In the 1990s, India was identified by MNCs as an ideal location for setting up what was then called offshore captive centres. Formed as an alternative to outsourcing, they served as the cost-saving centres to deliver IT and business process services to companies headquartered mostly in the western world. 

In recent years, Global Capabilities Centres (GCCs) have been growing in output and value proposition, especially with advancements in digital technology. A 2021 report jointly created by Deloitte and NASSCOM named India the ‘global GCC capital’ with a 50% share in the global market. As per the report, the GCC sector is expected to grow to USD 85 billion in annual revenue in the next six years.

Besides the rapid growth, GCCs are assuming a more influential role in innovating on budget. The days of GCCs’ functionality being just restricted to back-office operations are over. MNCs are expanding their current facilities and establishing new Centres of Excellence (CoEs). At this point, GCCs are undergoing a major makeover. Analytics India Magazine spoke to Sukanya Roy, head of GCC and BPM at NASSCOM, to understand the trend and future of GCCs.

GCCs in India

Right now, about 1,500 companies have their GCCs in India, which are about 2,700 in number. In just the past quarter, 19 more organisations have been added to the list, about 70 new companies getting added every year, Roy told AIM. “For this reason and more, GCC is a very important segment for us. A lot of companies are finding opportunities and strong talent leverage in India. Additionally, the work that these GCCs are doing is exceptional. We have a strong industry council that works closely with NASSCOM to identify levers that will help the industry leapfrog,” she said.

Introduced over 25 years ago, GCCs are flourishing in the country, more so in the past five-six years. “The transformation has essentially happened in the way we look at these India GCCs, in terms of value. A tech leader recently said that India is not necessarily the cheapest in every skill anymore, but it is fine as long as the higher value is delivered,” she said.

Today, the GCCs work with more focus on ownership, the business of the organisation and innovation. GCCs in India are now working under the leadership of seasoned professionals, this helps these centres to be more aligned with the larger purpose. “There is a lot more global leadership in India now. Earlier, the Indian managers would just handle the India team, but now they have the whole global portfolio and teams reporting to them from across the globe,” Roy said.

Speaking of talent, one of the major reasons that motivated MNCs to set up GCCs in India was the availability of highly skilled labour at lesser cost. But as salaries go up, does this reason still hold good? To this Roy rightly pointed out that comparison of salaries from 25 years ago to now is an exercise in futility to begin with. India continues to remain a competitive market. “Like I said, there is no denying that salary costs have gone up, but MNCs continue to scout for Indian talent because they are getting value for their money. As an industry, we must ensure that the India market scales up and enhances the kind of output it produces,” Roy said.

When asked, how long must India remain the back office of the world before transforming into an innovation hub, Roy said, “We have to understand that not all the people involved with GCCs can work at a super transformation scale. That said, it does not mean that they are not innovating. Innovation is being carried out by only a certain number of teams, others are involved in equally important tasks like continuously using data to figure out ways to help customers, and thinking about investments, etc,” she said.

Getting to the serious business of innovation

India is getting ready for the upcoming G20 Summit, set to take place between November 15 and 16 in Bali. This edition of the summit is doubly significant for the country as she takes up the role of the summit president. India is helping countries through the digital strategy that would define the upcoming ‘techade’ – portmanteau of technology and decade – implying the next era belongs to great technological innovation and progress.

NASSCOM is playing a major ally in cementing India’s position as a tech leader. For instance, NASSCOM has an AI CoE, which is working with the industry and the government to ensure higher adoption of the technology. The body has also launched a responsible AI framework recently. Additionally, in the context of GCCs in India, NASSCOM is helping them set up their own CoEs. “We help companies in charting down how they can build their CoEs in India and act as enablers. We offer them different options, models, and tell them about the various risks involved in terms of operation and building capability,” Roy said.

“As GCCs continue to grow further, they could use assistance from the government in terms of rapid workforce development and skilling, bring out strong data-related policies, and improve ease of doing business,” Roy concluded.