Jaspreet Singh, Partner and Clients and Markets – Leader, Advisory Services, at Grant Thornton Bharat LLP, shines the spotlight on this ongoing evolution to help us understand how these shifts will impact the talent landscape.
The Indian business landscape has undergone significant transformation over the past decade. One critical change has been the rise and success of Global Capability Centres (GCCs). Formerly known as offshore development centres, these hubs have evolved from mere back-end operations units to sophisticated, strategic parts of global firms. Their success isn’t just rooted in cost-saving strategies but in their ability to attract, nurture, and retain the crème de la crème of Indian talent. But what makes GCCs so attractive for India’s top-tier professionals?
From cost-cutting centres to innovation hubs
When we look back at the story of Global Capability Centres (GCCs) in India, it’s evident that the narrative has shifted dramatically over the past few decades. Pioneering multinationals like Microsoft, General Electric (GE), and IBM established their centres in India primarily driven by the potential of cost arbitrage. The initial model was straightforward: tap into India’s vast reservoir of skilled labour at a fraction of what they would expend in their home countries. Yet, as the years went by, many corporations began to see India not just as a hub for cost-effectiveness but also as a powerhouse of intellectual capital and innovative thinking.
Jaspreet Singh, Partner and Clients and Markets – Leader, Advisory Services, at Grant Thornton Bharat LLP, sheds further light on this ongoing evolution. He reflects, “In the last 15 years since the inception of the Global Capability Centres (GCC) in the country, the transformation within this domain has been nothing short of remarkable. At Grant Thornton, we’ve keenly observed these shifts and adapted our strategies to be at the forefront.”
Singh observes that in contemporary times, the appeal of GCCs in India has evolved beyond mere cost savings, pivoting robustly towards the realms of digital, cyber, and technology. This transformation, in Singh’s view, is fuelled by the government’s proactive digital initiatives combined with the country’s rich pool of skilled engineering talent. “The ripple effect of this change is palpable in our booming research and development sector,” Singh notes. “A case in point is the software that powers one of the world’s leading aeroplane engines – 60% to 70% of it is designed right here in India,” Singh shares.
Every three weeks, we witness the launch of a new GCC, translating into an addition of some 30,000 to 35,000 jobs annually. While Bengaluru was once the hub for such centres the momentum is now shifting to Tier 2 cities like Jaipur, Chandigarh, and Lucknow. These cities are becoming increasingly attractive for GCCs due to the abundant talent availability, cost-effective real estate, and higher job retention rates.”
Navigating the New Wave
Transitioning to the more immediate impact of this shift, Singh delves deeper into Grant Thornton’s interactions and strategic moves. “From our client interactions, a pattern has emerged. Over the last 18 to 24 months, every three to four weeks heralds the opening of a new GCC in India. The narrative has evolved from ‘Should we move to India?’ to ‘How soon can we make the move?’. Recognising this, Grant Thornton has been proactive in tapping into the talent pool emerging from various engineering colleges across the country. We’ve introduced the ‘Centre of Excellence’ concept. Under this initiative, we hire individuals and induct them into a comprehensive 15-day boot camp to hone their skills and align them with our objectives of shaping a Vibrant Bharat,” says Singh.
He adds that from a broader industry perspective, the growth trajectory is equally compelling. “Every three weeks, we witness the launch of a new GCC, translating into an addition of some 30,000 to 35,000 jobs annually. While Bengaluru was once the hub for such centres the momentum is now shifting to Tier 2 cities like Jaipur, Chandigarh, and Lucknow. These cities are becoming increasingly attractive for GCCs due to the abundant talent availability, cost-effective real estate, and higher job retention rates.”
A deeper dive into the shift towards Tier 2 cities reveals intriguing dynamics. According to a March 2023 report by EY India, from a talent perspective, Tier-2 cities in India are emerging as significant hubs for GCCs. The availability of skilled and employable resources has grown notably in these cities, with some like Lucknow and Mangalore ranking among the top three in employability, the report states. Specialisations and niche skill sets are burgeoning in these areas; for instance, Coimbatore is gaining recognition for engineering services. An added advantage is the relatively lower attrition rates in Tier-2 cities compared to their Tier-1 counterparts. This shift is further accentuated by the post-pandemic trend of professionals returning to their home locations in Tier-2 cities, leading to a rich talent pool in these areas. This talent advantage, combined with the cost benefits and improving infrastructure, positions Tier-2 cities as attractive destinations for GCC expansion.
“India’s rise as a pivotal player in the GCC landscape is a testament to the country’s digital prowess, evolving governmental policies, and unparalleled talent pool. At Grant Thornton Bharat LLP, we are both witnesses and participants in this transformative journey,” says Singh.
While India’s technical and policy advancements undeniably play a part, the underlying force that powers these centres is the talent they attract and nurture. For many top-tier professionals in India, the allure of GCCs isn’t just the promise of a competitive salary but also the promise of growth, continuous learning, and being at the forefront of global innovations.
Championing diversity and inclusion
Additionally, an interesting aspect of the GCCs in India is their increasing commitment to diversity and inclusion. With the tech world grappling with underrepresentation, GCCs in India are making strides in fostering a diverse workforce. GCCs in India boast a 35% female participation rate, surpassing the national average of 21%. Post-pandemic shifts offer GCCs an opportunity to bolster their recruitment and retention from diverse talent pools further, addressing prevailing biases and disparities in pay and promotions. And, as several studies have shown, diversity makes great business sense. GCCs in India have taken note of such findings, and are working to ensure a broader representation in their teams.
The ascent of GCCs in India to positions of strategic importance in the global plans of multinational corporations speaks volumes about the country’s ability to adapt, innovate, and lead. India’s GCC story is far from over. As Singh says, we are all witnesses and participants in this transformative journey, a journey that promises even more exciting chapters ahead.
About the expert: Jaspreet Singh is the Partner and National Leader for Clients and Markets (Technology and Transformation) at Grant Thornton Bharat LLP, where he manages large-scale transformation programs for marquee global clients.