The Indian GCC Boom: A Game Changer for IT Firms

India's emergence as a hub for Global Capability Centres (GCCs) is significantly boosting the prospects of IT services companies. These firms are seizing opportunities to set up projects, form partnerships, and even acquire these centres to expand their capabilities and deepen client relationships.

The Growth of GCCs in India

Indian IT firms are capitalizing on the country's status as a prime location for GCCs. Companies such as GlobalLogic, L&T Technology Services (LTTS), KPIT, and Happiest Minds are experiencing increased revenue momentum from their involvement with GCCs. Some firms, like LTTS, are aiding global clients in establishing GCCs in India, while others, including Infosys, TCS, Wipro, and Happiest Minds, are acquiring these centres to strengthen ties with parent companies.

For instance, GlobalLogic saw its GCC client base more than double in the last fiscal year, growing from 15 to 36, with a 90% increase in its GCC business. Similarly, Happiest Minds reported an increase in its India revenue, partly due to the expanded GCC business.

Strategic Partnerships and Innovations

The collaboration between IT firms and GCCs is driving innovation and efficiency. LTTS, for example, secured a deal to set up a 100-member offshore development centre for a global agricultural and construction equipment maker. The company is also involved in providing plant engineering, product development, and digital manufacturing services to various GCCs.

Tata Technologies has formed a joint venture with BMW to create a software and IT development hub in India, showcasing the growing trend of strategic partnerships between global corporations and Indian IT firms. These collaborations often follow a hybrid model, combining in-house teams with third-party service providers to leverage the best talent and processes.

Addressing Talent Shortages and Enhancing Capabilities

The growing number of GCCs in India is also addressing the talent shortages faced by global corporations. With STEM enrollment in some developed countries below 2% and retirement rates of current tech teams over 6%, the Indian ecosystem of global captives, engineering service providers, and startups is well-positioned to drive innovation and product development.

Global corporations typically develop 30-40% of cutting-edge technology in-house and partner for the rest. The Indian IT industry, with its robust talent pool and engineering capabilities, provides an ideal solution for these corporations to scale their operations and innovate.

Acquisitions and Market Expansion

As GCCs evolve and climb the value chain, they often outsource to Indian IT and engineering services firms. In some cases, these centres are acquired by Indian IT companies, providing a strategic advantage. Infosys, for instance, took over Danske Bank's old centre in India, and Happiest Minds acquired Macmillan Learning India Pvt Ltd.

These acquisitions and partnerships allow Indian IT firms to expand their market presence and enhance their service offerings. The ongoing technological changes and the need for specialized skills make India an attractive destination for setting up GCCs.

Conclusion

The GCC boom in India is creating significant opportunities for IT firms. By leveraging the country's talent pool and strategic location, these firms are enhancing their capabilities, driving innovation, and expanding their market reach. The collaboration between global corporations and Indian IT companies is fostering a dynamic ecosystem that is well-equipped to address the challenges of the modern technological landscape. As India continues to emerge as a global hub for GCCs, the prospects for IT firms in the country remain bright and promising.