At a time when multinational firms are increasingly offshoring their operations, leading to rise in number of GCCs (Global Capability Centres) in India, domestic IT service companies are nearshoring their operations to be near their clients.
Many of the top IT service companies have of late doubled their nearshore centres that are based in Poland, Mexico, Toronto, Vancouver, Costa Rica, Romania, Brazil, Middle East, and Nordic region.
Sample this: Tata Consultancy Services (TCS) and HCLTech have been named top employers by top surveys in many of these nearshore regions like UAE, Saudi Arabia, South Africa, Romania and others. TCS has been doubling its Nordic headcount in every five years to reach more than 20,000 employees in the region at present, whereas its global headcount doubled over a period of last 10 years.
This month, Wipro opened a new office in Jefferson City, Missouri, and said it will partner with the state’s Jobs for America’s Graduates (JAG) programme to attract local talent. The company added that the office will serve as a base to more than 500 employees.
In March, HCLTech said that it will double its operations in Romania and hire 1,000 more people in the country in the next two years. Last year the company announced to double its headcount in nearshore locations in 3-5 years. It also said that it will hire 1,000 and 1,300 professionals in Brazil and Mexico over next two years.
As per the recent annual report of Tech Mahindra, the company has more than 20,000 employees outside India, whereas its India headcount as on March 31, 2023 is more than 92,000. To put that in perspective, about 18% of its employees are outside India. Analysts say today, about 20% of these firms’ employees are based outside India.
In the last 10 months, three companies – Infosys, LTIMindtree and Midcap Persistent Systems opened their new centres in Poland. The second largest Indian IT service company also opened new subsidiary in Canada and Oslo, Norway this year.
Gaurav Gupta, partner and GCC industry leader, Deloitte India, said, one of the reasons for IT companies looking to hire in the regional geography is to have a good balance of onshore and offshore capabilities and show their commitment to the geography and to the clients, around job creation.
Infosys recently announced its new brand ambassadors Rafael Nadal and Iga Swiatek from Poland. Pareekh Jain, founder of Pareekh Consulting, said, “This signing of brand ambassadors will help the company to position itself as a big global employer in Europe. Large deals are generally global deals and clients prefer to have some work done from different locations because they have their operations spread across geographies”.
Jain added, “If these companies don’t have big nearshore centres, good local talent might not prefer them. People generally like to join big employers where they can have career growth, and not some company that has only a marginal presence in the region. That’s why they want to become employers of choice in many regions”.
He also said that sometimes the nature of work requires IT firms to have a good local knowledge of the systems and business and that’s another reason why few clients prefer to get some work done onsite.
Last year, Wipro announced increasing its investment locally in Norway to help its clients capitalise on digital transformation. It added, it would quadruple its employee headcount in Norway in two years.
Inorganic route through acquisitions is also contributing to increased headcounts at these onsite and nearshores centres. Infosys recently announced a strategic collaboration with Danske Bank which further enhanced its localisation strategy in the Nordics. Earlier, Infosys had
acquired BASE Life Science in Denmark and Fluido in Finland.
Similarly other companies like Wipro have done acquisitions like Capco that have helped them scale up in Europe. Bengaluru-based Sonata Software this year acquired Quant Systems that has delivery centres in India, Costa Rica and in North America. HCLTech took over 1,600 employees when it acquires Germany based ASAP recently.
DD Mishra, senior director analyst, Gartner, said, “Growth is expected in end-user spending on IT services and Indian IT companies are leveraging the opportunities to tap into the unexplored market as geopolitical situations disrupt their traditional markets”.
Mishra, added, “Indian IT companies have been focusing on localisation for the last five to six years, and many have moved away from pure offshore-centric deliveries to some kind of hybrid mode of operations combining onshore, nearshore and offshore capabilities”.
