country, is urging Beijing to endorse standards already used widely throughout the West.

For their part, Indian software developers and other businesses are welcoming the prospect of easier access to China's red-hot economy. "We are urging all our member companies to adopt a China strategy," said Sunil Mehta, VP at the National Association of Software & Service Companies, the trade group that represents Indian IT vendors.

A number of major Indian IT services companies, including Wipro Technologies, Infosys Technologies, and Satyam Computer Services, recently have established operational centers in China.

Varun Jha, CIO at India's Tata Steel, said he would like to extend his company's IT infrastructure into China to support plans to ship raw steel into the country for processing. "China is the big creator of demand for our steel," Jha said.

Indian software developers could also use the Chinese market as a means to become bigger players on the world stage, Prahalad said. In an interview, Prahalad predicted that a major Indian software developer could enter the enterprise application market within five years. Said Prahalad: "Improved trade with China would certainly help spur that."