Updated February 27th, 2024 at 12:47 IST

IT firms navigate 'insourcing' surge, stress on coexistence with outsourcing

Recent data from industry body National Association of Software and Service Companies (Nasscom) show a surge in the establishment of GCCs in India.

Reported by: Business Desk
IT companies | Image:Freepik
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The Indian IT industry landscape is witnessing a shift as global companies increasingly establish their presence in the country through the setup of Global Capability Centres (GCCs), a trend commonly referred to as "insourcing." Despite concerns about the potential impact on IT firms heavily reliant on outsourcing deals, industry executives maintain a stance of cooperation and assert that both models can thrive concurrently.

Rise in Global Capability Centres

Recent data from industry body National Association of Software and Service Companies (Nasscom) show a surge in the establishment of GCCs in India, with 118 new centres launched over the past two years. The trend underscores the growing preference among multinational corporations to leverage India's skilled workforce and conducive business environment for their in-house operations.

Collaborative approach

Executives from leading IT firms, including Capgemini and Infosys, stress on a collaborative approach to navigating the evolving landscape. Ananth Chandramouli, managing director of Capgemini, highlights the role of IT firms in supporting GCCs to scale up, innovate, and explore new revenue streams. Similarly, Satish HC from Infosys stressed on the importance of cooperation, stating their readiness to collaborate with GCCs irrespective of the chosen path for driving innovation.

Coexistence of models

Despite concerns about potential revenue cannibalisation for IT firms, industry insiders at the Nasscom event express confidence in the coexistence of both outsourcing and insourcing models. Anuj Kadyan, senior partner at McKinsey, notes that the majority of GCC ramp-ups stem from the migration of existing insourced spend rather than a redirection of outsourced expenditure. Sindhu Gangadharan, Managing Director of SAP Labs India, echoes this sentiment, asserting that there is ample opportunity for both GCCs and traditional IT players to thrive.

(With Reuters inputs)
 

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Published February 27th, 2024 at 12:47 IST