Indian IT ?? GCCs

The rise of GCCs in India has raised concerns for Indian IT, as many no longer require their services and are increasingly sourcing talent locally while setting up their own R&D centers .?

But, Indian IT believes GCCs still need their expertise to establish operations in the country. The question is, for how long?

Infosys’ CEO, Salil Parekh, shared how the company is actively partnering with GCCs. “We are working very closely with GCCs all around – working with clients when they set up their GCCs in India,” said Parekh , during the company’s recent earnings call, adding that the company is involved during the build-operate-transfer process.?

He also mentioned that they help GCCs in India in scaling and recruitment. Though he didn’t name any specific GCC, he told that in India they are working with a large number of GCCs in financial services, telecommunications, and life sciences, helping and supporting them.

Sharing similar views, Wipro chief Srini Pallia said, “As far as GCCs are concerned, it’s our strategy to partner with them. All of us know that GCCs are growing significantly in India at this point in time.” Pallia is particularly interested in leveraging Wipro’s employees trained in generative AI.

“We have trained 230,000 employees in generative AI and have 44,000 advanced AI experts. We have the talent, and we can groom it, allowing GCCs and us to partner in executing projects. So, I see this as a win-win for both of us,” he said, adding that Wipro is prepared to partner with them not just on the BOT, but also on many projects.

The GCCs and Indian IT will coexist, according to HCLTech chief C Vijay Kumar. “There is a certain type of work that is best done in an outsourced model, and a certain type of work that customers might want to do in-house,” he said.

He suggested that while some of this market share is moving to GCCs, this shift is not detrimental to the overall growth opportunities for service providers. “I think there is a slight deflation in the total addressable market for service providers, but it is insignificant because, if you look at the total addressable market for large GSIs, it exceeds one trillion dollars,” he said.

“From that perspective, some market share going to GCCs doesn’t really impact the overall growth opportunities for service providers,” he added.

A New Era of GCCs

India’s GCC sector is thriving and currently employs over 1.6 million professionals. According to EY, this growth will persist, with projections showing over 2,400 GCCs in India by 2030, generating jobs for over 4.5 million people.?

The market size is expected to surge to $110 billion by 2030 from the current $45 billion.?

In comparison, roughly 5.4 million people were employed in the Indian IT sector as of March 2023, according to MeitY and ICRA expects the Indian IT services industry to see revenue growth of 4-6% in FY2025.

“GCCs’ share in Indian IT and engineering services will grow due to the scaling of existing GCCs. The impact of new GCC growth will be smaller. India has 1,500+ GCCs, and most Fortune 1000 firms have GCCs in India. For new GCCs, the target profile is Fortune 1000–5000 firms and new tech firms,” said Pareekh Jain, the CEO of EIIRTrend, Pareekh Consulting.

Cities like Hyderabad, Chennai, and Bengaluru have emerged as the preferred hubs for GCCs.

GCCs Pay Higher than Indian IT?

The increasing number of GCCs in India indicates a trend where more professionals are gravitating toward these organisations. A recent report reveals that GCCs offer salaries 12-20% higher than those in IT services and other non-tech industries for comparable tech roles.?

For instance, GCCs provide salaries ranging from INR 9.7 lakh to INR 43 lakh per annum for software developers, depending on experience. In contrast, the IT products and services sector offers around INR 5.7 lakh per annum for entry-level roles, with salaries going up to INR 17.9 lakh per annum for professionals with over eight years of experience.

Moreover, entry-level talent at GCCs in India is attracting pay packages that are, on average, up to 30% higher than entry-level salaries across all sectors.

GCCs in India place a great emphasis on developing AI capabilities and leading AI transformation within their organisations. The most in-demand tech roles at GCCs include software engineers, developers, data specialists, AI and machine learning experts, cloud computing professionals, and cybersecurity experts.

Meanwhile, Indian IT is still testing the waters with generative AI and has yet to build an impressive product. The industry is currently focused on maintaining existing projects rather than creating something revolutionary. A primary reason for this reluctance is that investing in R&D requires significantly more capital than simply pushing existing solutions into the market.

Mohandas Pai , the chairman of Aarin Capital and former CFO of Infosys, told AIM that it has always been ideal for Indian IT companies to focus on services. “Indian IT services companies are not product companies,” said Pai.

Enjoy the full story here. ?

Is Microsoft Losing Its Edge?

“Microsoft has done a number of fantastic things, but I don’t think they’re in a great place to really keep innovating and pushing on this in the way that a startup can,” said Aman Sanger, one of the creators of Cursor (by Anysphere), in a recent episode of the Lex Fridman podcast. When asked how Cursor, a newer startup, could compete with a well-established Microsoft product like Copilot, he said that the tech giant lacked the research and experimentation necessary to really push the ceiling.?

Want to know how Cursor plans to compete? Read the full story here.

In other news, Microsoft has launched autonomous agents in Copilot Studio, set for public preview next month. These agents will automate tasks across sales, finance, and supply chain to streamline operations. This new development comes in the backdrop of Salesforce chief Marc Benioff’s criticising Microsoft Copilot—calling it Clippy 2.0.

AI Bytes

• IBM has unveiled Granite 3.0, its latest suite of large language models for enterprise applications.
• Meta has unveiled Meta Spirit LM, an open-source multimodal language model focused on the seamless integration of speech and text.
• Harvard Medical School researchers have introduced CHIEF, an AI model capable of performing diverse diagnostic tasks across 19 cancer types, trained on 15 million image sections to improve cancer evaluation.