Indian IT services companies are increasingly targeting global capability centres (GCCs) for growth as organic revenue growth falters. According to reports from Business Standard, these acquisitions offer scale opportunities and chances to move up the value chain, providing an inorganic method to boost revenue beyond traditional capability acquisitions. Major deals executed this year include TCS buying the GCC operations of US consumer electronics retailer Best Buy for ₹2,000 crore, HCLTech acquiring Guardian Life's GCC, and Wipro purchasing Mindsprint, the IT unit of food and agriculture business company Olam, with expectations of about $1 billion over the next eight years. As noted by HFS Research founder Phil Fersht, these acquisitions give providers greater revenue visibility while bringing domain expertise, IP and people who already understand the client environment.
The acquisition strategy addresses sustained revenue and margin pressure faced by IT services companies due to weak macroeconomic conditions and volatile geopolitics. As reported by Business Standard, many GCCs have failed to mature beyond certain levels despite operating for long periods, leading to higher operating costs and internal inefficiencies. These deals provide long-term, five-year arrangements that offer steady revenue inflows when legacy deals face pressure from artificial intelligence impact. Pareekh Jain, CEO of EIIRTrend, noted these deals should be viewed as long-term consolidation providing productivity benefits and enabling more client mining opportunities. From the GCC perspective, these deals make sense as a significant number have failed to become strategic hubs for their parent companies, leading to stagnation, layoffs, shutdowns or buyouts.
Significant data reveals the extent of GCC challenges, with 30% of GCCs set up since 2021 having plateaued, translating to approximately 150 GCCs in the last five years, according to Embark and UnearthIQ research cited by Business Standard. More than 500 centres are not fully realising their potential, with reasons including changes in corporate sponsorships, perception as cost centres, lack of strong local leadership, and workforce growth without corresponding specialist skills increases. This stagnation has created opportunities for IT services companies to acquire established capabilities with multi-year relationships. As noted by HFS Research, AI is putting pressure on traditional effort-based contracts and clients increasingly expect more output for less money, making acquiring established centres with multi-year relationships particularly valuable.
The GCC landscape has evolved significantly, with these centres once emerging as direct threats to traditional IT services between 2015 and 2020 as companies insourced technology work. As reported by Business Standard, GCCs now offer AI-led solutions for digital transformation, with companies like TCS creating dedicated Global Value & Innovation Centers business specifically for AI-native GCCs, Infosys implementing AI-first GCC models covering setup, operation, transformation and carve-outs, and having worked on more than 100 GCC engagements. However, greenfield GCCs remain challenging, with India having more than 101 greenfield GCCs in 2025, but Indian IT services companies' share continuing below 15%. More than 60% of the market share belongs to ANSR, Zinnov, Aeries Tech and the Big Four companies.
Despite providing near-term growth visibility, these acquisitions involve potential risks that require careful monitoring. According to Ambit Capital analysis reported by Business Standard, deals like Pramerica and Postbank for TCS had annual revenue run rates that fell by 70-80% over the duration of the deal. The firm emphasizes that typical savings involved can cause pressure later, making it crucial to monitor these acquisitions closely for their long-term impact on revenue sustainability. As noted by Ambit Capital, while these deals do provide near-term growth visibility, the typical savings involved can cause pressure later, which is key to watch.
