IT Firms Tap GCC Consulting Route to Win Tech Contracts

Mphasis, Hexaware are investing in GCC advisories to win larger tech, engineering contracts

- Jas Bardia

Mid-sized information technology (IT) services companies like Mphasis and Hexaware Technologies are investing in advisory firms that help large corporations set up back-end technology hubs or global capability centers (GCCs) in India, in their bid to win substantial tech and engineering contracts later.

This strategy, analysts say, enables IT services firms to get faster access to new clients and an easier entry into the country's $68 billion global capability center market, which is expected to swell to $105 billion by 2030.

Picking up a stake in these consulting firms makes business sense for the homegrown IT outsourcers, as they can start providing tech services, and secure support and maintenance deals as soon as the big foreign firms set up their GCCs in India, the analysts said.

On July 10, Mphasis invested $4 million in Aokah, a US-based GCC advisory firm, for a 26% stake. During the company's post-earnings interaction with analysts on July 25, MD and CEO Nitin Rakesh said the acquisition was done "with a view that we will essentially have an opportunity...in helping shape deals as clients start thinking about GCCs and the various shapes and forms that it takes."

Similarly, Hexaware acquired SMC Squared on July 17 for $120 million. Its management attributed the move to the "robust revenue opportunity" that SMC brought.