huaweiindia.jpgHuawei Technologies, the fast-growing Chinese telecoms equipment manufacturer, has just received the highest software quality certification for its Indian R&D centre — the company's largest outside of China.

Indian outsourcers have long sought to promote their software skills to the west through CMMi certification. Only a few hundred Level 5-certified organisations exist worldwide and the CMMi Version 1.2 Level 5 certification, which Huawei's Indian facility has just received, is more recent and thus even rarer.

But China's growing technological prowess is fueling protectionist talk in some quarters in India and may be the reason why Huawei has been excluded from bidding for two juicy mobile equipment contracts in India — the bids were ostensibly rejected on security grounds.

“Security concerns” have also been raised in a bid to stem the flood of cheap Made-in-China mobile phones into India — see this story.

Although the two emerging giants do not compete directly in international markets — India specialises in software and business process outsourcing while China's strength is more in hardware manufacturing — Chinese companies are increasingly targeting India because it is of similar size and stage of development to China.

Huawei has been allowed to bid for one contract to supply 2G and 3G mobile network equipment to BSNL, the state-owned operator. That contract covers the southern region of India. But Huawei also bid for two contracts in the western and eastern regions of the country.

Those bids were not opened because of security guidelines, according to India's junior telecoms minister, Gurudas Kamat.

The federal home ministry and the intelligence bureau had raised concerns over the presence of foreign companies “especially from certain countries in the critical and sensitive border areas, that may have national security implications,” Mr Kamat said.

Indian media have suggested that giving contracts to Huawei would constitute a national security risk because of the company's alleged Chinese military background. One report said the government had instructed BSNL to test Huawei's equipment for its vulnerability to hacking.

The founder of Huawei, Ren Zhengfei, is a former officer of the People's Liberation Army and the scarce information on its shareholding structure has long fueled speculation that Huawei has ties to the Chinese military.

Huawei recently told the Financial Times that the security concerns were unfounded and suggested bids had been rejected because of pressure from Huawei's competitors.

Swedish rival Ericsson has an easier time in the bidding round. It tendered bids for the north and east regions and these bids had been opened. No bids have yet been awarded.

Capability Maturity Model Integration, developed by the Software Engineering Institute of Carnegie Mellon University, measures the quality and maturity of the processes used to develop software. It was originally conceived to ensure the highest quality for “mission-critical” software used in aircraft or space missions.

However, it has now become a weapon with which software developers compete in commercial markets and, for Chinese companies, an important way to dispel lingering doubts that potential customers may have about using Made-in-China software.

Gartner, the IT market analyst , says Chinese companies that want to sell to sophisticated global customers must achieve high levels of process maturity assessment. A high level of quality and process maturity, assessed by an independent authority, can help them overcome concern about risk. Freeborders, a leading Chinese software outsourcing firm, achieved its CMMi Level 5 certification in 2006.

Huawei's Indian centre was founded in 1999 and achieved CMM Level 4 certification in 2001, CMM Level 5 in 2003, and CMMi Level 5 Ver 1.1 in 2005.

A recent report from Gartner estimates that Indian mobile revenues will climb at an annual rate of 18% to 2011, generating a $26bn market and making it the largest mobile market in the world after China.