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Microsoft and Satyam forge China partnership

Satyam Computer Services Ltd. and Microsoft China on Thursday said they will jointly develop a multibillion Enterprise Solutions market for the Greater China region. The five-year plan is based on delivering Satyam's services on Microsoft's enterprise platforms such as Axapta, Navision, Great Plains, Solomon, and CRM.

The agreement, six months in the making, is an extension of a global alliance between the two companies to offer business systems architecture, consulting, integration. "It could in the future include some applications development that might impact back-office activity," said Hari Natarajan, Satyam's vice president of strategic relationship with Microsoft. "The challenge most companies in Asia, specifically China, are operating on short time scales and need to design and take live, for example, a customer relationship management solution in eight to 12 months."

The two companies will establish the Satyam Microsoft Adaptive Solution Center in Asia. Today, about 300 people support Satyam's operation from Shanghai and Beijing. That will change as business in China grows. The plan is to hire another 2,500 to 2,700 during the next five years. Satyam will add development centers to support the agreement with Microsoft. Locations for new centers under consideration are in Xian, Nanjing and Chengdu.

Any big shift in economic Chinese policy could slow plans. But emerging economies are expected to go through phases as they mature and Natarajan is prepared to confront issues head on. Satyam and Microsoft have worked together in China for nearly 12 months as an extension of a global alliance setup between the two companies four years ago. Today's announcement formalizes a business strategy.

Natarajan estimates Satyam and Microsoft will grow their customer base in China to about 60 companies in the next year, up from two served today under this agreement. For the past six months they have been working with an undisclosed pharmaceutical company and government agency in China.

China slowly became the world's manufacturing hub for industries from electronics to textiles since agreeing to join the World Trade Organization in December 2001. Natarajan expects it will take the Chinese market about five years to buildup the infrastructure, forecasting an $8 billion market by the end of the decade. So there is plenty of opportunity for growth.

AMR Research Inc. put the enterprise applications market in Asia-Pacific for software and services at about $8.5 billion in 2009, up from $4.8 billion in 2004.

Some of that funding will come from China's government. Many Chinese companies are still state-owned and funded by government agencies. A rating system is used by local banks to distribute funds to Chinese companies based on success. Companies have begun to use technology to monitor and report success. "The banking system in China is under reform and companies are being asking to become accountable for their investments," Natarajan said. "There is a huge opportunity to supply the backend in this shift to be more accountable in China's economic reform."

The agreement will serve industries such as manufacturing, telecom, automotive, banking, financial services, healthcare, insurance, retail, consumer Goods, travel, logistics and retail market segments where business solution innovation, integration with global systems and agility are driving new age solutions for customers.

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