India is emerging as a global powerhouse with successes ranging from its rapid economic growth to a successful landing of Chandrayaan-3 on the uncharted south pole of the Moon. Amidst these achievements, a new revolution is unfolding in the Global Capability Centers (GCCs) located in our country, emphasising the creation of value rather than merely focusing on cost arbitrage, a characteristic traditionally associated with Indian growth stories. This is a journey of talent from optimising costs to migrating towards environments that offer greater opportunities for value creation.
The Indian IT sector, known for its prowess in cost arbitrage powered by native talent, is undergoing a remarkable resurgence with the proliferation of GCCs. NASSCOM projects Indian GCC exports to reach $46 billion in 2023-24, while Wizmatic, a consulting firm, offers a more optimistic estimate of $120 billion for the same period.
Regardless of the exact figure, the burgeoning growth of GCCs within IT companies signifies a new trend and a fresh growth narrative for the country, one centred on value creation. This shift towards prioritising value over cost arbitrage is not confined to the IT sector alone; other segments, including analytics and finance, are also part of this transformative growth. As a result, GCCs are poised to become significant contributors to India’s economic landscape, paralleling the growth story of the nation’s iconic IT industry.
From Back Office to Drivers of Digital Transformations
A BCG (Boston Consulting Group) study projects a substantial increase in India’s GCC employee base from two million to five million by 2030. Beyond the numerical growth, the expansion of GCCs in India is also about the evolution of back offices to hubs creating digital transformations. This is underscored by the crucial role played by high-quality talent involved in cutting-edge value-creating technological domains as opposed to driving cost-arbitrage only. An apt example is the global financial services company, Sun Life, which has established a strong presence in the country.
The technology talent in Sun Life Global Solutions (SLGS), the GCC arm of Canadian insurance major Sun Life, is driving digital transformations for its global clientele. The resources in India are highly talented and wield a diverse set of advanced technologies including Artificial Intelligence (AI) and Machine Learning (ML). Their expertise is instrumental in crafting innovative digital solutions and delivering data-driven insights. Going beyond traditional services, Sun Life’s strategic emphasis encompasses value-based delivery, consulting and solutioning, all made possible by the expertise of its Indian talent pool. The company has been growing annually at 12 per cent CAGR, reflecting the overall growth trend in the GCC market in India.
The emphasis on acquiring high-quality talent (to create value) is evident in the recent trend of Global Capability Centers emerging as major recruiters on campuses. Their hiring focus is on recruiting manpower skilled in cutting-edge domains such as AI, ML, prompt engineering and cybersecurity. Positioned for expansion, GCCs are increasingly leveraging India’s vast talent pool in high-tech areas, signalling a shift towards fostering an innovation-centric mindset.
Creating Innovation-Based Value
Integrated with research and development, India’s GCCs are evolving into innovation hubs. The future lies within these Capability and Innovation Hubs (CIH) with top-tier talent creating innovation-based value by leveraging data, blockchain and Generative AI. BCG predicts a 10 per cent CAGR growth in global CIH spending, projecting it to reach $715 billion by 2027, a substantial increase from its current size of $465-510 billion.
AI is spawning innovation in these GCCs in India. Embracing AI technologies, these centers are ushering in an era of operational efficiency and strategic excellence, creating inventive value propositions and revolutionising customer and client experiences. BFSI companies are integrating digital and AI, including generative AI to elevate customer experience, streamline operations, prevent fraud and devise innovative solutions that cater to the evolving needs of their clients. An interesting application from Sun Life involves the innovative use of facial analytics, utilising remote photoplethysmography (rPPG) to determine health risk scores and vital statistics of individuals. This technology analyses video streams of a person’s face to extract health measurements and assess risk factors. The information derived can be employed for accelerated medical underwriting and fostering lifestyle changes through wellness solutions.
Diversity and Inclusion
India’s GCCs are making significant strides in promoting workplace inclusivity, women’s empowerment, positive employee mental health and cultivating a healthy, flexible workplace culture, etc. – all key elements of an environment that enables value creation. Sun Life, as an exemplary case, has a gender diversity rate of 43 per cent, and it is actively broadening the scope of diversity to include persons with disabilities (PwD), promoting neurodiversity and supporting LGBTQIA+ inclusion.
With an aim to deepen inclusion and empower their people to feel psychologically safe, accepted, valued, and connected with the organisation, SLGS has expanded its DEI charter to include Belonging, thus making it DEI&B. The company is leveraging Employee Resource Groups (ERGs) to champion and support their DEI&B initiatives. These groups provide safe spaces for employees with shared backgrounds, experiences, or interests. ERGs play a vital role in fostering inclusion, raising awareness, identifying, and addressing workplace challenges, offering developmental opportunities, and driving positive change within the organisation. It also includes the Women in Tech chapter.
SunStree in India, for instance, is their women employee network, which plays a pivotal role as a platform for fostering a robust network among women employees. SunStree is dedicated to identifying and addressing workplace challenges faced by women, offering developmental opportunities to support their advancement and creating an open and interactive learning space. SLGS India also has a Working Families ERG and Women in Tech chapter under SunStree. SLGS Philippines has Bright Women, Pride (LGBTQ+), DiverseAbility (Persons with Disability) and DEKADA (Inter-generation) clubs/ERGs aligned with the Global Sun Life DE&I Inclusion Networks.
The landscape of operational Global Capability Centres in India is poised for significant expansion, with expectations of a 20 per cent surge from the current 1,580 to 1,900 by 2025, as per a report by real estate consultancy CBRE in November 2023. Evolving beyond their origins as mere back-office support for multinationals, GCCs have now assumed a pivotal role in building global solutions and generating additional revenue streams through technology-driven innovations. Fuelled by high-performing talents and progressive workplace cultures, this growth trajectory reflects a strategic approach that balances cost-effectiveness with the creation of sustained value, differentiating it from earlier cost arbitrage-based growth engines in the country.
In essence, the emergence and revolution of GCCs mark a journey of providing intellectual leadership and delivering impactful, value-based solutions from India.
Rajesh Mehta is a leading International Consultant in the field of Market Entry, Innovation and Public Policy. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect News18’s views.
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