Latest news with #IndianIT
Entrepreneur
a day ago
- Business
- Entrepreneur
IT Services Companies Set up Dedicated GCC Service Units
The GCC-as-a-Service model enables the company to focus on its core operations while the service provider takes care of the other aspects like infrastructure, real estate, legal compliance, tech peripherals, and talent. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Several Indian IT services companies are setting up dedicated service units catering to global capability centres (GCCs) to help such centres optimize costs and create additional value. Establishing a GCC business typically requires millions of dollars of upfront investment in the form of Capex while taking between 12-24 months to set up, operate and scale. The GCC-as-a-Service model enables the company to focus on its core operations while the service provider takes care of the other aspects like infrastructure, real estate, legal compliance, tech peripherals, and talent. On July 1, LTIMindtree launched its GCC-as-a-Service offering to cater to organizations that may want to set up GCCs or scale their existing ones to optimize costs and create added value. "The catalogue covers a spectrum of Build, Operate, Transform and Transfer services, offering clients the option to pick and choose what they require," the company said in a statement. GCC-as-a-Service commercials are designed on a per-seat or per service basis to ensure cost optimization and value realization. The 'Build' component includes end-to-end support for setting up entities including legal compliance and infrastructure; under 'Operate' services include transition management, program governance, delivery excellence, and knowledge management. The 'Transform' component includes transformation enablers such as industry-specific offerings, technology solutions and frameworks. Finally, the 'Transfer' component includes structured transition services covering talent migration, capability handover, change management and knowledge transfer to ensure long-term success and continuity. Venu Lambu, Chief Executive Officer and Managing Director, LTIMindtree, said, "GCCs are becoming strategic centers for industry-specific transformation and efficiency. LTIMindtree's GCC-as-a-Service helps enterprises build, scale, and evolve their GCCs into global innovation hubs, leveraging our BlueVerse ecosystem to drive next-gen capabilities and gain a competitive edge with scalable, responsible AI." LTIMindtree's GCC-as-a-Service comes days after Quest Corp, leading provider of staffing and workforce solutions, launched Origint, a strategic service-line to help global enterprises set up, scale, and operate high-performing GCCs across India and key international market. This strategic move comes at a time when India has emerged as the epicenter of GCC growth. The country now hosts about 1,800 GCCs, with 120 new centers launched in 2024 alone. These centers contributed to 17 per cent YoY tech workforce growth, adding nearly 1.8 lakh jobs in 2024, and the market is projected to reach USD 105 billion by 2030, employing 24 lakh professionals. As GCCs evolve from cost-efficiency centers into strategic hubs of innovation, Quess said Origint serves as "a single-window solution to empower global capabilities and offers a comprehensive solution that spans blueprinting, regulatory compliance, real estate, infrastructure management, digital onboarding, AI-powered hiring, and managed operations for global enterprises. It offers bespoke solutions for firms seeking shared service hubs, tech delivery centers, R&D units, or customer experience operations." "Global enterprises are increasingly seeking more than mere cost savings — they want speed, innovation, and efficiency at scale," said Guruprasad Srinivasan, CEO & Executive Director, Quess Corp. "With Mohit Mathur joining as Chief Business Officer for our GCC business, we are scaling up this opportunity. Under Mohit's leadership, Origint is being launched, to transform capability centers into dynamic ecosystems that empower businesses to scale and thrive in a rapidly evolving digital landscape. This is more than a new service line, it's a growth engine for our clients and for Quess. Origint is our commitment to powering the next wave of enterprise transformation, not as a service provider, but as a long-term growth partner." Lohit Bhatia, President – Workforce Management, Quess Corp, said, "Over the last 17 years, Quess has built a solid foundation which further enabled us to support over 350 GCCs across 8 countries. Origint - Powered by Quess and in partnership with our demerged entities - Digitide for AI-first digital solutions and Bluspring for infrastructure management, and other key external global partners, we are making a bold bet on the future of GCCs. With this holistic approach across people, platforms, and precision delivery, we are poised to reimagine the GCC playbook." To be sure, GCCs are taking away part of the business from IT services companies as clients are reducing their outsourcing spend by setting up their own tech centres. So by building business lines like GCC-as-a-Service, IT services companies are in a way partnering with the GCCs instead of competing.
Mint
2 days ago
- Business
- Mint
Sonata Software stares at revenue dent as Microsoft eyes direct licence sales
A global technology giant's attempts to sell its software licences directly to clients might lead to an unexpected casualty in Sonata Software Ltd, which counts that tech company as one of its five largest customers. Sonata Software, which entered Indian IT's $1-billion annual revenue club last year, is expected to get less business selling Microsoft licences, according to at least three people with knowledge of the matter. According to experts, the IT services company gets more than $500 million from selling Microsoft product licences, making it one of the only large IT outsourcers to sell such licences. This translates to almost half of its $1.2 billion revenue in FY25. 'Microsoft has talked about, or they're considering at least, going directly to a few large customers," said Samir Dhir, managing director and chief executive of Sonata Software, in an interview with Mint on 26 June. He said that the Bengaluru-based company considers this possible move as a threat. 'Is that a threat we see? The answer is, yes. Is that giving us sleepless nights? Perhaps not. It's something that we're watching cautiously. It might have a one or two quarter bump here and there," said Dhir. Analysts said Microsoft's move is aimed at cutting costs. 'Microsoft is saying that for large clients who require more than 10,000-plus licences, they will go for direct billing because it is one way of cutting costs and they probably do not want the IT outsourcers to keep the extra cut that comes from selling these licences," said Amit Chandra, IT analyst at HDFC Securities. 'This will be a gradual decision but Sonata is also de-risking it and focusing on selling more licences of other partners," said Chandra. Microsoft did not respond to Mint's queries. This move by Microsoft comes on the back of the tech company giving fewer tech services work to Indian outsourcers, including LTIMindtree Ltd, because of its own AI capabilities, according to Mint's report on 4 May. In a rare instance, Dhir called out lower revenue from one of its top clients, in a 16 April stock exchange, which Mint's report revealed to be Microsoft. He added that this is not the first time that Microsoft is trying to deal with clients directly. 'They have tried this model in the past as well. Okay, it hasn't worked. So they're trying again. It might work this time, it might not go this time," said Dhir. Sonata Software gets about 30% of its business managing back-end IT infrastructure for international businesses and the remaining 70% from selling software product licences to companies. Microsoft's licence reselling business makes up most of that business followed by Google, Oracle and other such licences. Sonata has about 7,000 employees, according to the company's management. This translates to each employee fetching around $171,428 for the company, which is the highest amongst the country's largest IT outsourcers. If indeed there is a hit in Microsoft's licensing business, it will likely dent Sonata's revenue per employee as three-fourths of the company's business comes from selling software licences that need fewer people. A second analyst attributed Microsoft's move to client sensitivity. 'Microsoft is dealing with large clients directly because these are sensitive customers and Microsoft wants to keep its own dedicated sales and support staff for such accounts," said a Mumbai-based analyst on the condition of anonymity. For now, Sonata is not perturbed and is looking to widen its client base. 'We have anticipated this. We have been working on de-risking the business in multiple ways," said Dhir. 'So we're not the top 10 Indian companies' reseller. We are a top, I would say, probably about 400 to 500 companies' reseller in India. And also, we have broadened the pyramid where we were selling (licences)," said Dhir. He added that the company is also selling software licences of other companies including AWS, Oracle and Google. Sonata has counted Microsoft as its client for more than 30 years and is among the top 1% of Microsoft's partners, according to its FY24 annual report. Microsoft, which follows a July-June financial year, ended its previous financial year with $245 billion in revenue. In other words, Microsoft is almost four times the size of Accenture Plc., the world's largest IT services company, by revenue. Lower business from Microsoft serves as a wake-up call for Sonata, which is now expected to lose business from its IT outsourcing unit to the licence reselling unit. Homegrown IT services companies work with Microsoft in two ways. One, as system integrators for Microsoft's software products. If a burger chain wants to use Microsoft's software to manage its sales and billing infrastructure, it can purchase the software from IT outsourcers like Sonata Software. Sonata will not just give the burger chain access to Microsoft's software, but will also fit the software in its computers and earn extra money. Secondly, IT service providers send engineers to Microsoft to manage its software products. These engineers ensure the functioning and backend requirements of Microsoft's software sold to companies such as the ice cream chain. For Sonata, both businesses from Microsoft are now under pressure.
Time of India
23-06-2025
- Business
- Time of India
Sandip Agarwal sees limited upside for Indian IT sector amid uncertain outlook
Yes, if valuation come down substantially either through better earnings or through time correction, then it will be time again to re-evaluate but as of today it does not look like that there is much reward here in comparison to the risk. Sowilo Investment Managers' Sandip Agarwal suggests caution for Indian IT. Accenture's CY25 outlook is uncertain. This casts doubt on Indian IT's H2 recovery hopes. While numbers are good, outsourcing weakness and Accenture's commentary raise concerns. IT stock valuations seem high. A bottom might appear when companies delay pay and offers. Currently, risk outweighs reward in the IT sector. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "The management mentioned that they think that CY25 will continue to be uncertain. Now, remember, Accenture year end is 31st of August. So, another five months according to them will also be weak," says Sandip Agarwal , Fund Manager, Sowilo Investment Managers So, as you rightly mentioned the numbers were better than expectation and it obviously implies that the guidance has to be upgraded because we are now in the final quarter and if the guidance would not have been upgraded, it would have meant that the current quarter would be very-very guidance upgrade is more of a technical thing. The good thing is that the numbers were good. But at the same time if you see the booking numbers, as you rightly mentioned also, the booking numbers are looking quite poor because it is down 7% in local currency and 6.5% in dollar and also more worrisome this time is that consulting has not seen such a sharp dip in the order book, it is down only 2.2, but the outsourcing is down 9.8. So, there is some bit of risk or cautiousness which is there and when we were hearing the conference call, that was something which gave a very interesting management mentioned that they think that CY25 will continue to be uncertain. Now, remember, Accenture year end is 31st of August. So, another five months according to them will also be there are two implications of that. One, next year guidance for Accenture, next full year guidance for Accenture cannot be very strong because first half will be weak according to them because of similarly the whole hope in Indian IT services which was there that H2 will be better than H1, that is now also jeopardized because if CY25 is going to be bad, then it will be very hard to recover anything beyond that in the Jan, Feb, March quarter because again Feb has less number of working days. So, my understanding is that there is quite a bit of uncertainty and because of that there will be some I believe that this nominal increase in guidance will have not much positive impact. In fact, if they would have said that we are seeing early signs of recovery or there is lower level of uncertainty and all that, I think that would have been taken very-very now with this, even H2 story of Indian IT looks little risky. So, I will say that while numbers are good and there is a technical upgrade in guidance, but at the same time there is more uncertainty than previous quarter in terms of commentary, so that will weigh upon Indian IT and this time for the first time in last so many quarters the outsourcing has shown some signs of weakness, so that leads me to believe that there is no clarity and there will be little more uncertainty even in the commentary of Indian it because they generally mirror what we see in Accenture's have gone up too much in last six-seven monthsBecause these valuations are not justifying what is happening because you have one sector which is upcoming sector that can grow at a phenomenal rate, but the IT services cannot grow too much, means it is a 6-7% growth industry after some market share gain you can do 8-9% on structural basis and for that if you are giving a PEG ratio of three-four, it is quite difficult to justify in IT it is very easy to track when it is bottom, when they starts postponing the variable pay, when they start delaying the offer letters, when they start not committing on the wage hikes, I think that period was in last year when everyone was postponing salary, wage hike and all those things that is the time we were very-very bullish and we went very-very massively overweight on the whole sector and then in six months we made very-very good returns and then everything has gone again in the euphoric zone and now we are not so optimistic in near if valuation come down substantially either through better earnings or through time correction, then it will be time again to re-evaluate but as of today it does not look like that there is much reward here in comparison to the risk.
Mint
30-04-2025
- Business
- Mint
Company Outsider: Indian IT's perfect storm may be a temporary squall and not a sign of climate change
The news from India's IT services industry is grim with tepid growth and subdued forecasts capping what has been a nightmarish two years. But if the past holds out any pointers, this may just be a passing shower rather than a signal of climate change. The latest results of the top four IT companies along with the accompanying commentary do point to a serious slowdown that is expected to continue this year. Slimmer order books and fewer mega-deals add to the gloom, with each of the country's top four IT services companies guiding for a slow start to FY26. But we have been there before; in the aftermath of the dotcom crash in 2000 and again during the fallout of the financial crisis in 2008 when clients slashed their IT budgets and cancelled deals. On both occasions, the percentage growth of exports of Indian IT and ITeS halved in the subsequent year, only to bounce back over the one next year as Indian IT companies figured out the dynamics of the changed environment. In the present context, there are two forces buffeting the business. The first is the slowdown in its two major markets - the US and Europe - which is largely on account of the tariff tantrums unleashed by the three-month-old Trump administration. Large US companies, which constitute the major share of Indian IT's client base, have turned cautious, cutting down or placing on hold spending on technology services. At an internal strategy meet, TCS CEO K Krithivasan confirmed that, holding microeconomic uncertainties as the company's biggest challenge. The big problem here is the uncertainty and not the financials of these companies. US banks, for instance, among Indian IT's biggest customers, are flush with cash. A Bloomberg report says that capital at 20 of the largest US banks surged by more than $175 billion in the past three years. But already, Donald Trump seems to be walking back on much of his tariff threat, particularly after facing a defiant pushback from China. Eventually, after the 90-day grace period which allows many countries including India to work out mutually agreeable terms, some tariffs will stay. These are expected to lay the grounds for Trump's campaign promise to lower the US corporate income tax rate to 15%. If that happens, it should thaw the spending freeze. The other big threat to Indian IT companies is that of artificial intelligence (AI) which has the potential to wipe out entire layers of their workforce with serious implications for billing. However, this isn't going to happen overnight. Large software services contracts are complex, multi-year affairs with specific delivery targets tied into them. To expect that a big American financial institution will suddenly cancel a billion dollar contract with its vendor of five years or even that it will slash rates unilaterally is too simplistic. Sure, newer orders will feel the squeeze but that's because the better companies who are already reskilling their workforce with AI technologies, will be more willing to pass on some of the cost savings to potential clients. That there is pain ahead is obvious. Hiring is down, salary hikes are being postponed and layoffs have started. But to write off a $280 billion industry's future on the basis of a few bad quarters is foolhardy. While technology changes are rapid, their transmission into business isn't. It takes years for large, mature companies to switch entirely to a new technology. The term cloud computing first gained currency in the early 1990s but it wasn't till 2006, when Amazon launched AWS, that large companies started adopting cloud-based computing. Even then, in 2016, only an estimated 35% of corporate data was stored in the cloud. In 2019, in a $1.8 billion deal, HCL Technologies bought some of the legacy software products of IBM. In its strategic rationale for the sale, the erstwhile technology giant said 'IBM runs the world's most critical business processes, increasingly helping enterprise clients on their journeys to AI and to cloud." Since then, IBM's revenue growth at 1.93% over the last five years trails that of the industry. By contrast, HCL has been the fastest growing among India's top four IT firms over the last two years. Significantly, a big contributor to the company's profitability has been its software products arm. The first mover isn't always the winner in business. In fact, it is those that bridge the past with the future in seamless ways that are more successful.
