IT services major Tech Mahindra is seeing soaring demand from existing and upcoming global capability centres (GCCs) in India, expecting the business to reach double-digit growth soon, a top company executive told Moneycontrol.
The company currently has 60-70 GCC customers, and is undergoing a business restructuring to improve margins under the new management led by CEO and MD Mohit Joshi, who took on the role late last year.
Tech Mahindra in the past few quarters has also been selective in the kind of clients it is taking on, with the focus being on defending operating margins. The company has set a three-year window for business and margin recovery.
Speaking to Moneycontrol, Ram Ramachandran, senior vice president, India, Middle East and Africa business, said that belying the perception that GCCs' own businesses would prove to be competition to Indian IT services companies thus affecting the latter's revenues, demand from these in-house units of multinational companies has been very robust, with many global companies looking to expand into India in a big way .
There has been demand for outsourcing of skilled talent, ER&D or engineering research and development and even developing newer solutions in partnership especially in the areas like AI and generative AI.
“We are definitely talking about crossing the teens very soon in terms of (growth in) GCC requirements on an annualised basis. What used to be a single-digit growth rate is now about to be in double digits,” Ramachandran said, without divulging exact numbers.
He added that in line with the leadership’s business turnaround plan, Tech Mahindra is not chasing all-pervasive GCC services, instead looking for its own sweet spots to deliver on.
“Our approach is value-based GCC strategy typically suited for the larger organisations or pure-play organisations which are on a very heavy tech journey," he said, adding that size may not matter, with many product companies that may small but with a tech-heavy focus and requiring a a technology refresh being in focus for Tech Mahindra.
He added, “So we are doing a very segmented analysis of the market. We are in discussions with GCCs where we believe we can add value and I think that's going to be the approach.”
This comes at a crucial time with India poised to have 800 new GCCs over the next five to six years, with various states competing to attract these investments through new GCC-focused policies. India already has over 1,600 GCCs employing over 1.66 million professionals, according to a report by staffing firm TeamLease Digital.
Scope in AI and SaaS
Beyond providing ER&D services and building a talent pipeline, artificial intelligence (AI), cloud enablement and security have been some of the core areas driving demand from GCCs for Tech Mahindra in India.
“Even though many of the developed countries have gone on the cloud journey, there's a revisit of multi-hyperscale cloud capabilities, and software-as-a-service and platform-as-a-service based solutions. So basically, cloud and cloud-enabled solutions, legacy modernisation are bringing demand,” said Ramachandran.
On the operations side, he explained that the traditional BPO (business process outsourcing) service is now changing into an “agentless” BPO through AI. “We have inquiries and opportunities around that from the GCC perspective, (about) how we can become a tech-enabled, BPO enabler in their journeys.”
Among sectors, Tech Mahindra is doubling down on BFSI, high tech and ER&D. Ramachandran shared that the life sciences and healthcare segment has huge requirements for GCC services. Besides, retail, consumer packaged goods, telecom and OEM vendor ecosystems too are providing business opportunities in this area.
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