2 days ago
GCC Boom Creates New Revenue Opportunities for Indian IT Firms
Global companies are opening special technology offices in India called Global Capability Centres.
These centres let companies do important technology work themselves.
This can mean fewer projects for some outside IT services companies.
However, the centres also need help with planning, hiring, software and daily operations.
Indian IT firms are creating teams to provide that help.
Some firms are even buying the technology units of their clients.
Tata Consultancy Services will buy MHP from Porsche AG and receive a large technology transformation contract.
Wipro and HCLTech have made similar deals with other companies.
India has 2,117 Global Capability Centres, with the number expected to reach 3,000 in coming years.
GCC insourcing is diverting some strategic and critical technology work from IT services providers.
IT companies are building dedicated GCC practices covering setup, talent, technology, transformation and operations.
Tata Consultancy Services agreed to acquire Porsche AG subsidiary MHP for $373 million alongside a $1.45 billion, five-year IT transformation deal.
Wipro and HCLTech have also acquired corporate IT units linked to major outsourcing agreements.
- Who
- Indian IT services companies, Global Capability Centres and foreign companies operating them; examples include Tata Consultancy Services, Wipro and HCLTech.
- What
- GCC growth is reducing some outsourced project flows while creating new services, acquisition and outsourcing opportunities for Indian IT firms.
- Where
- India, including GCC delivery centres, with related corporate units and parent companies located across countries including Germany, Singapore, the United States, the United Kingdom and the Middle East.
- When
- The trend is current; several dedicated GCC businesses were established during the past two years, with additional deals announced in recent months.
- Why
- Foreign companies are placing more strategic, data-sensitive and business-critical technology work in their own India-based centres.
GCC Insourcing Pressure
GCC Services Opportunity
Impact on IT outsourcing
GCC Insourcing Pressure
As companies place strategic, data-sensitive and business-critical work inside their own GCCs, some demand previously directed to IT and business-process services providers is being redirected.
GCC Services Opportunity
GCCs create a sizeable services market for external providers that can support strategy, setup, talent, technology, transition, transformation and ongoing operations.
Relationship with corporate technology units
GCC Insourcing Pressure
Foreign companies are retaining more technology work within captive centres, potentially reducing traditional project flows to Indian IT firms.
GCC Services Opportunity
Indian IT firms can collaborate with, acquire or provide outsourcing services to these units, as shown by deals involving MHP, Mindsprint and Guardian Life’s IT unit.
Key facts
- GCCs in India
- 2,117 centres, expected to reach 3,000 in coming years.
- GCC services
- Opportunities include strategy, setup, talent, technology, transition, transformation and ongoing operations.
- MHP acquisition
- Tata Consultancy Services agreed to acquire Porsche AG’s management and IT consulting subsidiary for $373 million.
- MHP contract
- Porsche AG awarded Tata Consultancy Services a five-year IT transformation deal worth $1.45 billion.
- Mindsprint deal
- Wipro acquired Olam Group’s IT unit for $320 million as part of a $1 billion transformative deal.
- Mindsprint workforce
- Mindsprint has more than 3,200 staff across India, Singapore, the United States, the United Kingdom and the Middle East.
- Guardian Life deal
- HCLTech acquired Guardian Life’s IT unit in India for $10.5 million alongside a seven-year outsourcing agreement.
Quotes
Jimit Arora
CEO of IT consulting firm Everest Group
“Companies are placing more strategic, data-sensitive and business-critical work within their own centres. This has redirected some demand that would previously have gone to IT and business-process services providers. It has also created a sizeable services market around the GCC lifecycle, including strategy, setup, talent, technology, transition, transformation and ongoing operations.”
thehansindia.com
“Most large and mid-sized providers have therefore established dedicated GCC businesses during the past two years. The more successful practices already generate several hundred million dollars in annual revenue, with a few operating at significantly greater scale.”
thehansindia.com
Sources
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