National Grid UK Ltd has outlined plans to spend up to $400 million to establish a tech facility in India, joining several global companies setting up back-end centres in the country even as the war in West Asia threatens power supply.
The energy company, among the 10 largest utilities in the UK, first floated a tender on 15 December last year, inviting bids to set up a global capability centre (GCC) in India, according to twopeople privy to the development and tender documents reviewed by Mint.
The company is “looking for a supplier to establish, grow and deliver engineering services capability at pace during the Build & Operate phase”, read the tender.
It aims to start work on the facility next year and finish it by 2032, with a possible extension up to 2035, according to the tender document. The people quoted earlier, who didn’t want to be identified, said the GCC will employ about 1,000 employees when fully operational.
Queries emailed to National Grid went unanswered until press time.
The UK's electricity transmission network operator will join global power and energy sector peers, including ABB, GE Vernova, Hitachi Energy, and ExxonMobil, which have their GCCs in Bengaluru.
India currently hosts over 1,760 GCCs, with Bengaluru and Hyderabad hosting 875 and 355 centres, respectively, according to the IT industry lobby Nasscom. GCCs generate at least $64.6 billion in export revenue. Nasscom estimates the number of such centres to rise to 2,200 by March 2030, with the market valued at $105 billion.
“We don't anticipate the West Asia conflict persisting indefinitely. Although the crisis may prompt power companies to delay establishing operations, India's long-term potential remains compelling due to its large pool of high-capability and affordable talent,” said Achyuta Ghosh, executive research leader for GCCs at HFS Research. “Setting up an India office makes economic sense, and the rupee's depreciation further strengthens India's appeal as an outsourcing destination.”
Wipro IT vendor to National Grid
According to the second person, the company's outsourcing contract to provide some engineering services through an international partner is expiring, and it is "gradually transitioning those services to an in-house model, overseas, over several years”.
Wipro Ltd, India’s fourth-largest outsourcer, has been managing National Grid’s digital transformation for two decades and also won a contract in 2021 to shift the power company’s data to the cloud.
Mint could not independently ascertain if Wipro is currently an IT vendor to National Grid or whether the UK company has altered its contract with Wipro or whether the GCC will be in addition work outsourced to the Indian IT company.
Wipro did not immediately respond to queries emailed on Monday evening.
In the case of Walt Disney, which is setting up a technology centre in India, analysts had cautioned that it could eat into the revenue of its IT vendor Globant, which gets about 8% of its revenue from the media and entertainment giant.
Location not final
National Grid currently outsources much of its backend work to third-party information technology (IT) service providers.
“National Grid is currently undergoing a strategic transformation of its Enterprise Business Services (EBS) organisation and as part of this initiative is successfully operating Engineering Support Services (ESS) activity in India via an incumbent supplier arrangement,” read the company’s tender.
The UK-based utility company expects to handle system modelling, customer support, project controls, and data management, among other tasks, at its India GCC.
For now, National Grid has not finalised a location in the country for its GCC and is currently inviting bids from both single vendors and consortia.
“They are expected to receive bids from May, and each of the country’s five largest IT services companies is expected to submit proposals,” said a second person privy to the development.
The tech centre will be established in a design-build-operate-transfer mode, with a third party designing and setting up the GCC, running it for a fixed period, and then transferring the operations back to the parent.
The company is also looking to attract vendors who can ramp up capacity, recruit the workforce, ensure delivery capability, and manage risks and compliance.
National Grid ended last fiscal year with £18.6 billion (about $24 billion) in revenue, down 7% on a yearly basis. Most of this decline was contributed by its electrical supply business in the UK, which accounts for about 6% of its total business.
