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Vishwanath Kulkarni

BANGALORE, Feb. 13

MASCOT Systems is in advanced stages of acquiring a small-sized Chinese software services company, even as it has announced plans to set up a wholly owned subsidiary at Wuxi, in China.

"We are in advanced talks to take over the assets of a small software services firm based in Wuxi, which employs about 20-30 people, for which necessary approvals are being awaited," a Mascot spokesperson told Business Line, even while declining to name the target or the acquisition cost. The acquisition is expected to give Mascot a strong foothold in the Chinese market.

Mascot already has presence in China in form of a partnership with Dalian-based IT services company, Haihui Sci-Tech Company Ltd. "The need to set up a wholly owned subsidiary was necessitated by the increasing demand from our Japanese customers to set up a near-shoring centre in China, in addition to the Indian development centre," the spokesperson said.

"With our new subsidiary, we will be able to meet the burgeoning need from our customers for China-based IT services. This will allow customers operating on a global level the opportunity to benefit from the advantages that the China offers," said Mr Devadas Parakkal, country head of Mascot's Japan and China operations, in a press release.

Through the proposed acquisition and the subsidiary, Mascot plans to service the existing and potential customer base in Japan, who have moved their manufacturing base to China, the spokesperson said. "We would also be targeting the multinationals operating in China," he added.

"Building upon our success in Japan, we position ourselves to address the key challenges of China's IT services market with Mascot's suite of service offerings and to contribute to the next phase of growth in a market with extraordinary potential," said Mr Gerhard Watzinger, CEO, Mascot. "The opening of our China office is a significant milestone for us," he said.

Several Indian companies are taking the China route to enter the Japanese market, the second largest IT spender after the US.

MphasiS BFL, another Bangalore-based software services firm, recently did a strategic buy-out in China to address the Japanese market. Due to its proximity to Japan and language similarities, China today provides IT outsourcing services to many Japanese companies.

According to analysts, most companies, which outsource to India at present, are seriously looking at alternate centres in China to plan for business continuity.

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