MUMBAI: Tata Consultancy Services, the largest IT services firm in Asia and Microsoft, will join other Chinese firms to create a software company to build a larger scale business in China. TCS?s subsidiary, TCS Asia Pacific signed a shareholder promoters? agreement with Chinese firms- Beijing Zhongguancun Software Park Development, Uniware and the Tianjin Huayuan Software Area Construction and Development to establish a software company. S.Ramadoria, the MD and CEO of TCS said that formal applications for business license will be applied on Tuesday in Beijing and operations would begin in September. TCS will hold 72.22 percent stake and the Chinese partners will hold a 27.78 percent. With Microsoft joining the venture next month, TCS would reduce its stake to 65 percent and the Chinese firms would give up two percent giving Microsoft a 10 percent stake. TCS will develop software using Microsoft technology, though Ramadoria stated that it is not mandatory. He said that China was a strategic point to extend services to China and the Far East and Japan. The company plans to develop China as a global delivery center. S. Mahalingam stated that TCS has currently invested $12.6 million and will raise it to $15 million once Microsoft joins the venture. The Chinese counterparts are expected to help the company provide infrastructure support, access to Chinese Universities to hire employees, government approvals and brand recognition. Ramadorai also hinted that in the future the company may buy out the other two partners or list it. The present unit of TCS in China employs more than 500 people. This unit is expected to merge into the joint venture at a later date. Mahalingam said that with this merger TCS?s stake may rise but at present it now falls below the 65 percent stake and the management control remains with the company. He also stated that, ?In five years time, we want to ramp up [the employee strength] to 5000.? He also said that the Chinese IT market is hooked at $30 billion and the attrition rates are higher in China , when compared to India. However, he added that salaries were comparable. The company has appointed Jonathan Lam as the CEO of the joint venture in China. He will be relocating from the U.S. TCS has signed another deal of $33 million with a Saudi Arabia based telecom company to ingrate their billing and CRM processes. The process is expected to be delivered in 18 months.