Software giant Microsoft has acquired a 10-per cent stake in a TCS-led venture in China, in which TCS' existing Chinese operations are likely to be merged. 

The Indian IT major had entered in to a new software joint venture with three Chinese firms, in which they had agreed to divest a 10-per cent stake in favour of the US software giant Microsoft once the venture had been established.

TCS had invested $15 million (nearly Rs 70 crore) through its subsidiary, Tata Consultancy Services Asia Pacific, for a 72.22-per cent holding, while the three Chinese firms - Beijing Zhongguancun Software Park Development, Uniware and Tianjin Huayuan Software Area Construction and Development - were its strategic investors, holding 27.8 per cent share.

Now that the venture has been established, the TCS subsidiary and its strategic partners have divested a proportionate share of their stake to enable Microsoft Corporation to acquire a 10 per cent shareholding in the company.

With the entry of Microsoft, TCS Asia Pacific's holding comes down to 65 per cent while that of the three Chinese partners will hold the remaining 25 per cent.

Its Chinese operations will be merged with the new venture, to be called TCS China and headquartered in Beijing. It provides services and solutions to clients in the global as well as the Chinese market. TCS, which first entered China in 2002, says that it has more than 25 clients there

For TCS, the operations of TCS China will be China-centric from a resource perspective, and have the capability of creating a Chinese domestic business of increasing scale while lso supporting the local Chinese software industry.

The joint venture will leverage the complimentary strengths of TCS, Microsoft and the Chinese partners.