Indian IT firms turn to GCC acquisitions as organic revenue growth falters

Indian IT services companies are increasingly acquiring global capability centres (GCCs) to shore up revenue and secure multi-year contracts as organic growth slows and artificial intelligence reshapes traditional fee models. Major 2026 transactions include Tata Consultancy Services buying the GCC operations of US retailer Best Buy in a deal reported to be worth ₹2,000 crore; HCLTech’s acquisition of Guardian Life’s GCC; and Wipro’s purchase of Mindsprint, the IT unit of Olam, a deal tied to approximately $1 billion (about ₹9,625 crore) of revenue expected over the next eight years.

“Such deals help the services companies do more client mining and be in line for other vendor consolidation projects,” said Pareekh Jain, chief executive officer of EIIRTrend, underscoring the long-term consolidation and productivity rationale behind the acquisitions.

Acquiring GCCs offers immediate scale and multi-year revenue visibility at a time when legacy effort‑based contracts face margin pressure from AI-driven productivity gains and client demands for more output for less money. Phil Fersht, founder and CEO of HFS Research, said, “For the IT services companies, this is also a response to slowing organic growth. AI is putting pressure on traditional effort-based contracts and clients increasingly expect more output for less money, so acquiring an established capability center with a multi-year relationship attached give providers greater revenue visibility while also bringing domain expertise, IP and people who already understand the client environment.”

Context and details

• Deal structure and benefits: GCC acquisitions often carry long-term contracts—commonly five years or more—that provide steadier cash flows compared with AI-led engagements, which are described as “not steady and big enough” to offset declining traditional revenue.
• Scale of activity in 2026: Notable completed transactions this year include TCS–Best Buy (₹2,000 crore), HCLTech–Guardian Life (terms undisclosed) and Wipro–Mindsprint (Olam) tied to ~₹9,625 crore over eight years.
• Market maturity and challenges: Research by Embark and UnearthIQ indicates 30% of GCCs set up since 2021 have plateaued—about 150 centres—while more than 500 centres overall are not fully realising their potential, driven by factors such as weak local leadership, perception as cost centres and limited specialist skill growth.
• Service providers’ responses: Rather than purely greenfield builds, several Indian firms are creating dedicated GCC offerings. TCS launched a Global Value & Innovation Centers business to build AI-native GCCs; Infosys promotes an AI-first GCC model covering setup, operation, transformation and carve-outs and cites work on more than 100 GCC engagements; Cognizant offers greenfield setup and build-operate-transform-transfer models.
• Risks and historical precedents: Ambit Capital warns that while acquisitions provide near-term revenue visibility, typical savings and contract dynamics can create later pressure. It cites past deals such as Pramerica and Postbank for TCS, where annual revenue run rates fell by 70–80% over the deal duration.

Outlook

Executives and analysts expect GCC deals to remain a prominent inorganic growth lever as service providers seek predictable income streams and domain expertise to bundle with AI-enabled offerings. However, the sector faces trade-offs: acquired centres must be integrated and upgraded to avoid the stagnation that led many GCCs to plateau, and acquirers must watch for longer-term revenue erosion seen in earlier transactions. The coming months will test whether these acquisitions can deliver sustained margin recovery or merely postpone the effects of a market reshaped by automation and changing client economics.