Overview:
Rise of Global Capability Centers (GCCs) in India has been a significant trend in recent years. GCCs, also known as global in-house centers or captives, are offshore centers established by companies to provide various services such as IT services, research and development, and customer support to their parent organizations.
While top IT companies are going slow on hiring, some of the large GCCs in India continue to scale. GCCs are setting up more units in India and looking to expand the existing ones.
Key highlights:
As per NASSCOM, India currently has over 1,580 GCCs, with over 1.6m employees. By 2026-27, NASSCOM sees the number rising to over 2,000 GCC units, with 75-80 being set up every year on average. In contrast, domestic IT hiring has significantly slowed.
As per Deloitte, GCCs initially dealt with transaction processing, and application maintenance, but the nature of work is changing. GCCs now work on the engineering and R&D side, as well as on technology, AI, ML and cloud.
Apart from wages hike, GCCs also offer huge brand pull by allowing fresh hires to directly engage with top global brands.
As per a report by Xpheno, 23% employees from the IT services sector have had one or more career movements over a 12-month period. 83% of the movements were towards other employers within the IT sector. Out of the remaining, 6% of the talent was absorbed by GCCs.
Moreover, the offer acceptance ratio for IT services firms is 50% - 55%, but for GCCs and product firms, it is 65% - 70%. The joining ratio for IT services companies is just 45% - 50%, whereas for GCCs its higher at 70%. At IT firms, employees work on a project and move on to other projects. But at GCCs, employees are working on products for internal use, so they get to take full ownership of the projects from conception to execution.
India holds about 25% of GCCs of global retail / CPG companies, employing over 50,000. About 63 retail and CPG companies including Walmart, Target, Tesco, Lowe’s, Nestle and Pepsi have tech centers in India.
Key trends and outlook:
As per NASSCOM, of the 18 new GCCs were established during the H1FY23, approximately 83% have all three functional areas of engineering R&D, IT and BPM. Around 55% of new GCCs have instituted or expanded in locations other than Bangalore. Tier 2 cities such as Vadodara, Nasik and Coimbatore saw the expansion of centers for established GCCs in verticals such as industrial, FMCG, retail, electrical and electronics and software and internet.
NatWest Group GCC in India announced that it will add at least 3,000 professionals in AI, analytics and cloud in the next three years, taking the total headcount to more than 21,000. Deutsche India will add over 2,300 professionals in 2023 across cloud, AI and ML, taking its India headcount to 16,000.
Citi announced that its Citi Solutions Centers will add at least 5,000 professionals in AI, mobile, analytics and RPA in the next two years in India, taking its total strength to 32,000. Lloyds Bank plans to set up Lloyds Technology Center in Hyderabad in cyber and data analytics. SAP Labs has started constructing a second office in Bangalore, which will create 15,000 jobs.
As per EY, the top GCC trends for the year include establishment of Centers of Excellence (CoEs) in areas such as AI, cloud computing, engineering, data analytics and cybersecurity; transitioning from a ‘cost center’ to a ‘profit center’ with a focus on generating additional revenue streams; expansion of functions in areas such as legal, marketing and procurement with increased investments; and greater emphasis on Employee Value Proposition (EVP).