GCCs continue to scale in India

While top IT companies are going slow on hiring, some of the large Global Capability Centres (GCC) in India continue to scale. In the last two weeks, global companies like Natwest, Deutsche India, and Citi Solution have announced major employee addition in India.

NatWest Group’s captive in India (formerly Royal Bank of Scotland) in the next three years will add at least 3,000 professionals in artificial intelligence (AI), analytics, and cloud to take the total headcount to more than 21,000. Deutsche India will add over 2,500 professionals in the first six months of 2023 across cloud, AI and machine learning (ML) to its India headcount of 16,000.

Citi announced that its Citi Solution Centers will add at least 5,000 professionals in AI, mobile, analytics, and RPA in the next two years in India to take its total strength to 32,000. Lloyds Bank plans to set up a Lloyds Technology Center in Hyderabad in cyber and data analytics.

Also read: Tech layoffs: Indian GCCs to benefit from more easily available talent

Stanton Jones, Distinguished Analyst, ISG Research, says there is an increased demand for captive centres. Historically, the captive centres were used for labour arbitrage to deliver internal support services. However, this is changing. Companies are increasingly using captive centres for creating internal capabilities focussed on areas like product development and software engineering. This is creating a number of new opportunities for service providers both to help companies establish these captive centres and in some cases take over the under performing centres.

Ramkumar Ramamoorthy, Partner, Catalincs and former Chairman and Managing Director, Cognizant India, in a social media report said the growth in GCC is a validation of a big structural shift in Indian ITindustry.

“In the past two weeks, we were witness to some data points that validate and reinforce this ongoing structural shift. One, the combined closing headcount of TCS, Wipro, and HCL - three large tech players who have announced their Q1, 2023-24 earnings - shrunk by more than 10,000 over the previous quarter. Two, in the past two weeks, we saw some big announcements from four large global companies on their growth plans for GCCs in India,” he said referring to the announcements made by NatWest, Deutsche India and Citi.

Also read: Margin pressure builds for IT firms; improvement in short-term unlikely

An interesting fact is that the captive centres of large companies that were earlier gobbled up by third-party IT/BPM companies are ‘born again’ with great enthusiasm and fanfare. UBS, T-Systems, Mastercard, Deutsche Bank, Citi, Aviva, AIG and Unilever are some of the prominent examples. The reason is quite simple: digital transformation is seen as core to every company’s business. They want to ‘co-own’ those capabilities, rather than merely ‘lease’ them, Ramamoorthy said.

Punit Sood, Head of NatWest Group’s GCC in India, and immediate past chair of Nasscom’s GCC council, said GCCs are a complimentary of the entire IT ecosystem. This entire space is helping companies what strategies they want to adopt and how they want to serve the end customers.

There are close to 1,600 GCCs in almost 2,800 locations across India employing over 1.6 million directly and an equal number of people indirectly. Almost 85 per cent of the GCCs are in the big cities, and are starting to expand to tier-2 cities, he said.

COMMENT NOW