Tech Mahindra in advanced talks to set up 300-member GCC for Goodyear

GCCs are in-house technology centres of large Fortune 500 companies, which are traditionally clients of Indian IT outsourcers. Instead of outsourcing tech work to software service providers, GCCs hire employees to handle the same work in-house.

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Indian IT service providers set up GCCs for their clients by providing them with employees and running their centres. GCCs can pay IT outsourcers for the employees they get or a share of revenue.

One of the two people cited above attributed Tech Mahindra's GCC push to its new CEO Mohit Joshi, who succeeded veteran C.P. Gurnani as the head of India's fifth-largest information technology (IT) services company in December 2023.

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Tech Mahindra’s push to partner with GCCs is in line with the company’s bid to increase its operating margins, focus on improving revenue growth in line with industry peers, and do away with tail accounts as part of its three-year roadmap called Project Fortius.

“Since Mohit joined, he has brought a rigour to the whole GCC process, and he has encouraged us to engage more with GCCs," the executive cited above said on the condition of anonymity.

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Pune-based Tech Mahindra, which ended FY24 with $6.3 billion in revenue, will deploy about 0.2% of its 150,488 employees to run the Goodyear GCC. Goodyear ended December 2023 with $20 billion in revenue.

IT service providers typically transfer GCC operations back to the parent company after running them for a few years, but Mint could not ascertain the plans of Tech Mahindra and Goodyear.

“As part of Goodyear’s ongoing transformation, we are establishing the Goodyear Technology Centre India (GTCI), a global technology hub, in Hyderabad, India. We plan to hire approximately 300 associates in Hyderabad in 2025, largely through the insourcing of contractors," said a spokesperson for Goodyear.

Emails sent to Tech Mahindra went unanswered.

Still, at least one expert said employees are given two options.

“When an IT service provider gives out workforce to a GCC, after the time of running the GCC comes to an end, the employees going to that GCC have the choice of working for the IT services company, or they mandatorily have to move to the parent company whose GCC they were running," said Ramkumar Ramamoorthy, partner at Catalincs, a Chennai-based tech advisory firm.

In October 2024, Bengaluru-based Infosys Ltd said it would build a GCC for German e-commerce company Zooplus. As part of the engagement, Infosys would oversee an array of Zooplus’s functions, from its marketing to technology.

Tech Mahindra currently has a partnership with Cisco to run its India GCC.

At the end of FY24, India had over 1,700 GCCs, an increase of 32% jump from FY19, according to Nasscom estimates. Of these, more than 875 are set up in Bengaluru, whereas Hyderabad, where Goodyear’s GCC is expected to come up, has about 355.

These centres employed more than 1.9 million people and generated about $64.6 billion in revenue in FY24. To be sure, the country’s IT industry is worth $254 billion.

Little more than half, or $36.4 billion, of the revenue generated by Indian GCCs is through engineering research and development (ER&D), Nasscom data suggests.

“Collaborating with Technology Partners, particularly in cost-effective regions like India, can lead to significant cost reductions, with potential savings of 50-70% through streamlined processes and efficient resource management," read the Nasscom and Zinnov report on India GCC Landscape, published in September last year.

Nasscom estimates the number of Indian GCCs to touch 2,200 by March 2030, with a market size of $105 billion.

 

An earlier version of this article incorrectly stated that the centre would employ 3,000 people. The correct number is 300. We regret the error.