Tata Consultancy Services (TCS) and Mitsubishi Corporation, Japan, on Wednesday announced a new joint venture — Nippon TCS Solution Centre — for the Japanese market. The new venture will offer a full service suite of IT, BPO and infrastructure services to Japanese corporations.
TCS' subsidiary, TCS Japan, will have 60 per cent stake in the joint venture and Mitsubishi the balance. The joint venture will also establish a nearshore delivery centre in Japan.
Addressing a teleconference, TCS CEO and Managing Director N. Chandrasekaran said the total investment in the joint venture was $5 million. “Japan is an important market for us and there was a need to focus there as Japan is the world's second largest IT services market.''
On a need to enter Japan through a joint venture, he said, “we have never had a joint venture model except in China. Japan is a different and unique market. Although we have been present there for 20 years, our presence was small. We are beginning to get traction there and this joint venture will accelerate the momentum.'' He said revenue from TCS Japan was now less than $100 million but he hoped it would grow to at least $500 million in the next 4-5 years, adding that the new joint venture would provide strong local market knowhow, deep domain knowledge as well as bring in global technology best practices to help Japanese corporations effectively respond to their global IT needs.
Mr. Chandrasekaran and Hideyuki Nabeshima, Senior Executive Vice President, Mitsubishi Corporation, have been appointed non-executive directors of the joint venture.
Mitsubishi Corporation and TCS have already started collaborating in areas that include establishing an IT support system that uses TCS's knowhow and its global network delivery model for Mitsubishi Corporation's overseas bases as well as implementing new employee training programs for Mitsubishi Corporation's business services division and for IT Frontier Co at its training centre in Thiruvananthapuram.
The joint venture e comes against the backdrop of a strong yen, the globalisation of supply-chain and a growing trend toward overseas mergers and acquisitions, all of which act as a catalyst for the increasing globalisation of Japanese companies.
This has heightened interest in the role of ‘global IT services' to link domestic and overseas operations.