Global Capability Centers: Transforming India into a Tech Powerhouse
According to a recent industry report, the GCC market in India has grown at a compound annual growth rate (CAGR) of 10-12% over the past five years, with the market size projected to reach $60 billion by 2025. Indian IT firms are reaping significant benefits from the country’s emergence as a hub for global capability centers (GCCs). These centers, which now number over 1,600, are driving substantial revenue growth for IT companies.
As of FY24, GCCs contributed approximately 25-30% of the total revenue for top-tier Indian IT firms, up from around 18-20% in FY20. The number of GCCs established in India has surged, with over 500 new centers set up between 2018 and 2023. This growth is reflected in the financial performance of IT companies, some of which have reported a 90% increase in GCC-related business over the past fiscal year.
India’s IT service providers are playing a crucial role in delivering innovative solutions and cutting-edge research across various technology domains. For instance, the adoption of generative AI, IoT, blockchain, and cybersecurity services within GCCs has led to a 15-20% increase in technology investments by global clients in India. Additionally, the demand for digital transformation services in GCCs has surged by 25% year-on-year, highlighting the growing importance of these centers in the global tech landscape.
The collaboration between IT firms and GCCs is also driving employment growth in India. The IT-BPM (Business Process Management) sector, which includes GCCs, employed over 4.5 million people as of 2023, with a significant portion of these jobs being created in the last few years due to the expansion of GCCs. The sector is expected to add another 500,000 jobs by 2025, fueled by the increasing demand for skilled professionals in areas like AI, machine learning, and digital engineering.
In recent developments, IT firms have secured several multi-million-dollar deals to establish offshore development centers in India, supporting agriculture, construction equipment, and telecommunications industries. For example, one notable deal involved the creation of a 100-member development center, focused on plant engineering, product development, and digital manufacturing, contributing to the 12% year-on-year growth in the engineering services outsourcing market in India.
Strategic joint ventures between IT providers and global corporations are becoming more common, with these partnerships contributing to a 20% increase in revenue for some firms. Such collaborations, often involving a hybrid approach that combines in-house teams with third-party service providers, enable businesses to leverage the best talent and processes while maintaining critical control and strategic direction.
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The GCC landscape in India is evolving rapidly, with many centers climbing up the value chain and focusing on more complex, high-value tasks. Over the past three years, this evolution has led to a 30% increase in the average deal size for IT firms involved with GCCs. Additionally, the acquisition of GCCs by Indian IT firms has become a notable trend, with several high-profile deals contributing to the consolidation of capabilities and expertise within the Indian IT sector.
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