Global Captive Centres (GCC) & Shared Service Boom. Multinational corporations will create over 3 lakh tech Jobs in India. Techies have an excellent news about fast technology hub expansion, which produces many employment and improves payrolls, but it represents a concern to the IT services businesses, such as TCS, Infosys, HCL Tech and Wipro.
India is the preferred location for International organisations aiming to establish technology centres, as they see enormous potential in the country’s availability of qualified technical manpower, favourable operating climate, and English fluency.
Additionally, the COVID-19 epidemic has hastened digitization and alleviated worries about remote labour patterns, allowing these firms to establish their technology captives here with more confidence.
Global corporations are making a beeline toward India.
While there was a little decline in new GCCs (global captive centres) starting in 2020 as businesses adjusted to the pandemic, there has been a considerable surge in new GCCs launching this year, with over 40 new ones in different stages of establishment since the beginning of the year.
Giant Eagle, H&M, Ikea, GSK Pharma, 7-Eleven, Fiat Chrysler, Lululemon, and Cardinal Health are among the companies that have established technological centres in India in recent months.
Not only a matter of cost arbitrage
“While cost arbitrage was the primary reason corporations established GCCs in India in the early 2000s, these have matured into strategic assets that offer firms with a considerable competitive edge. Omnichannel, mobile, cloud, digital, and information security are no longer optional competencies – they are critical capabilities for businesses to remain competitive,” according to Lalit Ahuja, founder and CEO of ANSR Consulting.
Lalit Ahuja advises multinational firms and has assisted in the establishment of over 60 GCCs in India and Poland. He continued by stating , captives today provide value beyond cost arbitrage and have an impact on business results.
Additionally, as a result of digitalization, businesses consider that technology is critical to their operations and that they should own it rather than outsource it.
“Captives are aggressively expanding their activities in India, and strangely, some of them are reestablishing captive centres after selling them a few years ago. These organisations are leading the agenda for change and innovation. Thus, Global Captive Centers (GCCs) have been renamed Global Innovation Centers (GICs),” Ramkumar Ramamoorthy, Pro Vice-Chancellor of Krea University and former chairman of Cognizant India, said.
Ramkumar Ramamoorthy said that the increase is also due to India’s tremendous skill pool across a wide range of digital technologies, products, and platforms.
India has around 700,000 workers proficient in digital technology in 2019. This figure is estimated to be increasing by 30% or more per year, thanks to businesses upskilling and reskilling current staff.
“No other nation can claim to be a global powerhouse of digital talent,” Ramkumar Ramamoorthy remarked.
Ramkumar noted that, after a decade of ups and downs, captives are expanding up to 30,000-40,000 personnel, with new entrants establishing their digital goods and solutions in India.
“As a result, captives have increased their participation to more than 25% of Indian IT export revenue,” Ramkumar Ramamoorthy added.
In India, large banks are recruiting big time. According to analysts major banks such as JP Morgan, Citi, HSBC, RBS, and S&P are ramping up their captive operations in India to recruit tens of thousands of staff.
In three years, 3 lakh IT jobs will be created in Shared Services / Captive Centers.
“We anticipate that at least 150-200 new firms will establish GCCs in India during the next three years. There will be an extra 300,000-350,000 jobs created over the next three years as existing GCCs expand and new GCCs are established,” Lalit Ahuja added.
Apart from bulge bracket banks and retail chains in the United States, a large number of mid-market enterprises, startups, and product firms from regions such as Eastern Europe, Southeast Asia, and the Middle East are also flocking to India.
“Covid-19 demonstrated the critical role of remote, collaborative teams in mitigating business impact and disruptions, confirming the GCC model,” Lalit Ahuja noted.
Deutsche Bank’s Dilipkumar Khandelwal, Global Chief Information Officer for Corporate Functions and Global Head of Technology Centers, recently told an business media that the bank would increase its investment in technology infrastructure, with India playing a critical role in the bank’s digital transformation. It has designated four areas for technology hubs, with India being the largest. Its India technology centre now employs 4,000 people, with the bank hoping to expand.
Will Captive / Shared Services ruin the Third Party information technology Provider?
While the captive growth benefits IT workers in terms of employment and compensation, it represents a danger to IT services firms like as TCS, Infosys, HCL Tech, and Wipro, as more customers choose to insource rather than outsource.
“It is true that huge organisations are actively expanding their in-house capabilities, depriving third-party service providers of employment. However, the massive need for digital and other IT expertise is eclipsing this trend and generating a robust growth market for service providers,” Everest Group CEO Peter-Bendor Samuel said.
Thus, although businesses may prefer to in-source in the long run, the present demand for IT projects means they cannot ramp up internal talent quickly enough, especially in the hard-to-find digital skill space.