India became the preferred offshore location for Business Processing Outsourcing (BPO), also known as call centres by the average middle-class household, at the beginning of the twenty-first century.
To promote global customer support, multinational corporations from AOL to MSN looked to India to capitalise on language proficiency and process intelligence.
Suddenly, coaching classes and finishing schools proliferated across the nation, and night shift work became the norm. This was likely the first time the globe sought critical IT-related assistance from India.
Two and a half decades later, India dominates the world in creating tech-enabled, end-to-end solutions to global problems. India is leading the way in unlocking innovation by becoming a global centre for Global Capability Centres (GCCs) as it strives to reach its goal of becoming a $5 trillion economy by 2025.
The fundamental distinction between BPOs and GCCs is that BPOs allow you to leverage your expertise in specific, typically narrow fields, whereas GCCs enable the country's intellectual capital to continuously generate value and have an impact through end-to-end innovation.
In turn, this affords India the chance to make new discoveries and become a one-stop shop for high-end technology-enabled innovation.
According to a recent study by Axis Capital (India Strategy Report, 7 August 2023), the number of GCCs in India has doubled between 2012 and 2023, with a 280,000 increase in GCC headcount in the first half of 2023 alone.
Today, more than 17 lakh employees work in GCCs, making the sector as large as, if not larger than, tier-1 IT firms, with a Compound Annual Growth Rate (CAGR) of 12,1% from 2018 to 2023.
Additionally, the Axis Cap report reveals that "all companies are now tech companies" and are fueled by thrifty innovation, local market access, and end-to-end business process ownership.
Multiple global studies confirm that GCCs have arrived in India with long-term objectives and strategies. According to a press release from the global authority in professional services and real estate, JLL, India is home to more than 1,800 global capability centres, a number that is projected to increase to approximately 2,300 by 2025.
The study reveals that technology companies and Banking, Financial Services, and Insurance (BFSI) firms are the primary GCC lessees. account for approximately 64% of the GCCs.
New technologies such as AI/ML, Engineering/Manufacturing, Data Science, and robotics were crucial to the new GCC demand in the country, which was still dominated by technology.
According to JLL's GCC guide 2023, Bengaluru, Hyderabad, Delhi NCR, Mumbai, Pune, and Chennai are the most popular destinations for global capability centres in India due to their robust infrastructure, access to talent, and supportive ecosystem.
These centres have contributed significantly to India's economic development by providing high-quality employment opportunities and boosting the country's gross domestic product.
These GCCs, which represent multinational corporations in India, span numerous industries, including technology, engineering, and consulting. In fact, India has become the destination of choice for many innovation centres due to its large pool of talented and skilled professionals, cost-effectiveness, and supportive government policies.
The survey also reveals that government impetus and support, along with the availability of a high-quality talent pool, facilities and technology infrastructure, and cost-effectiveness relative to the West, are genuinely fueling the expansion of GCCs in India.
This is demonstrated by the fact that fifty percent of the world's GCCs are headquartered in India, making India home to the largest concentration of Fortune 500 GCCs in the world.
According to NASSCOM, GCCs are now focusing on high-value activities such as the creation of intellectual property, the development of competencies around emerging technologies, the establishment of centres of excellence, and the complete ownership of vendor management.
There are a growing number of Indian GCC leaders with global responsibilities, and the GIC governance model is increasingly based on accountability. Through partnerships with start-ups, universities, and service providers, GCCs have also incorporated more deeply into the Indian ecosystem.
In addition, GCCs have taken on the digitisation mandate for their parent companies, assisting the parent in becoming a future-ready digital enterprise. NASSCOM has also outlined the next phase of growth for GCCs in India, which includes, among other things, capturing newer industry segments and diversifying competencies, accelerating the process of producing leaders, collaboration, and networking.
In addition to the government's impetus, global consulting firms such as E&Y and Deloitte are assisting multinational corporations by providing blueprints and visions to generate value through India-based GCCs. The most recent (June 2023 edition) of the NASSCOM-Zinnov biennial report on the GCC India Landscape, titled 'GCC 4.0: India Redefining the Globalisation Blueprint,' suggests that GCCS are increasingly maturing in a 4th wave, as they leverage scale, innovation, delivery excellence and leadership which lies at the core of India’s GCC progression”.
“India is at the epicentre of the GCC 4.0 wave, where India GCCs and their leaders are redrawing the blueprint of globalization by going beyond a cost and scale retrospective,” said Pari Natarajan, Chief Executive Officer of Zinnov. “They are helping their HQs solve new problems across business, technology, and people”.
Zinnov predicts that by 2025, India-based GCCs will employ 2 million individuals and have a market size of $60 billion (it is presently worth $46 billion).
India is remaining afloat and resilient in the face of global business turbulence, insulating itself from global slowdowns, while emerging as a crucible in the arena of global capability centres.
Mark Papermaster, Chief Technology Officer of semiconductor products leader AMD, stated in an interview with Financial Express:“The India team plays a role in the design of nearly every AMD chip across our diversified portfolio in high-performance CPU, server, data centre GPU, gaming graphics, PC, adaptive computing and embedded devices”.
More is anticipated: The corporation has allocated $400 million for the construction of a 500,000-square-foot design facility in Bengaluru.
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