Singapore IT firms courting China

Singapore companies Singapore Computer Systems Ltd. (SCS) and National Computer Systems Pte. Ltd. (NCS) are building up their presence in China, with SCS putting in close to S$1 million (US$567,000) to set up an IT software development centre in Chengdu and NCS announcing its largest investment in China to date.

SCS had made an initial investment of S$912,000 in SCS (Chengdu) Technology Company, which will focus on software development outsourcing, product customization and localization, prototyping and IT manpower outsourcing.

Said Stephen Yeo, president and chief executive officer of SCS, “The key focus will be on software development outsourcing. The centre aims to attract outsource projects and turnkey development projects from Singapore and China. In the longer term, we target to include the United States and Europe markets.”

For NCS, its chosen vehicle for business expansion in China is IPACS Computer Services, in which it has a 51 per cent stake. The investment gives NCS immediate access to IPACS’ blue chip customer base and China’s rapidly expanding IT services industry.

IPACS Computer Services is NCS’ third strategic investment in China, after its 100-strong Suzhou Development Centre in 1998 and Zhong Sheng Information Technology Company in 2000. Said Lee Kwok Cheong, chief executive officer of NCS, “This investment allows us to tap on readily available resource in IPACS Computer Services – its strong market and business knowledge, experience as well as products and services that are dedicated to the China market.”

IT opportunities in the China market are growing. According to International Data Corporation, China is the fastest growing IT services market in the region with a compound annual growth rate (CAGR) of about 41 per cent from 2001 to 2006, especially in sectors such as banking and finance, telecommunication and government.

The SCS centre will begin operation with 35 staff and aims to grow into a CMM (capability maturity model) certified IT resource centre with 100 staff within three years.

The centre will carry out product customization/localization, and will work with companies that want to sell their products into the China market.

Another business opportunity is in prototyping. The centre can help customers develop prototypes in a more cost-effective way compared to, for example, doing the prototyping in Singapore. In addition, the centre will provide IT related services such as project management training, specific software skills training, and administer IT certification when the market demand increases.

As for IPACS, with the strengthened financial, technical and domain capabilities arising from the NCS investment, its business focus in China may be expanded to include new industry sectors such as e-government, education, healthcare and telecommunication.

IPACS Computer Services is principally involved in the IT services business in China, with main operations in Beijing, Shanghai, Fuzhou and branch offices in Chengdu and Guangzhou.

Said Wong Sing Lam, chairman of IPACS Asia, “The strategic investment by NCS will allow us to enhance our capabilities in sales and marketing, industry, products and services and technical areas immediately. Both NCS and IPACS Computer Services’ customers can expect to benefit from a wide ranging suite of infocom and engineering solutions and best practices.”