GCC employee base to go up to 4.5 mn by 2030: BCG India's Snehil Gambhir

'Firms have always been trying to balance between what they outsource to third-party and what they keep in-house,' says Snehil Gambhir, partner & director, BCG India

Global capability centres (GCCs) also known as captive centres have been making news, with several large MNCs setting up GCC in India or ramping up the existing ones. Snehil Gambhir, partner & director, BCG India in an interview with Shivani Shinde talks about what is driving the growth of GCCs in India, what the future looks like and whether they are eating into IT services budgets. Edited excerpts…

What is driving the growth of GCCs?

The movement among GCCs has gained especially after Covid. But there are three critical reasons for this. The first reason is talent. India offers talent that is broad—STEM expertise, language etc. Second, this talent is available at scale. The third factor is digital transformation within companies and the need to control the narrative of this transformation. Along with this, there are other sub-factors.

Firms have always been trying to balance between what they outsource to third-party and what they keep in-house. When it comes to in-house it’s about creating IPs and maintaining those. This IP, a few years back would have been sitting in some Western hemisphere, but can now come to India.

The other unsaid element that is working in favour of India is the availability of senior and mid-level leadership. While you can have scale and talent at the bottom, access to senior leadership is also that much critical.

Also what Covid did was that there is no impact on quality of delivery due to remote work. Rather India stood out in this aspect when compared to other geographies, which saw many more disruptions.

What is BCG’s prediction on the growth of GCCs in India?

GCCs in general in terms of market size have grown in the 9-12 per cent range. This will be the same for a few more years. The number of GCCs growing is in the 8-10 per cent size. From a headcount base, the current employees that are hired by GCCs in India are 2 million, we think this will go up to 5 million by 2030.

We see robust growth for GCCs in India. And we see ER&D components of companies will be driving a large chunk of GCC growth in India. We also see GCCs expanding from tier 1 cities into tier 2 cities.

We are also seeing many small players, who are not in the Fortune list, also setting up GCCs. We also see some specialised GCCs also being set up here.

Even in an uncertain macro, GCCs have been growing. Comments

Two reasons, there is a natural augmentation of GCCs in India. There are more roles coming into India. But for those who are setting up a new GCC, the fact that they are wanting to set up a centre during an uncertain macro means this is also part of the boardroom discussion.

The other reason is the vibrant ecosystem that India has in the GCC segment. This itself is becoming proof of what can be done from here and the results can be seen. Besides, India has so many models to showcase.

We have seen the ER&D space seeing one of the fastest uptakes in GCC additions. This is also one of the areas which were smaller when compared to others in the non-ER&D space.

Would it be fair to say that the growth in GCCs is coming at the cost of work at IT services players?

No. I don't think there is a direct correlation between these two parts. There is a difference in both in terms of what they bring to the table for the company. The third-party vendors are more delivery-focused and oriented and standardisation. Hence their hiring is also in bulk, freshers and then training them accordingly. The GCC’s workforce is slightly more experienced and they look for people from similar sectors. Both are catering to different demands. They will not eat each other's pie.