Hexaware acquires two SMC Squared firms for over Rs 1,000 crore in GCC space

Time of India

2 days ago

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Mid-sized IT player Hexaware Technologies Thursday said it has acquired two SMC Squared group firms for a cumulative cash consideration of Rs 1,029.12 crore (about $120 million).The acquisition of Tech SMC Squared India and Tech SMCSquared (GCC) India is aimed at expanding Hexaware's presence in the global capability centre (GCC) space, the company said.'The acquisition is a strategic step in Hexaware's mission to deliver future-proof GCC solutions that go beyond cost efficiency, anchored in a combined human and digital agent-driven model,' Hexaware said in a regulatory filing.The recently listed IT company is the latest to join the race to help multinationals establish GCCs in India, a growing market over the past two years expected to cross $100 billion by 2030.The proposed acquisition does not require any governmental or regulatory approvals, the filing said.'Our clients are increasingly looking for GCC partners who bring more than staffing or infrastructure… This acquisition enables us to deliver long-term value to enterprises, leveraging our human and digital agent-driven model and proprietary IT delivery platforms,' said Amrinder Singh, president and head-EMEA & APAC operations, Hexaware.GCCs are offshore or nearshore hubs set up by foreign companies to deliver back-office business functions such as IT, finance, HR, analytics and research & development (R&D). Over the past few years, such centres are expanding from being cost arbitrage-driven support units to value-generating strategic centres.'Historically, we have not addressed the GCC market, and I think there are three sets of opportunities. One is to help set up new GCCs, there's quite a velocity of it happening. And with the current macros, that may accelerate new clients setting up GCCs…The second opportunity is scaling within GCCs once it is set up… the bigger opportunity is to transform with AI,' Hexaware CEO Srikrishna Ramakarthikeyan told ET recently.The third is that there is a percentage of GCCs that will exit back into outsourcing. That is also an opportunity, he added.Bengaluru-based SMC Squared has helped set up over 30 GCCs across commerce, manufacturing, financial services, health care and consumer brands. It operates through engagement models, such as managed services, build-optimise-transfer and hybrid solutions, which lower operating costs while assembling GCC teams.The GCC enabler has a total workforce of around 500 employees, with a go-to-market office in the US and two delivery centres in India—Bengaluru and Hyderabad—supporting operations across HR, infrastructure, employee well-being, finance and strategic technology consulting.'Enterprises are shifting toward outcome-based models, requiring partners who can deliver stable, scalable and high-accountability operations… SMC's proven playbook and relationships in the mid-market GCC segment will accelerate our go-to-market strategy… We will extend SMC's offerings to our broader client base, including existing Hexaware customers,' Hexaware said in its filing.By integrating SMC's GCC setup capabilities with Hexaware's strengths in AI, analytics, cloud transformation, modernisation and enterprise platforms , we can deliver end-to-end solutions for clients looking to optimise and scale their GCC operations, it added.SMC Group's turnover for calendar year 2024 stood at $22.58 million (Rs 189.15 crore at an exchange rate of Rs 83.77 per dollar).'For over a decade, we've helped shape the GCC industry, and this acquisition expands what we can deliver globally with strengthened capabilities across AI, analytics, modernisation, cloud transformation, and enterprise platforms while growing our delivery footprint with new centres in Latin America and increasing client activity in the UK and Europe,' said Patricia Connolly, CEO, SMC Squared.GCCs in India have grown at a CAGR of 11% over the past five years with one new GCC being set up per week at least on an average in 2024.As the GCC capital of the world, India is home to about 55% of global GCCs with nearly 1,800 centres, generating $68 billion in export revenue, contributing around 1.6% to the national GDP, as per latest government numbers.Further, around 32% of global GCC talent is based in India with nearly 2.16 million employed professionals in the GCC sector, which is expected to touch 2.8 million by 2030.