Arindam Sen, who leads the GCC strategy for the Media & Entertainment and Telecommunications segment at EY India, offers insights into the metamorphosis of India’s Global Capability Centres (GCCs), underscoring the emerging prominence of tier-two cities and the roadmap for future talent initiatives
The ascent of India’s GCCs is a window into the nation’s journey from an outsourcing hub to a nexus of innovation and strategic prowess. A shift is unfolding today, while the bustling cities of India — Bangalore, Hyderabad, and so on— have been the traditional torchbearers of this movement, tier 2 cities are now emerging not merely as alternatives, but as potent powerhouses in their own right. Beyond the economic allure of these cities lies a story of India’s expanding digital frontier, where technology isn’t just levelling the playing field but reinventing it. As businesses navigate this evolving terrain, recruitment isn’t just about filling positions anymore; it’s about securing the right talent that can drive innovation and foster strategic growth. The challenge is no longer about ‘where’ to find talent, but ‘how’ to engage, train, and retain it in an increasingly digital and decentralised India.
With the changing economic scenario and industry dynamics, GCCs are now faced with a dual challenge: driving innovation while maintaining cost efficiency. Arindam Sen, Partner, GCC Sector Lead-Technology, Media, Entertainment and Telecommunications, EY India aptly captures the essence, “Drawing parallels between a global construct like a GCC and an indigenous Indian IT giant is oversimplifying. GCCs have a singular focal point: the mandate from their parent organisation.”
It’s this unique positioning that compels GCCs to fine-tune their talent approach, veering from traditional transaction-centric models to ones that value high-calibre skill sets and innovative thinking.
The shift towards value
The reverberations of the COVID-19 pandemic accelerated many of these changes. Sen notes, “The emphasis on the employee value proposition — encompassing company culture, values, and the overall experience — found its momentum during the pandemic.” EY’s recent report underscores a significant trend: that of GCCs transitioning into centres of excellence with a digital-first mindset. The recruitment landscape is, concurrently, also undergoing a transformation. Now, it’s not just about hiring; it’s about attracting talent early on. Sen points out that the acquisition and onboarding process itself has morphed in response to the times. “Potential employees now begin their relationship with a company long before official job postings, often gauging a company’s culture and values via their online presence, especially on social media platforms,” he says. The EY report further highlights that India, with its robust regulatory system and political stability, remains a favoured destination despite global economic challenges. The nation’s standing in the IT and business services industry is stronger than ever, thanks to GCCs. Yet, it’s not all smooth sailing. The competition for top talent is fierce.
“The shift from a co-located work model to a more flexible approach has been significant. Yet, the effectiveness of such shifts remains to be seen,
The competitive landscape
“The talent pool is finite,” states Sen, highlighting the cut-throat competition for skills among GCCs, service companies, and startups. But there’s hope as the geographic scope of this pool is expanding. Sen talks about the shift from tier 1 cities, like Bangalore and Hyderabad to tier 2 cities like Visakhapatnam, Jaipur, and Coimbatore. The reasons for this shift are multifold. Tier 1 cities are approaching saturation in terms of infrastructure and talent pool availability. This saturation results in increasing operational costs and competition for top talent. On the contrary, tier 2 cities offer reduced operational costs, thereby increasing the appeal for MNCs.
“Centres like Pune, Chennai, Hyderabad, Bangalore, and NCR will always outshine cities like Jaipur or Kochi. After all, not every tier 2 city offers the same ecosystem as tier 1 cities,” says Sen, “Yet, the allure of a fresh, potentially cost-effective talent pool is undeniable.” However, this shift towards a decentralised work model brings forth new challenges. Experienced leadership, crucial for establishing and managing GCCs, is predominantly concentrated in tier 1 cities. As Sen insightfully points out, “Good, strong leadership with the kind of experience that’s required may not be easy to find in a tier 2 city, because so many people would have migrated from there previously to tier 1 locations.”
Peering into the future, Sen, thus, envisions a nuanced balance between remote and face-to-face interactions. As he predicts, tier 2 cities will play a pivotal role, but they may not overshadow the tier 1 hubs anytime soon.
Technology supports hub and spoke models
Consequently, many companies are exploring a dual strategy. Large companies, especially those with multi-centre setups in India, are keen on diversifying their portfolios. If a company has a major GCC in a tier 1 city, it might explore establishing a smaller unit in a tier 2 city, harnessing specific skill sets. This smaller unit may not replicate the tier 1 GCC in its entirety but will function in tandem with it, leading to a hub-and-spoke model.
“Technology has transformed the talent landscape post-COVID,” observes Sen. Remote work infrastructure now allows companies to tap into talent without geographical constraints, potentially reducing the migration of talent from smaller cities to metropolitan hubs. “The shift from a co-located work model to a more flexible approach has been significant. Yet, the effectiveness of such shifts remains to be seen,” says Sen. Predicting the future as companies grapple with the decision between a wholly remote workforce and a hybrid model, one thing becomes clear: the balance is essential.
“Tier 2 cities have talent, but companies must decide whether they want these talents closer to the office,” he says. In the EY report, Sen provides some eye-opening statistics and predictions about GCCs in India. By 2030, the GCC market is projected to be a whopping $110 billion, a significant leap from its current value. In terms of growth rate, the report states, we might see 100 to 115 new GCCs every year for the next five to six years. It also highlights that the talent pool will witness a surge, growing from the current 1.9 million to an astounding 4.5 million in the coming years.
These numbers don’t just represent new GCCs. A substantial portion of this growth will come from existing GCCs expanding their operations. These centres, having been in the country for years, are rapidly scaling up to accommodate global demands.
The integral role of training and development
As the demand for talent surges, the spotlight falls on training. India’s higher education system, despite its massive scale, often faces criticism for not being attuned to industry requirements. Progressive GCCs have started collaborating directly with academic institutions to bridge this gap. These partnerships ensure that the curriculum remains up-to-date, aligning with the fast-paced changes in the technology domain. Besides, learning and development (L&D) has started to play a pivotal role. Companies today have evolved their L&D strategies so it’s no longer just about classroom training; there’s a significant emphasis on online tools, platforms, and continuous learning. Job rotation is gaining momentum, with employees being encouraged to change roles every three years to stay updated with the fast-paced world. As Sen points out, “the world is changing as rapidly as we are,” emphasising the significance of staying relevant.
Good, strong leadership with the kind of experience that’s required may not be easy to find in a tier 2 city because so many people would have migrated from there previously to tier 1 locations
Sen lists other changes, he sees on the cards:
Hybrid Work Model: Recognising the necessity of in-person interactions, organisations might lean towards a balanced working model.
Prioritising Skills: Geographical location will become secondary to skills in the hiring process.
Commitment to Continuous Learning: With the relentless evolution of technology, upskilling will be non-negotiable.
Employee Wellness: Companies will integrate policies promoting holistic employee well-being.
Data-Driven Recruitment: Data analytics will spearhead recruitment strategies, offering deeper insights into candidate behaviours.
The future of GCCs in India seems promising, marked by growth, diversification, and an increased emphasis on talent development. But as we approach the dawn of a new era for GCCs in India, one thing is crystal clear: adaptability, continuous learning, and growth will define the future. Companies and candidates alike must navigate these waters with agility and foresight.
About the author: Arindam Sen leads the GCC strategy for the Media & Entertainment and Telecommunications segment at EY India. He has over 20 years of experience in digital transformation and enterprise IT systems. He is an engineer with an MBA from Duke University, and he champions diversity and talent development.