Vichaara written by: Anjan Babu.S.
Vichaara edited by: Sanjana Sudarshan
Source: India’s back-office boom sparks ‘war’ for IT service workers (ft.com)
Author of Source: Chloe Cornish
What are Global Capacity Centres?
Global Capacity Centres (GCCs) are offshore units of Multi-National Companies that provide various back office support services like IT, Finance, HR and Analytics.
What is the update?
“Work that was core, which was never outsourced before, is getting offshored to GCCs in India”, said K S Viswanathan, Vice President for industry initiatives at Nasscom, India’s IT industry trade body.
The rise of GCCs has caused a “huge war for talent” said Viswanathan.
Kumar Rakesh, a technology analyst at BNP Paribas, said technological innovation and economic pressure were creating demand for global capability centres.
“One of the drivers for this has been any major tech stack upgrade — like the transition to cloud computing — and the companies wanting to keep some of the core work in house,” he said. That core work includes sensitive projects related to intellectual property and customer data.
The other source of demand is “cost-cutting pressure in projects that cannot be outsourced, like core product engineering”, Rakesh said, adding “both of these drivers appear to be in play currently”.
"Companies cannot hire the right talent in their own countries, therefore India becomes an attractive destination”, said Lalit Ahuja, founder and chief executive officer of ANSR, a company that sets up global capacity centres.
Agraga’s Take
The shifting of sensitive and strategically important functions to Bharat by Multi-National Companies is an important shift and is also the next natural progression from basic outsourcing.
Within the next decade, we expect India to undergo the third progression and start housing Headquarters of MNCs, especially when ambitious projects like GIFT city would be more established. Another driving factor would be when India eventually becomes a strategic consumption centre.