Chinese software park’s success a wakeup call for Indian IT industry

By Arun Anand, IANS,

Chengdu (China) : It is the fastest growing software park in China and people here claim that every second laptop being sold in the world today runs on a computer chip manufactured here. And it could pose a major challenge to Indian information technology hubs and their premier position on the global IT map.

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Tianfu Software Park (TSP), run on 35 sq km in Chengdu city in southewestern China, is developed by the Chinese government-owned Chengdu Tianfu Software Park (CTSP) Limited.

Christine Du, president of CTSP Ltd, told a visiting IANS correspondent: “We can say now that every second laptop in the world sold now has a chip manufactured in our software park.”

Officially opened in 2005, TSP is now the fastest growing software park in China and is all set to double the pace of its growth over the next five years.

In fact, Indian IT giant Wipro too has opened a centre here and according to the CTSP officials there are around 70 Indians working in this software park.

TSP already has 200 enterprises spread over a construction area of more than 1.3 million square metre with state-of-the-art facilities. “We are planning to expand this construction area to 2.2 million square metres over the period of next four to five years,” said Du.

TSP has been used to set up various facilities by 23 of the Fortune 500 companies including IBM, SAP, GE, Siemens and Ericsson.

The reason for this massive influx of global IT giants is apparent as a visit to this software park shows. It has state-of-the-art infrastructure and some tax concessions too.

The TSP, unlike many of the Indian IT hubs that continue to grapple with infrastructure bottlenecks, provides cheap and comfortable housing at a cost that is six to eight times lower than Beijing and many other parts of China.

To attract foreign talent and make employees of foreign companies comfortable, the CTSP has facilitated setting up of foreign kindergarten schools as well as international primary and secondary schools run on American curriculum in this city of 13 million residents.

The Chinese government has invested more than US$31.2 million annually over the last few years to develop this infrastructure and intends to increase this spending substantially further in future.

TSP has a professional human resources centre, which provides full range of HR services, including recruitment, information and training. This centre has 12,000 sq m of public training venues and runs more than 1,000 cutting-edge courses training nearly 10,000 company employees annually. The centre also runs an e-college, which has more than 6,000 students who are employees of companies set up here.

It also manages an incubation centre and has so far directly attracted investment of US$18 million. At present the number of enterprises in TSP has crossed the mark of 200 and it includes many Chinese companies also.

The park has various clusters of business software, digital entertainment, telecommunications, business process outsourcing and back office service centres for providing support in domestic and international software and services.

As a result of these efforts, within a span of five years, the annual revenue from only software industry in the TSP has increased from around US$3.2 billion in 2005 to around US$9.8 billion in 2009.

To attract investment and best of the talent, the corporate tax rate for units operating in this software park is merely 15 percent – 10 percent lower than the general corporate tax rate in China. “The rule applies to both domestic and international companies,” Thomas Tang, director of Chengdu High Tech zone, told IANS.

The TSP falls within the Chengdu hi-tech zone. “Also there are provisions for refund of the individual income tax paid by certain categories of employees depending on their salaries,” he added.

(Arun Anand can be contacted at [email protected])