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Indian IT leader sees China as formidable threat

The country has "created its own positive brand in IT-enabled support," says chairman of tech giant Wipro. But he sees challenges.

NEW DELHI, India--The Indian IT industry should not be complacent about competitive vibes emerging from China and Eastern Europe, Wipro Technologies Chairman Azim Premji said Tuesday.

Azim Premji
Azim Premji
Chairman, Wipro

Indian companies have become leaders--in part because they have access to workers with a sound technical education and English proficiency. Still, other countries are fast catching up, Premji said during a rare meeting with foreign journalists in the Indian capital.

"I hear from Indian observers that top-down Chinese government structure poses a constraint to business expansion," Premji said during a talk with members of the Foreign Correspondents Club. But he added: "Do we really understand China's commitment to English, how government supports small-business growth? And most of all, have we experienced the tenacity with which Chinese entrepreneurs solve these problems?"

More Indian software and services companies are looking to grab a share of the outsourcing market and gain an advantage over China, Russia and the Philippines.

"In marketing terms," Premji said, "India has created its own positive brand in IT-enabled support. However, I see other countries and regions rapidly bridging this gap, most certainly China."

China, however, does have weak points, Premji said, including a lack of experience in software project management and in issues related to software intellectual property.

Responding to the changing scenario in the outsourcing arena, Wipro is carefully calibrating its expansion plans, Premji said. It has a presence in China to cater to American and Japanese customers, and is now setting up two development and service centers in Eastern Europe.

Bulgaria, Romania and Hungary are probable sites, Premji said. These centers will source local talent, just like the center Wipro has opened in Japan.

Premji is among the richest people in India, owing to his more than 80 percent ownership in Wipro.

The idea of an individual owning so much of a public company is actually under scrutiny. The Securities and Exchange Board of India last week issued guidelines asking companies to dilute promoters' stakes so that public shareholding could go up to a minimum of 25 percent.

When asked about his compliance with this rule, Premji said he would "dilute" his stake "at the appropriate time."

In any case, he said, the company is still studying the guidelines and will issue a "technical view" of the matter soon.