India’s emergence as the preferred destination for Global Capability Centers (GCCs) has been nothing short of remarkable. With over 50% of the world’s GCCs based in India, the country has become the powerhouse for these centers, employing more than 1.4 million people directly and indirectly.
Let’s delve into why India is the hotspot for GCCs and how this sector is evolving into a separate and highly influential industry.
Lalit Ahuja, CEO of ANSR, revealed that India boasted a staggering 1400 recognized GCCs. This number alone underscores India’s growing significance in the global GCC landscape. These centers, often established as subsidiaries of multinational corporations, have flourished in India for several reasons.
The answer lies in India’s abundant talent pool and leadership that is instrumental in building and nurturing these teams. GCCs in India have attracted interest from various industries and countries, creating a diverse and dynamic ecosystem. The Indian GCC model has matured and proven its effectiveness, making it an attractive proposition for businesses looking to set up their centers.
To comprehend the evolution of GCCs in India, it’s crucial to consider their inception. These centers typically take 2-3 years to mature their business models, initially focusing on demonstrating cost savings. However, they eventually transition into innovation-driven entities. This shift underscores their adaptability and ability to provide value beyond cost reduction.
GCCs in India recognize that global solutions cannot be developed in isolation. Therefore, they actively engage with the startup ecosystem and IT services companies to foster innovation and collaboration. This approach allows them to tap into the wealth of resources available in India’s burgeoning tech landscape.
Vandhna Babu, a Nasscom Research Analyst, noted that GCCs have made extraordinary contributions to Indian enterprises, the nation, and the global services community. Currently, GCCs account for 30% of India’s tech industry, with a staggering 5.4 million employees and 24% of export revenues. Moreover, they represent 45% of the global GCC headcount. This astounding growth highlights the pivotal role played by GCCs in India’s economic landscape.
While GCCs initially came to India as a cost-saving measure, their objectives have evolved. The Indian market, once operating at an average of $15,000 – $17,000 per full-time employee (FTE), has now risen to USD 29,500 and is expected to reach USD 39,000. This seismic shift underscores that cost savings are no longer the primary motivation for establishing GCCs in India. Instead, they focus on value creation, innovation, and enhanced productivity.
India has firmly established itself as the nucleus for GCCs, offering a unique blend of talent, infrastructure, and innovation. With the sector’s continued growth and the evolving priorities of GCCs, it’s evident that India’s GCCs are here to stay and will likely form a distinct industry in the near future. Companies seeking to set up GCCs should take note of this remarkable transformation and explore the myriad opportunities this burgeoning sector has to offer.
As GCCs continue to contribute significantly to India’s tech industry, export revenues, and global headcount, it’s clear that India’s GCC story is one of extraordinary growth and promise. This ‘elephant’ in the room is not only here to stay but is set to dominate the global GCC landscape.
If you are curious to know about the challenges faced by GCCs, starting from seamless integration with parent organizations to employee retention and the evolving cost of full-time employees, read on!
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