Tech Mahindra’s GCC Push: A New Era for Indian IT?
Tech Mahindra,India’s fifth-largest IT services company,is making waves with its ambitious push into the global capability centre (GCC) market. The company is in talks too build a GCC for Ohio-based Goodyear Tire & Rubber Co. in hyderabad, a move that could employ 3,000 people and house the US company’s research and progress (R&D) and IT operations.This development highlights a notable shift in the Indian IT landscape, moving away from traditional outsourcing models towards in-house technology centers.
GCCs are essentially in-house technology centers established by large Fortune 500 companies, frequently enough clients of Indian IT outsourcers. Instead of outsourcing their tech work to external providers, companies like Goodyear are choosing to build their own GCCs, hiring employees to handle the same work in-house.”Since Mohit joined, he has brought a rigour to the whole GCC process, and he has encouraged us to engage more with GCCs,” said an executive familiar with Tech Mahindra’s strategy, speaking on condition of anonymity. This renewed focus on GCCs is part of Tech Mahindra’s three-year roadmap called Project Fortius, which aims to increase operating margins, improve revenue growth, and shed unprofitable “tail accounts.”
This shift towards GCCs is not unique to Tech Mahindra. In October 2024, Bengaluru-based Infosys Ltd announced it would build a GCC for German e-commerce company Zooplus, overseeing a range of functions from marketing to technology. Tech Mahindra already has a partnership with Cisco to run its India GCC.
The Rise of GCCs in India
The GCC model is gaining significant traction in India. According to Nasscom estimates, India had over 1,700 GCCs at the end of FY24, a 32% jump from FY19. Bengaluru leads the way with over 875 GCCs, followed by Hyderabad, where Goodyear’s potential GCC is set to be located, with around 355.
These centers employ over 1.9 million people and generated approximately $64.6 billion in revenue in FY24, representing a significant portion of India’s $254 billion IT industry.
“Collaborating with Technology Partners, notably in cost-effective regions like India, can lead to significant cost reductions, with potential savings of 50-70% through streamlined processes and efficient resource management,” states a Nasscom and Zinnov report on the India GCC Landscape.Nasscom predicts the number of Indian GCCs to reach 2,200 by March 2030, with a market size of $105 billion.The Goodyear-tech Mahindra Partnership: A Case Study
the potential partnership between Goodyear and Tech Mahindra offers a glimpse into the future of the GCC model. Goodyear, a global leader in the tire industry, is looking to leverage Tech Mahindra’s expertise in R&D and IT to enhance its operations and drive innovation.Tech mahindra, in turn, sees this partnership as an prospect to expand its footprint in the GCC market and solidify its position as a leading IT services provider.Practical Implications for U.S. Businesses
The rise of GCCs in India presents both opportunities and challenges for U.S.businesses.
Opportunities:
Cost Savings: GCCs can offer significant cost savings compared to traditional outsourcing models.
Access to Talent: India has a large pool of skilled IT professionals, providing access to a diverse talent pool.
Innovation: GCCs can foster innovation by bringing together teams from different countries and cultures.
challenges:
Cultural differences: Managing a team across different cultures can be challenging.
Data Security: Ensuring data security and compliance with U.S. regulations can be complex.
Interaction: Effective communication across time zones can be crucial.
Navigating the GCC Landscape
For U.S. businesses considering establishing a GCC in India, careful planning and execution are essential.
Conduct Thorough Due Diligence: Research potential partners and locations carefully.
Develop a Clear Strategy: Define the goals and objectives of the GCC.
Build a Strong Team: Recruit and retain skilled professionals.
Invest in Communication and Collaboration Tools: Facilitate effective communication and collaboration across teams.
* Prioritize Data Security: Implement robust security measures to protect sensitive data.
The GCC model is transforming the Indian IT landscape, offering new opportunities for both Indian companies and their global clients. As the model continues to evolve, it will be interesting to see how it shapes the future of the IT industry.
Tech mahindra’s GCC Push: A New Era for Indian IT? An Expert Interview
Time.news: The Tech Mahindra’s negotiations wiht Goodyear Tire & Rubber Co. to build a GCC in Hyderabad is generating a lot of buzz. Can you tell us more about the meaning of this development and what it suggests about the future of the Indian IT sector?
Expert: Absolutely. This potential partnership highlights a crucial shift in the global IT landscape. We’re witnessing a move away from the traditional outsourcing model towards a more integrated approach,with companies preferring to establish in-house technology centers,or GCCs. These centers offer a host of benefits, including closer collaboration, faster innovation cycles, and better control over processes and data.
Time.news: GCCs are gaining traction globally, but why is india becoming such a prime location for these centers?
Expert: India possesses a powerful confluence of factors that makes it an ideal hub for GCCs. Firstly, there’s the massive talent pool of skilled IT professionals.India has been churning out highly qualified engineers and tech experts for decades. This readily available talent base allows companies to rapidly build their GCC teams.
Secondly, India offers significant cost advantages. Building and operating a GCC in India is substantially cheaper compared to manny Western countries, leading to ample savings for companies. This cost-effectiveness is a major draw for businesses looking to optimize their budgets and invest in innovation.
Lastly, India’s supportive government policies and robust IT infrastructure provide a conducive surroundings for businesses to thrive.
Time.news: Industry reports indicate a surge in the number of GCCs in India. Can you elaborate on this trend and its potential impact?
Expert: Yes, as per the Nasscom and Zinnov report on the India GCC Landscape [[2]], India now has over 1,700 GCCs, a number that has grown considerably in the past few years. This trend is expected to continue, with Nasscom predicting the number to reach 2,200 by 2030.The economic impact is significant, with GCCs generating substantial revenue and creating numerous job opportunities.
Time.news: What are some potential challenges that U.S. businesses might face while setting up GCCs in India?
expert: While the benefits are clear,venturing into a new market always presents challenges. Cultural differences can sometimes pose a hurdle in team management.Effective interaction across time zones is crucial for seamless collaboration. Ensuring data security and compliance with U.S. regulations is also paramount.
Time.news: What advice would you give to U.S. companies considering establishing a GCC in india?
Expert: Thorough research is key. Companies should carefully evaluate potential partners, locations, and their specific requirements. A robust,well-defined strategy is essential,outlining clear goals,objectives,and anticipated outcomes. Building a strong, culturally-aware team is crucial for success. Investing in communication and collaboration tools can bridge geographical and cultural gaps. Lastly, prioritizing data security and complying with relevant regulations should be a top priority.