GCCs in India: Shifting Focus from Cost Arbitrage to Cutting-Edge Innovation Hubs
Global Capability Centers (GCCs), also known as Global In-house Centers (GICs), have transformed from mere back offices into innovation hubs and Centers of Excellence (CoEs) in India. These offshore facilities, established by enterprises, now handle a wide range of functions and processes.
Evolution of GCCs in India
Initially, GCCs were set up for outsourcing tasks like data processing, document management, and customer service. Over the past 3 decades, the landscape of GCCs has undergone a significant transformation, Over the past three decades, the landscape of Global Capability Centers (GCC) has undergone a significant transformation, evolving from single-function Shared Service Centers (SSC) to multi-function GCCs.
Emergence (2000-2010): The concept of GCCs took shape in India in the early 2000s when multinational corporations, particularly from the United States and Europe, began to identify India as an appealing destination to establish offshore centers. During this period, GCCs concentrated on achieving cost efficiencies and operational effectiveness, offering vital support services like IT infrastructure management, application maintenance, and testing.
Maturation (2010-2020): During this phase, organizations began to recognize the potential of India not only for cost-efficiency but also for the high quality and expertise of its talent pool. GCCs broadened their focus from mere cost containment to encompass innovation and value generation. They undertook more intricate responsibilities such as product development, research and development, and analytics.
Transformation (2020-present): Today, these centers are increasingly acknowledged as strategic hubs vital to the global operations of their parent companies. GCCs in India have taken on a crucial role in propelling digital initiatives and transformation, including the implementation of artificial intelligence (AI), machine learning (ML), big data analytics, cloud computing, and the Internet of Things (IoT).
According to an EY report, How do you Supercharge Your Business Growth Through a Capability Center, as of FY 2023, the GCC market has expanded to reach a size of US$46 billion with a CAGR of 11.4%, accommodating over 1580 GCCs nationwide. This growth has been attributed to technological advancements and an increasing demand for digital native talent. Notably, there has been a notable shift in the focus of GCCs from providing services to delivering solutions.
Top GCC trend in India
Digital twin: In 2024, GCCs have transformed into dynamic "digital twins" of their headquarters. These digital twins mirror the parent company's digital operations and processes, allowing for seamless replication of all functions and operations. This enables instantaneous collaboration, synchronized decision-making, and a more unified organizational structure at the headquarters.
Centers of Excellence (CoE): Organizations are increasingly recognizing the imperative of establishing a change management CoE within GCCs to efficiently deliver accelerated transformative value. GCCs have assumed a pivotal role in propelling product development and innovation across diverse domains, including AI, cloud computing, engineering, data analytics, and cybersecurity.
Reskilling and upskilling initiatives: Considering the rapid technological advancements that are reshaping job roles and skill requirements, GCCs are proactively focusing on reskilling and upskilling initiatives to empower their workforce with the necessary competencies. By engaging in partnerships with educational institutions and harnessing the potential of online learning platforms, GCCs are actively investing in continuous learning programs to cultivate a future-ready workforce capable of adeptly responding to evolving business needs.
Expansion of functions: GCCs are enhancing their range of services by integrating modern offerings into their portfolio. They are broadening their services by incorporating specialized end-to-end activities in areas such as legal, marketing, and procurement, with increased investments in personnel, technology, infrastructure, and other resources across the value chain. This strategic diversification positions GCCs for continued growth and adaptability in the evolving business landscape.
Why India?
The success of GCCs in India can be attributed to a compelling combination of factors that make the country an exceptionally attractive destination for multinational companies. India boasts a wealth of highly skilled professionals in various industries such as technology, engineering, finance, and customer service. Their exceptional proficiency makes them a highly sought-after resource for businesses aiming to excel in their respective domains. Indian professionals are renowned for their strong work ethic, dedication, and high-quality work, ensuring that GCCs in India not only meet but exceed performance standards.
According to an EY report, Future of GCCs in India - A Vision 2030, it is estimated that by 2030, the GCC industry is expected to have a headcount of over 4.5 million as compared to the current base of 1.9 million. Indian cities such as Bangalore, Hyderabad, and Pune offer tech parks, business centers, and robust connectivity for GCCs to operate seamlessly and to grow. India's cultural affinity with the West and English proficiency further enhance GCC operations, enabling effective communication and collaboration with global teams and clients, leading to increased efficiency and effectiveness.
GCCs in India are highly flexible and scalable, enabling companies to quickly adapt to changing market dynamics, providing a significant advantage in today's competitive business landscape.
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GCCs play a pivotal role in India’s economy, contributing significantly to growth, employment, and innovation. Their key impacts are as follows:
·?????? Economic contribution: GCCs contribute over 1% of India’s GDP, attracting foreign investment, creating jobs, and boosting local economies by providing employment opportunities for skilled professionals.
·?????? Employment generation: GCCs employ millions of professionals across various domains, including technology, finance, research, and analytics, offering high-quality jobs, competitive salaries, and prospects for career growth.
·?????? Skill development: GCCs foster skill development by providing training, exposure to global best practices, and collaboration with cross-functional teams, enhancing India’s talent pool.
·?????? Innovation and research: GCCs drive innovation through research and development (R&D) initiatives, collaborating with local universities, startups, and industry bodies, contributing to technological advancements.
·?????? Technology adoption: GCCs adopt and implement emerging technologies such as AI/ML, Blockchain, Cloud Computing, and IoT, accelerating digital transformation across industries.
·?????? Business ecosystem: GCCs create a robust ecosystem by collaborating with local businesses, startups, and government bodies, facilitating knowledge exchange, partnerships, and industry growth.
What does the future hold?
The forecast for the GCC industry in India is optimistic as organizations intend to establish their GCCs in the country. Furthermore, GCCs are expanding their operations to various cities in India, diversifying their services, and recruiting individuals with specialized skill sets.
It is anticipated that the GCC market in India will reach a value of USD 110 billion by 2030, with 2,400 to 2,550 GCCs operating in the country. These GCCs will maintain a substantial presence in the IT sector while also extending their reach into other sectors such as financial services, manufacturing, healthcare, and consulting. With an increasing number of global leadership roles being established in India, GCCs will further enhance their position through emphasis on innovation, product development, and digital transformation.
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