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Time of India
2 minutes ago
- Time of India
Rapid GCC growth reshapes India's outsourcing industry
Academy Empower your mind, elevate your skills Recent exponential growth of global capability centres ( GCC ) in India may have come at the expense of the people-led tech outsourcing industry – the country's biggest services exports over the past three decades and unquestionable change agents for once-sleepy towns such as Bengaluru, Pune, and Hyderabad MNCs, which are setting up these GCCs or expanding existing facilities, are also the top spenders of tech for the $280-billion listed Indian pureplay. The increasing insourcing of core tech tasks – especially the top end, high-value work - may be leading to one of reasons for the current rot in the outsourcing industry, marked by a protracted slowdown and now FY24, GCCs' grew at a rate of 40% even as the top five Indian IT companies posted negative to sub-5% growth for the same period and reported similar numbers for fiscal 2025, as per estimates by Nasscom and the the IT industry the subdued numbers continued in FY25. While the official numbers are yet to be out for GCCs, the growth is expected to be in double Indian technology services industry which operates in a pyramid structure by hiring more entry-level coders is now witnessing a foundational shift with AI, experts said.'The pyramid is collapsing. GCCs are rising. AI is automating the middle. Pricing is shifting from effort to outcomes, and that means a full-stack transformation—not just of how services are delivered, but how they're sold, priced, and measured,' said Saurabh Gupta, president at US-based technology research and consultancy firm HFS Research Earlier this week, India's largest software exporter Tata Consultancy Services (TCS) announced that it is going to lay off around 2% or 12,200 people in the current fiscal as it grapples with low growth amid a challenging macro situation and AI-led disruption, sending shockwaves in the to an HFS data survey with 200-plus enterprises, over 65% enterprises expect to relocate at least 10% FTEs (full-time equivalent - which measures the work based on employees work hours) from third parties to have seen tremendous growth in the past few years as multinationals sought to leverage India's skilled talent and cost advantages. Estimates suggest that two new GCCs opened every week last year, increasing the total to 1,700 centres employing nearly 2 million Joshi, partner at another US-based Everest Group, said that the accelerating pace of GCCs in India is having an impact on the net demand for service providers, specifically in segments such as banking, financial services and insurance (BFSI) where these clients have scaled their GCCs in India. As per data by ANSR, over 50 banking GCCs run more than 90 centers in India employing over 180,000 BFSI contributes around anywhere between 30% and 50% of the revenue share for most Indian IT companies. Almost all large multinational banks and financial services firms have huge GCCs in India. In fact, firms like JPMorgan Chase , Wells Fargo have more employees in India than a mid-tier IT firm, with 50,000 people, representing roughly 20% of its global IT industry employed around 5.4 million professionals as of FY24, while GCCs employed nearly 1.9 million people. Net addition of talent by GCCs in FY24 stood at 90,000 and surpassed 100,000 in year, GCCs hired a total of around 110,000 people, while India's top IT companies grew their headcount by a mere 13,500 in FY25, after a reduction of 64,000 in which typically function as back office operations for large overseas companies, established their presence more firmly in India post to Ramkumar Ramamoorthy , partner at Catalincs, a tech growth advisory firm, GCCs have publicly stated that their focus to largely be on driving innovation using digital technologies, as they believe they are core to their business and they should own these capabilities.'IT services companies which were once in denial about the impact of GCCs are today proactively forming crack teams to work alongside them to jointly shape and participate in their transformation and innovation agenda,' he says alluding to the investments and acquisitions by IT firms in the GCC space.'Large IT services companies have been stuck in a low single-digit, organic revenue growth cycle for three years in a row, " he said. Prominent companies collectively generated approximately $20 billion in free cash flow last year. 'The real question we should be asking is, are these companies reinvesting enough back into the business to rewire their business, operating and financial models for accelerated growth?''With a significant portion of the revenue coming from 'run the business' as opposed to 'change the business', from time-and-material (T&M) contracts as opposed to outcome or risk-reward based contracts, from pass-through revenue from product license sale as opposed to newer service opportunities such as cyber security, interactive and platforms, companies need to take bold, unconventional decisions to force-cannibalize revenue, where appropriate, and invest their way out. If they don't act now, we risk looking back in regret for having missed a generational opportunity,' Ramamoorthy per government data, the industry had estimated revenues of $254 billion, marking a 3.8% YoY growth in FY24 (excluding e-commerce). Of this, GCCs contributed to $64.6 billion in the same period, industry body Nasscom numbers year, the government's Economic Survey also pointed out that the share of IT in India's services exports fell two percentage points over three years, while indicating an expansion of "other business services" which include GCCs of the growth has fastened at a time when the AI-led disruption is aiding more innovation and R&D work by multinationals based out of India as GCCs, which are no longer just back-office factories. Key leadership of many of these centres is based out of India making them key decision making destinations say, the 12,000 workforce layoffs announced by the largest Indian IT major TCS on Sunday is just the beginning as the Indian players are yet to get return on investments from the large AI investments made. With AI, many companies including GCCs and smaller tech firms are getting higher output with the same people.
Mint
2 minutes ago
- Mint
Jashvik Capital acquires stake in pharma software provider Marg ERP for over ₹400 crore
Private equity firm Jashvik Capital said on Wednesday that it has acquired a stake in pharma software provider Marg ERP for over ₹400 crore, marking the firm's fourth investment from its maiden fund, which has a target corpus of $350 million. The firm is betting on the growth of organised healthcare software as a service (SaaS) in the Indian market, where Marg ERP is currently a market leader. The healthcare software services market in India has been largely unorganised, but with tailwinds like an increasing focus on digitisation, tightening regulatory processes, and a rise in consumer trends, this space is expected to grow, founder and managing partner Naresh Patwari told Mint. 'Healthcare SaaS has been a very large opportunity globally. We think we are at the start of that super cycle in India," said Patwari. 'Our view is that while India is in the early stages of this transformation, our investment in Marg ERP is the first step in building a platform that can ride this super cycle." Jashvik Capital, a mid-market PE firm, has in the past made investments in Bharuch-based Jabsons Foods, Bengaluru-based Futura Surgicare and Hyderabad-based eye care chain Smart Vision Eye Specialities Pvt. Ltd. It is also in the process of closing an investment in pest control and home care products maker Midas Hygiene, which it had announced in February. Marg ERP, founded in 2000, is one of the country's largest ERP (enterprise resource planning) and accounting software providers for pharmaceutical retailers and wholesalers. The firm currently has over 500,000 subscribers and is present in India and 32 other countries. It works largely with players across the pharmaceutical distribution chain, including wholesalers, distributors and pharmacies. It has a market share of over 50% in some segments in the distribution chain, said Patwari. 'Marg is a highly profitable, fast-growing company. Growth has been 25% over the long term and close to 40% more recently. It is a clear market leader and it can compound for the next 10-15 years. We are perhaps at the early stages of a long-term trend," he said. The firm plans to scale up Marg's operations through a mix of organic and inorganic strategies, as well as invest further in R&D, said Patwari. '...the goal is to expand, go deeper in India and to go wider internationally." API Holdings, India's largest digital healthcare platform and parent company of brands like PharmEasy, had acquired a 49% stake in Marg ERP in 2022, which the company's founders bought back in February this year.
Time of India
2 minutes ago
- Time of India
W Health Ventures targets $70 million Fund II to build healthcare startups
Academy Empower your mind, elevate your skills US venture capital firm W Health Ventures is looking to raise $70 million, or about Rs 610 crore, for its second India-focused fund to back healthcare startups in the fund will support the development of eight to ten seed and early-stage healthcare companies over the next four years, in partnership with 2070 Health, a healthcare venture studio, W Health Ventures managing partner Pankaj Jethwani told ET.W Health plans to invest Rs 26-40 crore ($3-5 million) per company, with additional capital reserved for follow-ons, he company-creation model offers infrastructure, capital, and operational know-how from the incubation stage.'The company creation model is particularly suited for healthcare due to the sector's inherent challenges, such as its slow pace of change, heavy regulation, and complexity,' Jethwani said. 'This approach helps founders overcome bottlenecks by leveraging the fund's data, relationships, playbooks, and teams to build companies from zero to one.'Fund II will focus on two core themes: single-specialty care delivery platforms and AI-enabled business-to-business (B2B) healthcare first theme will back startups offering high-quality, efficient care in specific medical second will target B2B companies catering to the growing demand from US-based healthcare firms for technology solutions powered by India's clinical and engineering talent pool. These startups are expected to use automation and artificial intelligence (AI) to drive operational efficiency for international clients.'AI is no longer optional when building a company, including in healthcare, though it doesn't always have to be the primary product,' Jethwani said. 'The technology is crucial for embedding convenience and high-quality care at every step.'W Health has already begun deploying capital from the new first investment from Fund II was in EverHope Oncology, which raised $10 million in a seed round. W Health led the round in partnership with Narayana Health and 2070 Health, as reported by ET.W Health's first fund of around $50 million backed startups such as AI-enabled mental health platform Wysa; Elevate Now, a medical weight-loss programme; and Kins, a US-based virtual and home-based physical therapy platform. Its other investments included startups in paediatric care and pain in 2019, W Health has backed companies across various healthcare domains, including digital health, chronic disease management, and mental has seen a rise in sector-specific venture capital funds that focus on defined themes such as healthtech, deeptech, cleantech, and consumer tech. Examples include Java Capital, which backs deeptech and climate tech startups; Avaana Capital, focused on consumer, food and agritech; and Delhi-based Sauce VC, which invests in consumer brands.
