Tech experts: India’s tech boom no threat to outsourcing
MUMBAI, INDIA — Indian IT executives believe that Global Capability Centers (GCCs) does not pose a threat to traditional IT services firms in the country which rely heavily on outsourcing contracts.
Global companies are rapidly expanding technology and business process operations in India through GCCs, taking their total count to over 1,620 as of February.
Ananth Chandramouli, India head of IT services firm Capgemini, said that IT firms are helping GCCs “scale up, innovate, and do much more.”
“We are also helping their platforms and solutions to go to market. Now GCCs are (being) made a revenue center from a cost center, and it is net new revenue for both of us. It will not cannibalize our revenues,” Chandramouli added.
Infosys Executive VP Satish HC said their strategy is to work with GCCs, no matter which route they take to drive innovation.
“If somebody wants to scale up their captive (offshore unit), we will co-exist and work with them. If somebody wants to create a captive and ask us for a BOT (build-operate-transfer) deal, we will be glad to do a BOT deal,” he said.
The comments come as some analysts warn that rising insourcing could dent the revenues of Indian IT firms. However, attendees at Nasscom’s recent leadership forum said the two business models can co-exist as the pie is big enough.
McKinsey Senior Partner Anuj Kadyan noted that multinational corporations “are not taking outsourced spend and rechanneling it to GCCs, most of the GCC ramp-up is driven by migration of existing insourced spend.”
SAP Labs India Managing Director Sindhu Gangadharan also emphasized that the technology investment landscape is sufficiently large to accommodate both GCCs and established IT firms.
“The usual ratio is 60% is insourced and 40% with outsourced partners. We don’t see any changes in that.”
