Microsoft to play second fiddle to TCS in China JV

Global software giant Microsoft is going to play second fiddle to India's home-grown software company, Tata Consultancy Services (TCS), in a three-way joint venture with the Chinese government.

TCS will hold over 50 per cent of the equity, with Microsoft holding a minor strategic stake. Besides, the joint venture will operated under the TCS brand and the TCS people will be operationalising and running it.

"We are clearly going to be the dominant partner. We will hold more than 50 per cent of the equity. Beyond that we are still negotiating," Girija P Pande, TCS' regional director for Asia Pacific, told Business Standard.

Beijing Zhongguancun Software Park Development Co, Uniware Co and Tianjin Huayuan Software Park Construction and Development Co - subsidiaries of the National Development and Reform Commission, an arm of the Chinese government - will together hold the rest of the equity in the venture.

As a result of this venture, China will grow in importance in the global network of TCS, two of whose biggest sources of revenue now are the United States and Europe.

"The US and Europe will remain big for some time. But you have to see where the new growth is coming from. That is where this fits in. From a strategic perspective, we are in the right market," said Pande. China's annual spend on IT now is about $23 billion, growing at 15-18 per cent a year.

The three-way venture intends to establish a software joint venture company to provide IT outsourcing services and solutions to both the global and domestic market. The JV will be located in Beijing's Zhongguancun Software Park.