As a regular reader, now a days it is very difficult to miss news around GCCs’ (Global Capability Centres) in media. It shows how much this business has moved to centre stage in last few years, particularly after Covid. GCCs’ growth in India is quite a phenomenal and remarkable story. Once humble support centres and now have become dynamic innovation hubs at the forefront of global business evolution. It is a quite an amazing journey of evolution, adorned with anecdotes of resilience, ingenuity and the relentless pursuit of excellence. Recent (FY23) GCC nos speak for itself with $46b in Revenue, 1.66m in people employed & 1580 Centres. The future looks even more robust with the estimation of $100b in revenue and 4.6m in resource count by 2030 by Industry Analysts.
Early Days: In the late 1990s, multinational corporations are venturing into uncharted territories, seeking to leverage India’s burgeoning talent pool and cost advantages. Enter the first wave of GCCs, set up as offshore delivery centres, with a primary focus on providing basic support services. From handling IT operations to managing operational requests/transactions, these centres laid the foundation for what was to come, albeit in the shadows of their parent organizations. Initially centres were managing piece of IT operations and Tech support and moved up to manage entire gamut of IT operations. Mostly the early starters of this phenomenon were multinational Tech companies like Microsoft, IBM, Accenture, Oracle HP and few others.
The Inflection Point: With the dawn of the new millennium approached, winds of change began to blow across the Indian IT landscape. Y2K was a turning point for the IT services industry and IT services business took off to a different level. IT services companies started hiring in large nos to cater to the growing need and fix the Y2K bug for the corporations across the world. The momentum picked up in Y2K continued unabated and IT outsourcing work portfolio expanded with large scale Application development & maintenance, SW testing, IT infrastructure support, Engineering services etc. As IT outsourcing to Indian IT services companies grew, there was a rub of effect on GCCs as well. The no of GCCs being setup in India grew steadily and this time multinational banks like Bank of America, Goldman, JP Morgan, HSBC and few others jumped the bandwagon. Lead by the Global IT services firms and BFSI companies many large global corporations have set up their capability centres in India and slowly started growing them.
Progression over the years: Initially global companies followed 2 prong approach by outsourcing large and complex piece of work to IT services firms and outsourcing (rather insourcing!) some of the basic work to their own GCCs. Thro’ mid 2000s to 2010s GCCs grew steadily in India both in no’s, scale of operations and capabilities. These centres have moved up from shared support centres (Tech support /Business operations centres) to delivering core product and application development work, Business operations, R&D work etc. In fact, the IT services companies were the favourite hunting ground for GCCs. With India having very large and well-developed IT services firms, GCCs got the demand fulfilled relatively easily, with higher pay package being the major attraction.
Fuelling Business Growth: As the years passed, GCCs emerged as key drivers of business growth for their parent organizations. With their newfound focus on innovation and technology, they became hotbeds of creativity, generating groundbreaking ideas and solutions. From accelerating product development cycles to enhancing operational efficiency, GCCs played a pivotal role in shaping the future of their industries and fuelling the growth ambitions of their parent companies. Across the industries there are numerous examples of GCCs helping their parent organisation’s business growth. There are many case studies speak about GCCs’ role in product enhancement/development, reengineering applications and platforms, re-imagining the processes and cutting down the cycle times, improving the risk management and compliance, Improving customer experience and engagement and so on.
Adding value to business & Economy: Moreover, GCCs started to take on strategic roles within their parent organizations, providing valuable insights and market intelligence to support decision-making and drive business expansion. From identifying emerging market trends to evaluating potential investment opportunities, GCCs became trusted advisors, guiding their parent companies through the complex terrain of global business. A large Retail GCC collaborated with parent’s global teams to develop a cashier-less shopping experience that uses computer vision and machine learning algorithms to track customer purchases. A Manufacturing GCC has collaborated with parent’s global teams to develop advanced manufacturing processes for aerospace components.
Going beyond Traditional path: As the demand for innovation grew, so did the scope of GCC operations in India. No longer confined to traditional support functions, GCCs began to explore new avenues of growth and diversification. Research and development (R&D) emerged as a key focus area, with GCCs spearheading groundbreaking research initiatives and collaborating with academic institutions and startups to drive innovation. In the age of digital disruption, GCCs in India embraced the wave of technological innovation sweeping across industries. Leveraging advancements in artificial intelligence, machine learning, and data analytics, GCCs drove digital transformation initiatives that revolutionized business operations and customer experiences. Post Covid the digital transformation initiatives have taken huge leap. For instance, a leading GCC in Bangalore developed an AI-powered chatbot that revolutionized customer service operations, reducing response times and enhancing customer satisfaction. Similarly, a GCC in Pune implemented a blockchain solution to streamline supply chain processes, improving transparency and efficiency across the entire value chain.
Changing People Dynamics: For a very long time the IT services companies (Particularly Tier-1 like TCS, Infosys, Wipro etc) were the major drivers of IT employment in India. GCCs always were able to give better Pay package, however they have lagged IT services firms in quality and variety of the work content, engaging work environment etc. They mainly relied on experienced professionals from the traditional IT services firms and they could tap them with higher pay. However, as GCCs moved beyond basic services, their profile and attractiveness to the resources has dramatically changed. Today GCCs have become much more attractive to IT professionals due to cutting edge tech work, opportunity to learn the domain knowledge & global best practices with the end-to-end exposure to business processes, better work and HR policy environment etc. GCCs have also started venturing to colleges/universities and tapping on to fresh talent, which was not the case decade back. So, today GCCs have become lot more attractive to IT talent beyond just attractive pay package.
Collaboration at work: GCCs have already started having collaborations with Academia in terms of giving inputs and refining the curriculum in line with business needs. Similarly with Startup Eco system by working together to resolve business problems and thus bringing tremendous value addition to parent organizations. One European large Re-insurance company is training people on Insurance domain, risk assessment and making them not only employable, but very valuable too. A Global Pharma major engages with Startups to improve operations, offerings and products.
The way Forward: Today, GCCs in India stand at the threshold of a new era of innovation and growth. With the rapid pace of technological advancement and the shifting dynamics of global business, the journey of GCCs is far from over. As they continue to navigate the ever-changing landscape of business, one thing remains clear: their spirit of innovation, resilience, and excellence will continue to light the way forward, guiding them towards new horizons of success and prosperity.
The transformation of GCCs as R & D powerhouses, engineering centres, co-creation and innovation hubs is a testament to the country’s growing stature as a global powerhouse in technology and innovation. I guess from Indian economy standpoint, GCCs have created formidable Triple Engine IT eco-system by complementing IT services companies (our famed original torch bearers) and the fast-growing Startup eco-system. GCC eco-system not only sharpens the Tech knowledge, it imparts deep domain and process knowledge as well. I think deep domain knowledge is key to products and it can trigger a wave of IT products/platform eco-system as we move forward. As GCCs grow leaps and pounds they will have profound impact on the Indian business environment and Talent eco system. From their humble beginnings to their current stature as drivers of growth and transformation, GCCs have come a long way indeed.
