GCCs not 'cannibalising' IT services revenue, says Capgemini's Ananth Chandramouli

A spurt in Global Capability Centers (GCCs) in India has not resulted in the cannibalisation of IT services revenue, Capgemini said at a time when there is widespread debate whether GCCs are negatively affecting information technology (IT) companies’ revenue as well as talent retention.

On the contrary, the surge in GCCs has expanded its customer base, the world’s fourth largest IT services provider said.

“I don't see this as a negative sum game, where we are going to kind of lose our right-shore business, as we call it, cannibalisation of that, but there could be new clients that we can actually get,” Ananth Chandramouli, Capgemini’s India Managing Director, told Moneycontrol.

Ultimately, the GCCs need to ponder whether system integrators (SE) such as Capgimini are competitors anymore, Chandramouli further said. However, he gave a caveat that IT companies should also come a few steps forward and not look at GCCs as competition. “That maturity will happen over a period of time,” said the former Infosys’ India head of client services.

GCCs should be viewed as partners rather than competitors, Chandramouli further said. “To me, it's a more of an expanding the pie… the moment you expand it together, then there is an opportunity for you to do more.”

Capgemini has a flexible approach when dealing with GCCs, sometimes even co-hosting captive centres within its own campus.

Chandramouli oversees the GCC and domestic market for the company. For the GCCs, the company helps clients scale, innovate, and add value to operations.

Core vs Context

It is said that technology has become very core to some of the multinational companies, and therefore, they would rather want to own that capability than lease it. Typically, GCCs are set up to keep the core operations of the company to themselves, such as product design, know-how, and engineering, research, and design (ER&D).

“So the core and context itself varies over a period of time, what is core today for a company could become context in two-three years down the line,” Chandramouli said on the sidelines of the Nasscom Technology Leadership Forum, 2024.

A company, which would have set up its GCC, a few ago to expand presence and add value for its offerings, may not need it anymore, he said. That is when system integrators like Capgemini come into the picture, he added.

“And the moment GCCs and we both sit across the table and understand how we can add value to your HQ (headquarters) by doing this and arrive at a long-term plan, I think it all works out,” Chandramouli explained.

Modus operandi

The operating model is contextual and depends on the maturity of the HGCC, said the France-headquartered company. Capgemini provides multiple models such as the “build-operate-transfer” and “run-the-programme”.

For example, for a major German automotive player, Capgemini completely runs the operation for a fixed price while its client keeps the transformation part of deal. This client missed the first wave of GCC influx in India by 2019, by when it was “too little, too late”, and Capgemini helped it scale the captive centre faster by co-hosting it.

If software and hi-tech companies, which are inherently technology-driven, were to be excluded, then companies operating in other sectors find it difficult to attract the right talent for them to set up GCCs.

“The key point is how do you create value? The moment GCCs start thinking along those lines, I think there is a lot more trust and confidence that is created between the SEs and GCC,” he said.

The conversation has moved from competition to client vendor relationship, and then more on the lines of client-partner relationship. Going forward, GCCs and IT companies will coexist and collaborate to being a truly a “joint go-to-market partner,” Chandramouli said.