Accenture’s ANSR acquisition to reshape enterprise innovation and business strategy

The increasing enterprise interest in global capability centers (GCC) is something service providers cannot ignore. Enterprises receive several benefits from running GCCs as opposed to outsourcing, including:

• Enterprises achieve greater flexibility and control over their business operations, which leads to better decision-making and enables them to respond quickly and decisively to market changes .
• GCCs are evolving from managing back-office operations to becoming innovation hubs where technology applications, including AI, ML, advanced data analytics, blockchain, robotic process automation (RPA), and the internet of things (IoT), occur.
• Having a GCC also gives enterprises access to a wide array of talent to meet changing needs. According to a recent report on the Indian technology sector by the National Association of Software and Service Companies (NASSCOM), the country has a total tech employee base of 5.43 million, which has risen 1.1% in the past year despite challenging market conditions.
• Since GCCs are essentially part of the larger enterprise, a strategic alignment of values, culture, and goals ensures more cohesive and optimized day-to-day operations.

Accenture’s alliance and equity investment of nearly $170 million into ANSR reflects its strategy to play both sides of the equation. This is similar to shorting a stock you hold to earn profits, irrespective of the price direction. Accenture also will join ANSR’s board of directors, perhaps ensuring it’s heading in the right direction. This strategic alliance is expected to propel India’s ongoing GCC boom.

ANSR’s GCC setup experience complements Accenture nicely

ANSR has established more than 125 GCCs over the last 18-plus years, creating over $2 billion in capital investment for enterprises. It has helped hire more than 125,000 professionals and manages over 2 million square feet of office space. ANSR provides talent and workspace as well as research, advisory, and business operations services. It covers the end-to-end GCC value chain, from location and talent analysis, benchmarking, peer intelligence, workspace strategy, and construction to day-to-day business operations. Accenture is expected to leverage its technology, industry experience, and ecosystem partnerships and amalgamate that with ANSR’s experience of setting up GCCs, which will help enterprises achieve a faster time to market.

What does this acquisition mean for the Indian GCC ecosystem?

India has been on a phenomenal run for the last two decades, riding the wave of relentless double-digit growth in IT and business process services powered by skilled talent in cost-effective regions. However, the era of replacing onshore workers with offshore talent is ending. Now it’s time to dig deeper to uncover new, less obvious avenues of value. The Indian IT services industry must leap to a new S-curve (see Exhibit 1), driven by technology arbitrage, to reclaim its hockey-stick growth trajectory. And GCCs are leading the charge. The explosive growth of GCCs in India stems from the transformation of the “why India” value proposition—from a purely cost-focused narrative to combining cost efficiency with innovation.

Exhibit 1: The new S-curve of value creation will be AI-driven technology arbitrage

Source: HFS Research, 2024

According to NASSCOM, India had almost 1,600 GCCs by FY2023, employing more than 1.66 million people. Among all cities in the country, Bengaluru seems to be the GCC hub due to its pre-existing talent pool and infrastructure. However, with the introduction and subsequent withdrawal of Karnataka’s draft reservation bill and the city’s overly stressed infrastructure, cities such as Hyderabad and Pune are likely enterprise choices for GCC setups.

The ANSR acquisition showcases how service providers are coming to terms with the rise of the GCC model and exploiting new areas of partnership and M&As to ensure they are well-equipped to handle this paradigm shift. However, there also must be a concerted effort by the state and central governments in India to spread the GCC setup into tier-2 and tier-3 cities to ensure that already burdened software hubs are not further pressurized and to utilize the existing blueprint in newer regions. This will further boost the country’s GDP through the already impressive IT services sector.

Embracing new business strategies and talent is the way forward for enterprises

As the uptick in GCC establishments continues, they will soon become centers of innovation in addition to managing ordinary business operations. Innovations will include creating new business strategies and developing specialized talent pools. This move toward scalable innovation will be augmented using AI, ML, and advanced data analytics technologies. Enterprises must do their homework to select the right GCC partner.

Enterprises already offer a premium to attract talent from IT service providers and Big 4 consultancy firms, showcasing their seriousness about establishing and utilizing GCCs in the country. The top leadership tasked with running these GCCs is also paid a premium, about 14% higher in GCCs than in IT service companies.

HFS’s research and viewpoint on GCCs

Additionally, HFS is interviewing a series of leaders in India to dive into how GCCs are shaping the “why, what, and how” of keeping India at the forefront of the technology arbitrage revolution. The initiative aims to tackle the following themes:

• Cracking the digital dichotomy: balancing cost pressures with rapid, scalable innovation
• Redefining the services catalog to go beyond coding and transaction processing, pushing into engineering and R&D
• Making IT services desirable again for India’s top talent, who are increasingly drawn to tech companies and startups
• Building a killer ecosystem of in-house talent, third-party IT and BPO firms, tech providers, and startups
• Fostering an “infinite mindset” among Indian GCC leaders, positioning them as global chief innovation officers

The Bottom Line: GCCs will slowly but surely disrupt how IT services are delivered.

The enterprise GCC ecosystem (mainly Fortune 2000) needs strong partnerships with academic institutions, startups, local governments, industry bodies, service providers, and technology partners.

For India to capitalize on the growing GCC boom, all the ecosystem players must unite to create a favorable atmosphere for Fortune 2000 companies to open their GCCs here in a win-win for all stakeholders.