By Sirish Korada, Managing Director and CEO, BINDZ
In the global outsourcing market, India has created a niche, especially as the go-to location for Global Capability Centres (GCCs). From just a cost arbitrage benefit, it has now become a key strategy for global firms to source high-quality talent and leading-edge innovation. India is seeing an increase in GCC establishments attributable to a unique mix of cultural flexibility, a strong skill pool, cost benefits, and encouraging government regulations. The number of GCCs in India had climbed up to over 1,500 GCCs by the end of 2022 employing approximately 1.3 million people as of FY2021 which is expected to rise by over 100% and potentially employ ~3 Million people in GCCs in India by 2025 according to a report by EY.
But what’s so Unique about India, for global firms to consider it as the number one destination in the world for their Global Capability Centres?
Cultural and Linguistic Advantage
India’s ability to adjust to many cultures is one of its greatest assets. India has created a progressive and inclusive culture as a country influenced by many languages, faiths, and colonial past. Indian professionals are very sensitive to the organisational culture of multinational corporations because of their openness to new concepts and approaches. Additionally, one major advantage of British colonial control is India’s fluency in English. By facilitating smooth communication and integration with international teams, it offers India an edge over other Asian offshore locations. Because it speeds up operational efficiency and lessens onboarding difficulties, this cultural and language compatibility is a crucial consideration for businesses thinking about establishing GCCs in India.
A Vast and Skilled Talent Pool
India’s population, often perceived as a challenge, has turned into a strategic advantage in the global economy. Over the past few decades, consistent investments in education and skill development have yielded a highly skilled workforce across diverse sectors. Approximately 1.5 million engineers graduate annually in India, complemented by a massive influx of commerce, humanities, and science graduates.
India’s talent pool isn’t just large—it is also highly skilled and adaptable. The country’s stringent accounting standards, for example, enable professionals to quickly adapt to global frameworks like CPA or US accounting standards. In technology, Indian professionals are at the forefront of innovation and cutting-edge development, ensuring that global companies can access a workforce well-versed in emerging technologies.
As a result, companies find it easier to recruit talent without extensive training programs, as foundational skills are already strong. This ease of access to skilled labor is a significant factor in India’s appeal for GCCs.
Cost Efficiency: Beyond Arbitrage
While cost arbitrage remains an important consideration, India’s value proposition extends far beyond cheaper labor. Global companies, including companies like Microsoft, have acknowledged achieving cost savings of 50% or higher by offshoring operations to India. For generic skills, this cost advantage can rise to as much as 70–75%.
For instance, a role that costs $100 per hour in the US might cost $30–$35 per hour in India, delivering substantial bottom-line savings with at-par quality. This cost differential is particularly advantageous in high-skill domains like technology development and business process outsourcing (BPO), where companies can achieve significant financial efficiencies without compromising quality.
India’s value proposition, however, is not solely about cost. The country is increasingly recognised for its ability to deliver high-quality outcomes, driven by a talent pool with deep expertise in areas like technology, finance, and operations.
Stable Workforce and Low Attrition Rates
India’s workforce is not only skilled but also stable and committed. Compared to other offshoring hubs like the Philippines, India has lower attrition rates, reducing the operational costs associated with recruitment and training.
The cultural inclination towards long-term employment and professional stability ensures that global companies can rely on a consistent workforce. This stability enhances productivity and helps organisations build robust GCCs without the constant churn seen in other markets.
Government Support and Infrastructure Development
The government of India has been instrumental in establishing the nation as a major hub for offshore work worldwide. To enhance business operations and attract foreign investment, policies have been continually enhanced. Liberalised rules, simpler procedures, and an emphasis on infrastructure development have made doing business in India easier over the last ten years.
The government has also made major investments in innovation, technology, and startups. Research and development, digital transformation, robotics, and artificial intelligence initiatives have contributed to India becoming a leader in these areas. India is a suitable place for both traditional outsourcing and innovation-driven GCCs because of this collaborative approach.
The advantages extend beyond businesses. The growth of the GCCs benefits all parties involved because it boosts local economies, adds to India’s foreign exchange reserves, and generates jobs.
Industry Growth and Sectoral Focus
The technology and operations sectors dominate India’s GCC landscape. In 2021– 2022, service exports from these two sectors alone accounted for $157 billion, a testament to their global appeal. GCCs in technology do not just focus on support and maintenance jobs, however, it’s becoming a hub for product development, R&D, and Innovation. Operations encompass diverse streams like finance, accounting, audits, knowledge process outsourcing (KPO), investment banking operations, and recruitment process outsourcing (RPO).
India’s ability to handle complex and high-value processes has led to a consolidation of outsourcing operations, with global companies increasingly choosing India as their strategic partner.
The GCC surge in India reflects not just a preference for cost efficiency but also a recognition of the country’s strategic value in the global economy. With an anticipated doubling of people employed by 2025, India is set to further solidify its standing as a global offshoring leader.