Some years ago, an India IT services major actually developed an in-house app to track which part of the globe their executives were in at any given moment. No, it wasn’t a big-brother-like attempt to keep a beady eye on employee movements. It is just that so many of its staff were travelling at any given time that managers were simply losing track. Their own teams — not to speak of families — would lose track of the time zone they were actually in.
Calls and meetings scheduled for sleep time in another part of the world meant that its globetrotting executives were being seriously deprived of adequate rest. In fact, in the pre-Covid heyday, it was said that at any given moment in time, at least a 100 of its staff were actually in mid-air! The app was to sort that — if the location showed up in a “night” zone, the executive was not to be disturbed, unless it was a real emergency.
That was, of course, before the pandemic changed the way businesses interacted with each other and teleconferencing largely replaced physical commuting. Nevertheless, it was an indicator of just how big India’s IT services business is. With revenues in excess of $225 billion, India’s IT services firms account for a third of the global IT services market.
Just the big three — TCS, Infosys and Wipro — employed more than a million people, a sixth of the nearly six million directly employed in the sector. Arguably, there is not a significant market anywhere in the world where Indian IT does not have a measurable footprint.
All this is a far cry from 30 years ago, when the late Dewang Mehta, President of the then newly-formed Nasscom, would do the rounds of government offices and the media, trying to convince his sceptical audience that India’s nascent IT and ITeS sector was capable of hitting the $1 billion mark in export revenues!
That was a fantastic track record, one which has not been matched in any other country in the world. Two things drove this: One, India’s immense pool of talented engineers, who were available at costs a fraction of what was available in the home markets of the clients these companies serviced. This was the cost advantage which India’s IT Inc initially leveraged to win those offshoring contracts, particularly in the early years.
The second was the entrepreneurial drive of those who then ran what are now the behemoths of today. If a far-seeing FC Kohli created TCS — and arguably, the concept of IT services — when he took a small consulting arm of the Tatas and grew it into what will become the TCS of today, we had entrepreneurs like Azim Premji, who took the family’s edible oils business into the unknown territory of information technology, or first-generation engineer-entrepreneurs like NR Narayana Murthy, Nandan Nilekani and Shiv Nadar, who dared to pursue the dream of delivering world-class IT services from India using home-grown talent.
Their success in doing so not only created immense wealth and transformed the cityscapes of cities like Bengaluru or Pune but also firmly established the quality of India’s IT talent. So much so that today, three decades later, the world’s major corporations are no longer simply outsourcing back-office jobs to India — they are setting up global captive centres (GCCs) which are in the business end of their global technological development and research.
According to a recent Nasscom study, India is now the GCC capital of the world. More than 1,430 GCCs had set up shop in India by FY21, clocking revenues in excess of $35 billion and employing a staggering 1.38 million people in India. In fact, GCCs as a consolidated entity would be larger than TCS, India’s biggest IT company.
What’s more, these GCCs are also helping to build niche skills in cutting edge areas like Artificial Intelligence, Machine Learning, Cloud, Blockchain, Robotics, Internet of Things and data analytics. In fact, it is safe to assume that this talent pool — honed by exposure to world class technology and skills — is what is driving the start-up innovation boom in India.
But this success in attracting global MNCs to set up R&D captives in India can turn out to be a mixed blessing. For one, getting the work done in India by Indians means that they are eating into the key offerings of home-grown IT majors. In fact, the days of headlong growth and hundreds of new hires every day are well in the past as far as India’s IT titans are concerned.
Headcounts are still growing, but a rate which is a fraction of what it was a few years ago. And GCCs also take away some of the opportunities for Indian tech majors to offer the kind of services which are now being performed by GCCs.
The start-up boom in India, and the unreal valuations commanded by some local unicorns, has served to take attention away from the larger picture of the sector’s fortunes going forward. True, we are spawning new start-ups by the dozens every week, and minting start-up billionaires every other week. But where are the next generation TCSs, Infys and Wipros? Which of the gen-next players amongst the current crop is showing any indications of emulating, if not exceeding these original pathbreakers?
In July, TCS passed yet another milestone in its illustrious history — it topped the 600,000 headcount mark for the very first time. Unfortunately, that is increasingly looking like a record which is not going to be broken.
The writer is a senior journalist