Written by Sai Ishwarbharat B
MUMBAI (Reuters) – Global companies are opening more offices and expanding in-house teams in India, but that doesn’t mean the end for Indian IT companies that rely heavily on outsourcing deals, executives say. I said this at a Nasscom event last week. .
Companies have opened 118 global capability centers (GCCs) in India in the past two years to ramp up their ‘insourcing’ efforts, taking the total number to over 1,620, according to February data from an industry body. .
Anant Chandramouli, managing director for India at French IT firm Capgemini, said IT companies are helping GCC countries scale up, innovate and do more.
“We are also helping them bring their platforms and solutions to market. Now, GCC is going from a cost center to a revenue center, and that’s net new revenue for both of us. There is no revenue cannibalization,” he said. .
Other industry players agreed.
Satish HC, executive vice president and co-head of delivery at Infosys, India’s second-largest exporter of software services, says the company’s strategy is to drive innovation, no matter what route it takes. He said the aim was to cooperate with GCC countries.
“If someone wants to scale up a captive (offshore unit), we will coexist and cooperate with them. If someone wants to create a captive and asks us for a BOT (build, operate, transfer) deal, “We’ll be happy to accommodate you if you want to do a BOT transaction,” he said, adding that it’s important to be “collaborative and not prescriptive.”
The comments come as some industry watchers say India’s emergence as a GCC powerhouse could reduce revenues for IT companies that have made fortunes helping meet the technology needs of overseas customers. This came as a warning.
In a December note, Kotak Institutional Equities specifically mentioned the banking, financial services and insurance sectors, saying, “Companies with high exposure to high insourcing customers will see an impact on overall revenue growth.” There is a possibility that it will be given.”
“In-house production is on the rise, but has not yet reached alarming levels.”
Attendees at the Nasscom event sang a different tune, saying the two models can coexist.
“Multinationals are not just accepting outsourced spending and channeling it to the GCC. Most of the growth in the GCC is being driven by the migration of existing insourcing spending,” said Anuj Kadian, senior partner at consulting firm McKinsey & Co. said.
Some said the pie was big enough for everyone.
Sindhu Gangadharan, Managing Director, SAP Labs India, said, “There is enough technology spend to be shared between the GCC and traditional IT companies. The typical ratio is 60% in-house and 40% outsourced. We are an outsourcing partner.” “I don’t see any change in that.”
(Reporting by Sai Iswarbharath B; Additional reporting by Haripriya Suresh; Editing by Dhanya Skariachan and Varun HK)