GCC Series 1 - GCCs in India: Enhanced resilience during the pandemic

This webinar covers the emergence of Global Capacity Centers (GCCs) with India as a preferred destination. We also discuss navigating GCCs in India to choose an ideal location, operating models, and how it has grown as a transformation hub using technology.

How have GCCs performed during the pandemic?

The global pandemic caused a mass hysteria worldwide for which business continuity plans (BCPs) had to be actualized via workarounds like work from home, optimizing the supply chain, upskilling employees, etc. Many businesses were forced to redo their business models, explore foreign geographies for talent and embrace the gig economy to survive pandemic blows.

Thanks to technology, organizations could adapt easily due to virtual office culture, which led to the following growth stats for GCC:

• 50% of GCCs are scaling up with automation
• 80% of GCCs had no operational impact
• 92% employee turnout due to remote work in the GCCs
• 67% of GCC leaders visualize remote work as the norm
• 60% of GCCs enjoyed 10%+ growth in their portfolio work
• 54% of new businesses focused on digital services

Hence, pandemic forced remote work has given rise to new opportunities for both employers and employees to grow themselves while also optimizing costs.

State of GCC market in India

“India is the leading delivery location for new GCCs accounting for more than 25% of new setups in 2020 with a market size worth USD 36 billion in revenue and will reach over USD 60 billion by 2025.” - Mark Lessem, Senior Executive Director at Nexdigm

With over 1430 centers employing 1 M+ workforce in India, here are some quick stats:

• 70% of GCCs are US-based
• 180 entities in fortune 500 companies serve as innovation hubs
• GCCs focus on digitization with robotics, cloud, and automation, IoT, AI, etc

With the existing base, the GGCs market continues to grow exponentially in India due to

• Availability of 2nd largest English speaking skilled workforce
• Good infrastructure and connectivity in tier 1 and 2 cities
• 45% cost savings due to policy reforms for taxation and innovation by the Indian government
• Access to multi-functional back offices and low cost/value talent pool reduces costs that companies can use to grow their business
• India has observed a 250% increase in GCCs with 44 global unicorns

Why do global organizations select India as their GCC?

“India has the deepest leadership pool, so if you're starting a GCC, there is a deep bench of leaders you can recruit to come in and help you start, and I think that is perhaps the most important (aspect). So it is the lowest-risk place to start a GCC.” - Peter Bendor Samuel, Founder & CEO at Everest Group

• India has a very deep talent pool across engineering, IT, and data science, due to which more than 1/4th of GCC setups in 2020 are in India
• Having robust and cheap broadband internet, led by Reliance, has also made India a favorable destination
• Great healthcare infrastructure ensures employees are safe, with India also leading vaccine manufacturing across the world
• Availability of talent ensured India was able to soak up the surge in demand

Key factors to consider before entering the Indian GCC market

“India has the ability to provide intelligence and not just resources in the form of cost arbitrage.” - Manoj Gidwani, Vice President Global Marketing at Nexdigm

Although, global expansion tends to have the same rules irrespective of the location targetted for presence, here are some key considerations for companies looking to base in India as suggested by the panel:

• Research on regulatory, employment laws, audits, and tax environment
• Availability of finance and pre-investment feasibility
• Availability of talent pool and which skillsets are scarce or plenty
• Availability of adequate physical and digital infrastructure
• Understand how the ecosystem is evolving and is different from others
• Have clarity on the data protection laws in India
• Prepare for change management and cultural shocks
• Ensure you have board commitment and employees have clarity about the changes
• Prepare for wage rises and attrition rates

Other key factors include:

• With India improving its regulatory game, companies would fall under the ‘automatic route’, whichonly requires post-investment compliance to be undertaken.
• India has also nurtured a great ecosystem, where one can have support from organizations like ICICI Bank, CBRE, Nasscom, etc.
• In terms of location, one should look for professional (offices, talent, etc.) and social (schools, restaurants, etc.) infrastructure, transportation, especially airport connectivity.

How GCCs evolved in India to provide business continuity to their parent organizations during the pandemic?

“The ability to access the broader ecosystem to make progress wherein other locations it's been difficult to have been extraordinary (for India).” Peter Bendor Samuel, Founder & CEO at Everest Group

COVID has been an emotionally heavy journey for employees as many shifted back home to work. Larger organizations showed empathy during such times. The ability of GCCs to adapt to the pandemic has been remarkable.

Here’s what the panelists shared about how GCCs, their employees, and India trumped over the pandemic and resultant trends due to it:

• Since everything happening in India with the GCC is bi-directional and teams spread across timezones, one needs to have trust and mutual understanding along with the usual required technical skills.
• India is also moving beyond STEM education to other soft science skills like design that help increase the talent pool.
• While historically, larger companies had a GCC presence. But there has been democratization in that you don’t need to establish 1000s or more seats and can start with smaller numbers across 50-100. This is due to a reduction in costs and time to implement a GCC. Larger firms and other industries can also have micro engagements as experiments as a result.

In conclusion, organizations should understand the payback for GCCs is very quick and might depend on the time taken to adapt to the change management. One also needs to look into the factors that drive high performance in globally distributed companies and adopt best practices for the successful implementation of GCCs.