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Ramkumar Ramamoorthy has had a ringside view of the evolution of India’s Global Capability Centres(GCC). He joined Cognizant in its early years and went on to become the Chairman and Managing Director of Cognizant, India, where he was responsible for operations spanning more than 200,000 employees. During his 22-year tenure, he incubated and scaled multiple portfolios, and was closely associated with the acquisition and integration of a dozen GCCs, including those of UBS, Invensys, T-Systems and KBC Bank.
After stepping down from Cognizant in 2020, Ramkumar co-founded Catalincs, a technology advisory firm that helps niche technology companies build the capabilities for rapid growth. With Cognizant itself having begun as the technology captive of Dun & Bradstreet in Chennai, Ramkumar has seen the GCC story unfold first-hand — from 200 employees in 1994 to Cognizant’s 340,000-strong workforce today serving hundreds of global clients.
In a conversation with Dataquest, he reflects on the opportunities, challenges, and shifts shaping India’s GCC journey.
What do you see as the biggest opportunity for India to strengthen its position as the global GCC hub over the next five years? What’s the compelling value proposition right now?
Over three decades, we have seen multiple waves of Fortune 500 and Global 2000 companies establishing their GCCs in India. What started with financial services, chip manufacturers and software companies in the United States soon expanded to European and Pan-Asian companies across industries such as manufacturing, telecom, healthcare, pharmaceuticals, energy, consumer goods, utilities and media.
We are now witnessing a new wave of ‘nano GCCs’ coming to India. These are venture capital and private equity-backed specialist companies, which are keen on tapping into the incredible talent in India in newer areas such as next-gen hardware, in-memory and edge computing, space technology, genomics and synthetic biology. Unlike in the earlier waves, these nano GCCs may not hire in thousands, but focus on high-end techno-business talent to develop innovative products, platforms and bleeding-edge solutions.
I expect these nano GCCs to play a larger role in the transfer of technology through R&D, sharing of best practices in newer areas such as product development, cyber forensics and quantum computing, through deep collaboration with academia and the start-up ecosystem in India, thereby driving higher levels of innovation and intellectual property.
It is important to note that no progressive global business today can afford not to have access to digital and AI capabilities at scale. With no other country in the world having the digital and AI capabilities at scale that India has, many of these GCCs do not have a choice but to make a beeline for India.
What do you consider the most critical challenge that could slow or limit India’s GCC growth story if not addressed in time?
In addition to the challenge of going beyond cost arbitrage and driving transformational value, I would call out the ability to attract and retain exceptional talent and give them a career path over longer periods of time as the biggest challenge. The growth of any GCC is directly linked to the growth of the parent organisation and therefore addressing the career growth aspirations of everyone is extremely important. Otherwise, they could get acquired by a traditional IT services company, as happened earlier with Citigroup, UBS, American Express, Unilever, Invensys, MasterCard, Deutsche Telekom, among others.
There are two pathways for growth to happen at GCCs. One, the parent should continue to grow organically or inorganically to provide the growth momentum needed. Or two, at an appropriate time, start servicing companies beyond the parent, as happened with Cognizant, Genpact, EXL, WNS, Optum, among others. These companies started as captive technology or business process arms for reputable companies such as Dun & Bradstreet, GE, Conseco, British Airways and United Healthcare, and went on to become global leaders in their own right.
How will the traditional IT services industry intersect with the GCC model: will it be competition, collaboration, or convergence?
While in the short run, traditional IT services companies will see some revenue cannibalisation and opportunity loss, in the medium to long run, they will create newer business models and flourish in them.
In addition to the time-tested strategic staff augmentation model, we are already witnessing more and more traditional IT services companies incubating newer GCCs using build-operate-transfer (BOT), joint venture (JV), virtual captive and other models, as well as co-locating and co-innovating with GCCs through their Centres of Excellence. It is estimated that GCCs already contribute to anywhere between 4 and 10 percent of the annual revenues for traditional large and mid-sized IT companies.
Just as hybrid workplace models are evolving, we will see hybrid models in techno-business collaboration and entrepreneurship between traditional IT services companies and GCCs.