Infosys, Wipro and other IT Companies to be Affected by India- China Border Dispute? Details

The India- China border face-off is having an effect on both the countries’ financial ties. IT services companies express that they are noting the developments keenly. 

Although China is a small market for India, it is being used by India to tap into global clients. Indian IT industry is one of the biggest Indian employers in China. There are around 22,000 employees in the country it includes both locals as well as expatriates. Among the large IT Majors, Infosys has 4,000 employees in China and Wipro has 2,000 out of which almost 98% are locals.

“The industry is in wait and watch mode. This issue with China is not economic. It is a military and territorial issue. We are hopeful the situation will be sorted, sooner than later,”  Gagan Sabharwal, senior director (Global Trade Development) at National Association of Software and Service Companies (NASSCOM) told Business Standard.

The pace of decision- making has been slow over the past three months due to travel bans imposed in view of COVID19 and according to Gagan Sabharwal it is likely to continue. 

“It is a multi-tangential issue. Indian IT services have a base in China though only to a limited extent,” Sanchit Vir Gogia, founder and CEO of Greyhound Research told the media.

“In the long term, Indian IT players have to tie up with local Chinese partners from a delivery perspective (similar Facebook-Jio deal in India) as even Facebook and Google have not been able to enter China for a long time, he added.

According to data presented in media reports, Asia put together accounts for nearly 8% of the Indian IT Sector’s exports revenue whereas China’s contribution is less than 1% cent. Nasscom has been trying to break into Chinese market so that it can reduce its dependence on European and the US markets.

Nasscom has set up three Sino-Indian Digital Collaboration Plaza corridors in Dalian, Guiyang, and Xuzhou in partnership with local municipal corporations springing up opportunities worth $18 million Since 2018. 

Nasscom was planning to open fourth corridor in Wuhan but it has been stopped due to the on-going coronavirus outbreak. The next course of action taken by Indian IT Majors will depend on developments coming in from India and China.