Indian IT companies are increasingly viewing Global Capability Centres (GCCs) as lucrative partners for growth, especially amidst diminished demand from traditional markets. This shift has prompted firms like Infosys and Wipro to collaborate with GCCs, providing various operational supports. As GCCs expand, they are expected to become key revenue drivers, with projections indicating significant contributions to the overall technology services market.
In recent trends, Indian IT companies such as Infosys, HCLTech, and Wipro are finding growth opportunities in Global Capability Centres (GCCs). Experts observe that GCCs are pivotal in diversifying revenue streams, especially as demand in traditional markets like the US and Europe softens. Ramkumar Ramamoorthy from Catalincs highlights that GCCs are increasingly transitioning to third-party engagements. \n\nThe Everest Group estimates significant revenue generation from GCCs, asserting they could yield upwards of $1 billion annually for major players. This marks a strategic shift, as firms like Indian IT services that once viewed GCCs as competitors now regard them as valuable partners. In the last couple of years, many new GCCs have enlisted external IT service providers for setup support. \n\nThe build, operate, transfer (BOT) model has emerged prominently compared to other setups. Ramamoorthy pointed out multiple partnership models are being adopted, ranging from staff augmentation to building tech centers of excellence. Firms like Capgemini confirmed that GCCs are integral to their business, forming a considerable share of revenue. \n\nThe growth of Indian GCCs has been striking, with a reported revenue contribution of $64.6 billion in FY2024, marking a significant increase. Consequently, Indian IT service companies are aligning their strategies to assist GCCs. Infosys has adopted a proactive role in establishing GCCs through collaborations and even acquisitions. Wipro also sees partnership with GCCs as a cornerstone of their strategy. \n\nAs GCCs expand, local revenue contributions for IT firms are rising, notably reported by Infosys and Tata Consultancy Services. Nevertheless, competition from insourcing poses challenges, prompting firms to adapt their strategies. HCLTech acknowledges the insourcing trend as a potential market threat. \n\nDespite insourcing, collaboration with GCCs remains crucial for continued success. Major players like Accenture make strategic investments in firms that facilitate GCC establishment. Moreover, GCCs are becoming major employers in the IT sector, adapting to the demand for advanced technology skills. \n\nCurrently, India hosts around 1,700 GCCs, employing approximately 1.9 million individuals. This number is projected to grow significantly by 2030, potentially increasing both revenue and employment within the sector. The IT services market shows great potential for expansion, and industry leaders emphasize that GCCs will constitute just a small segment of this vast market.
The increasing prominence of Global Capability Centres (GCCs) has reshaped the operational strategies of Indian IT companies. As traditional markets experience decreased demand, firms are pivoting towards GCCs as a viable growth avenue. This development reflects a marked change in perception, where GCCs evolve from competitors to crucial new partners in the Indian IT landscape. Furthermore, with supportive models like build, operate, transfer (BOT) gaining traction, GCCs are driving innovation and employment. The relationship between Indian IT firms and GCCs highlights an essential adaptation amidst market fluctuations.
The evolution of Global Capability Centres signals a transformative period for Indian IT service providers. Companies like Infosys and Wipro have recognized the potential in collaborating with GCCs, which have now transitioned from competitors to essential business partners. The growth of GCCs represents not only substantial revenue opportunities but also a shift in operational dynamics within the IT sector. As GCCs continue to flourish, they will undoubtedly play a critical role in shaping the future of IT services in India.
Original Source: m.economictimes.com
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