One of Computer weekly’s journalist recently met HCL Technologies’ CEO, Vineet Nayar.

Amongst other things he warned Indian IT services companies to be prepared to change their ways or lose business to Chinese companies.

He says that IT buyers will go to China for the same reason they went to India. To get lower cost services.

China has 350,000 computer science graduates every year and they cost less than their equivalents in India. Chinese service providers such as Bleum and VanceInfo are currently targeting the UK market for growth.

I recently met someone from a Chinese software company and he was not afraid to say that one of China’s selling points is the fact it is much lower cost.

I recently met Ashok Soota, one of the pioneers of offshoring to India. He is a former president of Wipro. He said when Indian firms posed a threat to Western companies they were ignored, which ultimately meant they could take massive market share. The western firms then thought ‘if you can’t beat them join them’ and set up their own low cost Indian resources. For example IBM has 100,000 workers in India, some 25% of its total.

Read my interview with Soota here.

But it seems the Indians are ready for the challenge. Read Nayar’s comments in this article.

I asked Thomson Reuters global head of Enterprise Information Mike Powell about his experience with Chinese software development. Thomson Reuters has development centres in Hong Kong and Beijing.

He said it gives the company access to a large number of highly skilled developers and allows it to scale up quickly.