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GCC business contributes 10% to Coforge revenue amid growing demand
Avik Das Bengaluru
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Mid-tier information technology (IT) company Coforge said its global capability centre (GCC) business already contributes about 10 per cent — roughly $147 million — to its top line, as it doubles down on a sector that has posed a stiff challenge to IT service providers.
Coforge is focusing on its core verticals — banking, financial services, and insurance (BFSI), and travel, transportation, and hospitality (TTH) — while also expanding its presence to help healthcare GCCs set up units in India, Maddee Hegde, executive vice-president and head of business process service and GCC units, told Business Standard in an interaction.
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What I'm seeing came out consistent. They said, 'Listen, we've tried BOT (build-operate-transfer) models with traditional outsourcing companies,' and they named some of our large competitors. They said, 'With them, we never felt like it's a model that works for us. We always felt like there is a tension that is going to be there at the point of transferring. That it won't be easy, one. Two, even before the transfer in the 3-year or 4-year operate phase, we felt like the team is not ours. We felt like the team is the outsourcing company's team," said Srikrishna during the company's analyst call. Also Read: Too small or too soon? Sonata, Happiest Minds segregate AI biz revenue IT outsourcers traditionally set up and run captive tech centres for their clients initially and then transfer the ownership after some time, which is known as the BOT model. Changing GCC demand Small GCC advisory firms can expand fast and deliver quick results, prompting IT outsourcers to invest in them, analysts said. 'Mid-cap IT firms aren't avoiding GCCs, they're cutting to the front of the line. By investing in specialist advisory shops, they buy instant expertise, warm client access, and a faster route to lucrative downstream IT and engineering deals, without the years it takes to build that capability from scratch," said Phil Fersht, chief executive of HFS Research. These investments also reflect the changing demand patterns in the GCC landscape. 'The moves by mid-tiers like Hexaware and Mphasis reflect a changing demand pattern for IT Services. Just like AI, GCCs are a topic that cannot be avoided when discussing the future of the market," said Thomas Reuner, principal analyst at Pierre Audoin Consultants. 'Where the wheat gets separated from the chaff is where GCCs are set up to help drive transformation by either pivoting to product engineering, especially within the manufacturing sector, or accelerating the transformation journey through data management and AI capabilities," said Reuner. According to a Mint report on 19 April, smaller GCC advisory firms like Gloplax Solutions, Stratinfinity, and Bridgepath Innovations were sprouting up across the country. These smaller firms help global companies set up GCCs and manage hiring, regulatory compliances, infrastructure and day-to-day operations for the parent company. Still, the trend of acquiring a GCC advisory firm is not new. GCC growth Last July, Accenture Plc, which is the world's largest IT services company, acquired an undisclosed minority stake in ANSR, the country's biggest GCC consulting firm, for $170 million. These investments also come at a time when larger peers including Infosys Ltd, HCL Technologies Ltd, Wipro Ltd, Tech Mahindra Ltd, and LTIMindtree Ltd have been setting up independent GCC units internally since the past two years. Also Read: Infosys acquires majority stake in Australian IT firm for $150 million Currently, India has more than 1,760 GCCs, of which 875 are based in Bengaluru alone, while Hyderabad has about 355. The rest are located in cities such as Delhi-NCR, Pune, and Chennai. Nasscom estimates that the number of GCCs in India will surge to 2,200 by March 2030, with a market size of $105 billion. This presents an opportunity to the boutique advisory firms sprouting up to open and run these GCCs.
