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Until 2010, GCCs were mostly outposts of multinational corporations (MNCs), providing technology and operational support to the parent company, according to Zinnov, a management consulting firm. By 2015, they had matured into satellites, offering more comprehensive solutions in select business lines.
In the decade that followed, they evolved further into centralised hubs for a range of technologies. They piloted innovative projects and developed expertise in areas such as artificial intelligence, analytics and blockchain. Now, in 2024, they are managing global transformational projects, impacting profits.
As MNCs – mainly from the US but increasingly other markets too – see the potential of GCCs, they have been setting up centres in India and stepping up their investments. In 2023-24, India had about 1,700 GCCs employing about 1.9 million people, up from 1,580 GCCs and 1.65 million employees a year earlier, according to Nasscom and Zinnov.
Against the year-on-year personnel growth of 14.5%, revenues of GCCs in India jumped 40% to $64.6 billion. In contrast, Indian IT services companies grew 5.5% in 2023-24 and are projected to grow 4-6% in 2024-25, according to rating agency Icra. This is only partly because of their higher base. Demand for IT services has been muted in the past couple of years. GCCs, on the other hand, have been accelerating, as MNCs seek to leverage local talent, reduce costs and enhance their operational efficiency.
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Talent hotspot
India has a large number of engineers talent, second only to China. The country has about 3.74 million software engineers that centres of excellence can tap. This is a shade below China’s 3.76 million, and 58% more than the US, which is at No. 3, according to Zinnov’s CoE Hotspots of the World report published in May.
The IT services sector has traditionally absorbed this talent. However, owing to muted demand, they reduced hiring in 2023 and most of 2024. The total headcount of the top five IT companies declined for seven quarters in a row before it picked up in the September quarter. GCCs’ appetite for talent came at the right moment. GCCs also pay 12-20% more than IT services and non-tech companies for similar roles, according to a TeamLease Digital report. Established GCCs have also started hiring from campuses, even as IT services have slowed down fresher hiring.
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Beyond the top 6
GCCs are expected to step up their hiring in the coming years. HFS, a research and analysis firm, estimates that GCCs will employ over 2.7 million people by the end of 2026 and 4 million by 2029. They are currently concentrated in cities where the IT services sector boomed, but that’s changing. In 2019, Bengaluru accounted for 34% of all GCC units in the country (a single GCC can have multiple units), which is now down to 30%.
The share of smaller cities has increased from 5% to 8% over this period. Smaller cities such as Jaipur, Vadodara, Nashik, Coimbatore, Bhubaneswar and Indore are emerging as alternative centres for GCCs as they are less expensive than metros. State governments have recognised the employment potential of GCCs. This year, a number of them, including Karnataka, Uttar Pradesh, Gujarat and Tamil Nadu have launched policies offering incentives to new GCCs, especially in tier-II cities.
Transition ahead?
EY projects the Indian GCC market will be worth $101-117 billion by 2030, driven by “a skilled workforce (especially tech-related), expansion into tier-II cities or satellite centres, favourable government policies and improving infrastructure”. While IT services companies initially saw GCCs as competitors, they are now becoming collaborators. Capgemini, for example, has said it sees GCCs as potential customers, works closely with them and has co-hosted captives on its campus.
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However, as the industry matures, competition will likely intensify, especially as GCCs start offering their services to third parties. Some large IT and BPO firms started as captives. Cognizant started as a captive of Dun & Bradstreet and has become one of the top five IT services companies. Similarly, Citigroup’s captive BPO arm, Citigroup Global Services, was taken over by Tata Consultancy Services in 2008. With all this, GCCs seem set for even more growth.
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