NASSCOM: Key Factors Fortifying GCC Growth in India

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Navigating the complexities of today’s business environment, the Global Capability Centre (GCC) ecosystem in India has emerged as a key driver of growth and innovation. To better understand some of the top considerations for GCCs as they define their future roadmap, nasscom, in collaboration with KPMG in India, has released the key findings of its study titled, ‘GCCs in India: Building resilience for sustainable growth’ at its annual GCC Conclave held at Bengaluru. The findings presented are derived from the brief survey and interviews conducted by nasscom and KPMG in India with leading executives of GCCs in India across various size, scale, and industry sectors.

As of FY2023, India has over 1580 GCCs, with an addition of multiple GCCs every quarter. Several factors such as access to a wide pool of digitally skilled talent, the drive to adopt new technologies and the imperative to make greater customer impact are driving the growth of the GCC ecosystem in the country. This growth trajectory over the next two-three years is expected to continue with the growing number of global players across sectors establishing deep capabilities, building technology centers and transformation hubs.

However, this rapid growth and scale of GCCs has also brought to the forefront some associated challenges and considerations that need to be addressed as organizations continue to evolve. The paper identifies four considerations for GCCs as they move up the value chain. These include talent management, strategic emerging technology adoption, navigating regulations, and de-layering the concentration concerns.

Navigating the multifaceted & evolving talent landscape

As GCCs in India are transforming and moving up the value chain and roles are expanding and evolving. There is a growing demand for high value digital skills in areas such as automation architecture, cloud development, AI/Machine Learning, Data Science, etc. Given the competitive talent market, availability, attraction & retention of niche talent, building a pipeline of readily deployable talent with the new emerging skills, finding and nurturing, talent equipped for global leadership positions and cost arbitrage have emerged as key challenging factors facing GCCs in India.

Navigating these challenges, GCCs are leveraging innovative workforce strategy models, such as Hire-build-scale, borrow- augment & co-create, to achieve near, medium, as well as long-term goals. These organizations are embracing a comprehensive approach that ensures a steady stream of skilled individuals ready to meet emerging and future business needs, with a focus on both talent demand forecasting and building a robust talent pipeline. Further, these GCCs are also implementing measures to develop future-ready leadership, leading deep functional capabilities and stepping up to handle global roles.

Futureproofing GCCs in the age of emerging technologies.

Fueled by the rapid adoption of Emerging Technologies, GCCs are evolving from being conventional centres focused on transaction delivery and cost optimization to strategic transformation hubs focused on innovation and value creation. These centres are also developing capabilities on GenAI and streamlining GenAI governance/ adoption process for Global organisations. GCCs must strategically RethinkRedefine and Reimagine their approach, leveraging a four-tiered transformational ecosystem as they adopt and implement emerging technologies. Some of the key approaches include, fine-tuning the existing talent pool with a skill-driven continuous learning path to build and prepare for the change, redefining and identifying ways to reduce the impact of futuristic tech implementations on customer experience while ensuring value delivery, and reimagining value proposition, by building a futuristic and innovative workforce with cultural values through newer opportunities.

The report further underscores how navigating regulations is a key concern for GCCs, with over 55% of leaders emphasizing its importance for smooth operations. It identifies transfer pricing as the top regulatory consideration, followed by SEZ/STPI regulations and labor laws. To address these considerations, the report introduces a self-assessment compliance maturity framework to help GCCs evaluate their current standing and ensure adherence to regulations. As GCCs continue to evolve and adapt, proactive engagement with regulatory frameworks will be paramount in ensuring sustained success and contributing to India’s position as a global business hub.

The paper also expressed the view that it is essential to de-layer concerns around concentration. The reality of concentration concern goes beyond a simple headcount evaluation. By adopting a variety of metrics, GCCs can accurately identify critical exposures, thoroughly assess potential vulnerabilities, take proactive measures to mitigate the concerns and provide comprehensive reports to global organisations.

Commenting on the report, Mr. Srikanth Srinivasan, Vice President at nasscom said, “Over the last few years, we have witnessed a remarkable growth of GCCs in India with several factors are driving its growth. As GCCs continue their growth trajectory, moving up the maturity curve, with factors such as blurring geographic borders, and technology disruptions, these centres are constantly scanning the dynamic risk landscape and adapting to successfully navigate through.”

Sharing her insights on the report, Mrs. Shalini Pillay, India Leader – Global Capability Centre, KPMG in India, said: “India as a nation, is gearing up to attract many more global players to establish and scale their GCCs over the next 3-5 years.  As these GCCs continue to build, innovate and scale, adopting new operating models influenced by the emerging technologies, they are also equipping themselves to navigate through a dynamic risk landscape and hence further fortifying the resilience of this model.”