Hybrid models future for IT, GCCs?

Distant cousins to IT firms or not, global capability centres (GCCs) have captured the mindshare and wallet share in many client conversations. The relationship between IT companies and GCCs has drawn various managerial observations—collaborators, competitors, co-creation, cosourced and coexistence. Just as boardrooms are abuzz with discussions around AI strategy, they are quizzing management on their GCC playbook.

However, the present collaborative model might face major tweaks, as emerging market conditions could demand concessions from both sides. This presents a case for what analysts call a hybrid model—complementary strategic capabilities. Newer GCCs have evolved as transformation hubs for newer technologies. India, dubbed as the GCC capital of the world, has the largest base of 17% of GCCs. Currently, it has over 1,700 GCCs and the number is expected to grow to 2,200 by 2030, employing 2.5 to 2.8 million employees.

Ramkumar Ramamoorthy, partner at tech growth advisory firm Catalincs, said that because of cannibalisation in revenue and some opportunity loss, IT companies consciously pivoted their narrative from denial to acceptance. “This shift is driving these companies to incubate GCCs using different flavours of the build-operate-transfer (BOT) model, co-locate and provide a broad range of services, as well as co-innovate and build newer digital products and solutions. IT companies that historically embraced collaborative models with clients and partners—including JVs, BOTs, and minority investments—are best positioned to win this new game as it is in their DNA to team up to win.”

Hansa Iyengar, senior principal analyst in London-based Omdia, said to stay competitive, IT firms must pivot from purely operational roles to becoming true strategic partners to GCCs—helping them evolve from cost centres to sources of innovation. “This shift may require revisiting traditional cost structures, prioritising outcome-based engagements, and building cross-functional teams that leverage the strengths of both sides. Ultimately, success will depend on how well both IT firms and GCCs can adapt to each other’s evolving expectations.”

Mathew Hannon, account director and Carolyn Becker, director in ISG, in a recent whitepaper, said that organisations with mature in-house capabilities and outsourcing services are looking for a more bespoke solution that meets their specific needs. This, they said, is resulting in a hybrid delivery model, in which the role of a strategic partner differs from client to client, based on their specific needs. They also said although an increasing number of enterprises are opting for a hybrid model, it increases the level of complexity requiring additional hand-offs, collaboration, and oversight in GCC operations.

Ramamoorthy also pointed out that IT companies cannot afford to not work with GCCs for two key reasons. “A significant portion of the discretionary spend in digital is being gobbled up by GCCs as companies believe that digital is core to their business and they need to own that capability rather than lease it. And two, many of the India-based leaders at GCCs are taking on global CXO responsibilities and will be key decision-makers of tomorrow. Not building deep relationships with them today can prove to be costly in the medium to long run.”

Yugal Joshi, partner in US-based IT advisory Everest Group, said GCCs have become a reasonable demand segment for some providers. “Though most providers will not build a long-term sustainable large business from these, everyone is chasing near-term revenue uplift. Moreover, many clients are driving insourcing initiatives which create further competitive challenges,” he said.

Phil Fersht, CEO of US-based HfS Research, stated that GCCs need to be at the heart of the organisation, fully integrated with a “OneOffice” mindset. Why even call them “GCCs” at all? They should simply be the “India Office,” as essential and core to the business as any other part of the company. It’s time to drop the labels and recognise that these centres are not just support units but strategic hubs that drive growth, innovation, and competitive advantage.”

Fersht said it’s time for India’s IT and GCC sectors to go beyond services and become product powerhouses. “GCCs must also look beyond engineering and develop experience design and product management capabilities.”



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