Galwan Valley clash: Indian IT services companies in wait-and-watch mode

With the India-China border face-off in Galwan Valley of Ladakh disrupting trade relationship between the two sides, the country’s IT services companies say they are watching the developments keenly.

China as a market is quite small for Indian IT firms at the moment, but they use the country as a delivery base to cater to global clients.

“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,” said Gagan Sabharwal, senior director (Global Trade Development) at National Association of Software and Service Companies (Nasscom).

Decision-making has been slow for the past three months because of travel bans due to Covid-19 and will likely continue to remain so for some time, he said.

Indian IT industry is one of the biggest Indian employers in China, with around 22,000 employees in the country, including locals as well as expatriates. Among the large Indian firms, Infosys has 4,000 employees in the country. Wipro has over 2,000 employees, around 98 per cent which are local.

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

“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.”

In terms of market, Asia accounts for around 8 per cent of the Indian IT sector’s exports revenue while sources peg China’s contribution at less than 1 per cent. Nasscom has been trying hard to break into the Asian major’s IT market to reduce its dependence on European and the US markets.

Since 2018, the industry body 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. Nasscom also temporarily shelved plans of openings fourth corridor in Wuhan due to the pandemic outbreak in December.