Tech Mahindra is negotiating to set up a 3,000-member GCC for Goodyear in Hyderabad, focusing on R&D and IT operations to enhance operational efficiency under new CEO Mohit Joshi. The initiative aims to boost revenue growth and aligns with Tech Mahindra’s strategic plan. Current trends indicate significant growth for GCCs in India, projecting continued expansion in the sector.
Tech Mahindra Ltd is currently in advanced discussions to establish a Global Capability Centre (GCC) for Goodyear Tire & Rubber Company in Hyderabad, according to two informed sources. This facility is projected to employ 3,000 individuals focused on research and development (R&D) and IT operations for the US company.
GCCs represent in-house technology centers for large Fortune 500 companies, which often shift their technological tasks from Indian IT outsourcers to in-house teams. By establishing GCCs, companies can minimize costs and streamline their operations by hiring employees directly rather than outsourcing their IT needs.
Tech Mahindra’s endeavor to initiate GCCs is linked to the strategic vision laid out by its new CEO, Mohit Joshi, who took over from veteran C.P. Gurnani in December 2023. The company intends to increase its operational efficiency and belong to the competitive echelon of its industry peers, emphasizing improved revenue growth.
Since the appointment of Mohit Joshi, there has been a marked increase in focus on the GCC process at Tech Mahindra, motivating employees to enhance engagement with GCCs. As part of its three-year plan outlined in Project Fortius, the company aims to optimize its resources by shedding less profitable accounts.
Tech Mahindra, which reported $6.3 billion in revenue for FY24, will assign roughly 2% of its workforce, totaling 150,488 employees, to operate the Goodyear GCC. Meanwhile, Goodyear announced a revenue figure of $20 billion at the close of December 2023.
Typically, IT service providers transfer the operations of GCCs back to the parent firm after a few years, although the future plans of Tech Mahindra concerning the Goodyear GCC remain undisclosed. Email inquiries directed at both companies for additional information were not answered.
Industry experts highlight that employees engaged in GCC operations have options post-contract. “When an IT service provider gives out workforce to a GCC, after running the GCC, employees have the choice to remain with the IT services company or transition to the parent company of the GCC they managed,” noted Ramkumar Ramamoorthy from Catalincs.
Additionally, Infosys Ltd announced plans to create a GCC for the German e-commerce firm Zooplus, intending to manage various operational functions. Tech Mahindra is also working with Cisco, overseeing its GCC in India.
Recent reports indicate that India is home to over 1,700 GCCs, marking a 32% increase since FY19 according to Nasscom estimates. More than 875 of these centers are in Bengaluru, while Hyderabad currently hosts approximately 355.
With GCCs employing over 1.9 million individuals and generating around $64.6 billion in revenue for FY24, the Indian IT industry continues to thrive, boasting an overall value of $254 billion. Reports highlight that engineering research and development constitutes more than half of the revenue accrued from these centers, totaling $36.4 billion.
As collaborations between technology partners, particularly in cost-efficient locales like India, continue to evolve, significant savings of 50-70% are anticipated. A recent Nasscom and Zinnov report emphasizes the financial benefits stemming from efficient resource management within the GCC landscape, projecting an increase in the number of GCCs to reach 2,200 by March 2030 and a market size of $105 billion.
In summary, Tech Mahindra is set to establish a GCC for Goodyear in Hyderabad, employing 3,000 individuals focused on R&D and IT operations. This strategic move aligns with the company’s ambition to optimize governance under its new CEO and respond to industry competition. As the number of GCCs in India continues to grow, so too does the potential for operational cost savings and revenue generation.
Original Source: www.livemint.com
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