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What is the role of GCCs in developing Indian engineering talent?

India’s growth as a powerhouse in engineering and tech service delivery has been steady over the last few decades. Multinational corporations set up Global Capability Centers (GCCs) as their dedicated offshore facilities. India is the destination of choice for these multinationals. The country hosts about 45% of the total GCCs in the world. As of FY 2020, India hosts 1300+ GCCs, which employ 1.3 million+ employees and contribute US$33.8 billion in gross revenue. By 2025, India will have over 1900 GCCs, employing over two million-plus people.

GCC service providers in India are spread across sectors. The main concentration is in banking and financial services, electronics, energy, and healthcare. These centers were initially cost-arbitrage centers, handling back-office operations, business support services, contact center operations, and IT maintenance. Today, GCCs have developed to become Centers of Excellence for automation, innovation, and analytics. GCCs in India drive their parent companies’ innovation and digital transformation agendas.

GCCs in India thrive under policy support and robust infrastructure, but the unique differentiator is the workforce. The ability of the GCCs to deliver their transformative agenda depends on the workforce they can access. For most of the GCCs and other multinationals, India is the largest country for human resources. India’s educational and training system offers a rich supply of technical skills. The country offers talent in AI, analytics, automation, 5G optimization, IoT, cyber security, and cloud, in numbers not available anywhere else.

1. Leveraging India’s rich talent base

GCCs in India have a symbiotic relationship with talent. India offers an enabling environment for talent to thrive. In turn, multinational corporations, especially GCCs, have become a catalyst for mainstreaming India’s talent.

GCCs access India’s talent, develop them, and enable them to apply skills in practical, real-world settings. GCCs offer Indian engineering talent innovation, research, and development opportunities. They consistently invest in talent building, in up skilling, and leadership development. The structured investments carried out by GCCs has enhanced the capabilities of the nation’s engineering and tech talent, and creates a strong pipeline of resourceful and mature workforce.

The easy access to India’s resourceful talent enables GCCs and their parent companies to overcome the crippling skill shortages plaguing industries globally. Developing and nurturing talent is one of the key focus areas of GCCs to overcome competition. To such ends, GCCs:

  • Undertake extensive recruitment efforts from tech and management campuses across India. A 2019 NASSCOM survey estimates India produces one and a half million engineering graduates yearly. Most of these graduates have skill-sets related to technology, operations, data, and analytics.
  • Hire from the market. India’s vibrant BPO and GCC ecosystem is two decades old and offers a rich pool of experienced domain experts. GCCs tap on talent from these sources and offer career advancement opportunities for experienced hands.
  • Benefit from, and promote, the vibrant ecosystem of the gig economy freelancers, amateur entrepreneurs, inventors, contingent workers, part-time employees, self-taught programmers, and household innovators. These freelancers lend valuable flexibility to the talent pool. GCCs offer employment opportunities and contracts that enrich the independent contractor’s work and make their occupations sustainable.

GCCs are industry agnostic and support a diverse nature of functions. They attract and nurture a vast pool of talent. GCCs evaluate talent based on their inherent skills and subject expertise, and build a diverse and inclusive workforce.

2. Employee development initiatives

GCCs invest in skill development and reskilling programs for their workforce. These interventions have been through continuous learning initiatives and developmental programs.

GCCs invest in training and developing raw recruits to refine their skill sets. The training brings out the recruits’ creative and resourceful abilities, enabling them to channel their cognitive capabilities to real-world commercial use. Experienced hands get targeted training and development initiatives, which will allow them to develop their career and tap opportunities at a global level.

GCC service providers in India offer:

  • Regular training for skill upgrades in full-stack development, software engineering, cloud, analytics, and other core domains.
  • Experience-based skills development initiatives, such as on-the-job learning opportunities.
  • Mentoring circles, externships, and reskilling initiatives to grow the skills and experience of incumbent employees
  • Continuous learning programs, including inclusive learning and development.
  • Leadership competency development programs. Over the last five years, GCCs have groomed about 50-60,000 future leaders in India. These leaders now have the competencies to take on diverse global roles.

Employees get capability development support that benefits them for a lifetime. According to reports from NASSCOM,

  • A GCC for a financial service multinational trains its 40,000 employees annually with standardized learning and development sessions. The quality of training is on par with top certification courses.
  • A GCC of a product engineering company has tied up with global universities for specialist executive programs, enabling cross-functional global leadership learning expenses.
  • The GCC of a medical technology company made available specialized learning programs to all its 5000 employees,

Overall, GCCs in India have trained 200,000 employees in futuristic digital skills. Cumulatively, they have spent $275-325 million for the purpose.

In many Indian GCCs, HR works with individual employees to develop focus areas and strengthen skill sets at the individual level. As a spin-off benefit for the GCC, such initiatives arrest attrition. Skill investments by GCC keep the talent in the country, halting the brain-drain to foreign countries, to an extent.

3. Promoting inclusivity and diversity

GCC service providers in India promote inclusivity at the workplace. GCCs comprise 40% of India’s most inclusive companies. The Centers of Excellence, run by GCCs, empower diverse people with new career opportunities.

About 175,000 households across India have received financial benefits due to women professionals employed by GCCs. GCCs have been a major source of quality employment for women. The traditional male dominated Indian society offers women limited opportunities. GCCs make up 27% of the best places to work in India for women employees.

A global retail giant focus on grooming STEM-qualified women for qualified across its global network.

Most GCCs offer employee benefits on par with global standards. Some benefits include flexible work hours, social work credits, and paternity benefits.

4. Community development initiatives

GCC service providers in India uplift and support the wider community. They promote:

  • Apprenticeships and internships for students and others looking to gain new skills.
  • Training in domain skills in universities and other technical institutions. A re-insurance GCC works with the national insurance academy to train students on domain skills.
  • Curriculum development. Grassroot support by GCCs in curriculum development has increased graduate employability by 3% to 4%. Such intervention by GCC has resolved a large proportion of unemployable graduates.
  • Thought leadership. Over the last five years, Indian GCCs have supported 800+ educators to promote innovation and thought leadership. Over 30,000 students of state engineering institutions have benefited from exposure to real-time industry solutions.
  • Women empowerment. The corporate social responsibility initiatives of GCCs enrich education and women’s empowerment in the broader community. Over the last five years, GCCs have invested more than $100 million in CSR initiatives. About 40% of these investments are for education. Women empowerment programs have impacted 1.7 million households.

GCCs are also improving employability in tier-2 and tier-3 cities. The GCC of a leading global financial service company has set up its GCC in a tier-2 city. The center handles data science and AI expertise for the company’s global risk management capabilities.

GCCs support an ecosystem that grows on its own. For instance, Former GCC leaders have established 1200 to 1500 tech start-ups and created 85-90,000 jobs.

5. Promoting research & development

Robust R&D infrastructure contributes to sustained growth and creates employment opportunities. As GCCs in India grow to become strategic growth partners for their parents, they set up global innovation hubs and digital R&D CoEs.

India hosts about 45% of the top 500 global R&D spenders.

The key reasons for R&D spenders preferring India are:

  • India’s maturing capabilities of engineering research and development (ER&D) ecosystem. Several universities across the country, including IITs, facilitate state-of-the-art research. These universities promote incubators and start-ups that roll out commercial prototypes.
  • State support for the technological revolution, including policy changes to promote IT industries

GCCs have a significant role in the engineering research and development growth story. GCC service providers in India tie up with start-ups and incubators to access raw talent. They leverage Indian ingenuity to discover new products and services on behalf of their parent companies.

India’s mature R&D ecosystem enables GCCs to have a well-defined roadmap to leverage untapped knowledge.

Having skilled talent is an essential condition for R&D to flourish. Since the first tech boom of the 1990s, India has been a leading global source of talent for IT, software development, and other tech positions. The technology hiring in India for FY22 will be a whopping 3.7 to 4.6 lakh. Most of this vast talent pool is vibrant, diverse, and adaptable to any needs. GCCs hire the cream of such talent to speed up value creation for their parent companies.

6. Promoting innovation

As competition intensifies in the post-COVID world, enterprises seek competitive differentiation. There is little upside in offering different flavors of the same products and services. The way to achieve differential is through innovation.

Innovation is, however, costly, resource-intensive, and disruptive. It requires entrusting innovators with funds and giving them a long rope to experiment. The process is trial and error, where a string of failures is often the norm before finally hitting success. Very few enterprises can support disruption or afford the costs in today’s competitive atmosphere.

GCCs, set up in remote geographies, make sense as innovation hubs. GCCs in low-cost economies limit the costs and insulate the parent company from the cost of failure. GCCs also offer a structured environment to experiment in real-world settings.

Multinational companies look at India for operating their innovation crucibles.

In 2015, India ranked 81 on the Global Innovation Index (GII). In 2021, India ranked 46. The improvement in rankings has been due to India’s headway in AI, cloud, mobility, health tech, and green tech.

India’s unique tech ecosystem includes:

  • Engineering and technical talent, in huge scale and depth.
  • Many high-quality educational institutes, such as engineering colleges, tech-oriented universities, and research labs.
  • A vibrant start-up environment. India has the third-largest start-up ecosystem globally. As of June 2021, there are 80,000+start-ups with 56 unicorns in India.

GCCs have played a significant role in developing the Indian workforce’s innovation capabilities. GCCs offer India’s talent opportunities to experiment and apply innovation in real-work settings.

In any specialized or customized process, about 80% is generic. The GCC center of excellence does these generic tasks and follows up with the 20% unique work. The unique structure of the GCCs makes it easy to spot early trends and conceptualize new products and services.

7. Developing and expanding prototypes

Parent companies task Indian GCCs to develop prototypes.  These projects enable Indian engineering employees to apply their skills in real-life cutting edge projects.

Of late, automation is the flavour of the season. GCCs herald the automation process. Several jobs executed by GCCs earlier have itself become automated as a natural evolutionary process.

The key USPs offered by GCCs that promote employee engagement when developing prototypes include:

  • Lean and digitized practices for distributed delivery.
  • Enhanced collaboration tools and processes.
  • Superior bandwidth to access multiple applications and transfer large files, to streamline workflows and reduce time-to-market.

8. Orchestrating digital transformation

Industry 4.0 is changing the world. As the world rewires itself digitally, businesses that do not upgrade risk obsolescence. The COVID-19 pandemic sped up digitization by about a decade. Companies with extensive global operations had to respond quickly to COVID-19. They had to transform their systems overnight to enable work-from-home and e-commerce.

The knee-jerk trends at the start of the pandemic are now reinforcing themselves as long-term models. Many customers now prefer to shop and engage online. Key talent prefers likewise and would likely join and stay in digitally savvy companies. Businesses, cutting across sectors, invest in digital transformation to cater to digital-first mindset. They look to convert their short-term fixes into longer-term opportunities through digital transformation.

GCC service providers in India have lived up to the challenges posed by the pandemic. Even before the pandemic, GCCs in India underwent digital transformation to grow from cost arbitrage centers to Centers of Excellence. They used their experience to deliver seamless transformation for their parent companies. Best-in-class GCCs pivoted swiftly and delivered resilience, continuity, and efficiency.

Businesses faced the double-whammy of work-environment disruptions and the intense spike in online customer volumes. Top GCCs rose to the challenge and kept operations afloat without a decline in service-level agreements (SLAs). Best-in-class GCCs focused on the immediate response. They supported work-from-home arrangements and focused on employee well-being. Soon, these priorities shifted to stabilizing the business and improving productivity. GCCs with pre-existing agile capabilities adapted quickly to the complexities of remote work.

A strong entrepreneur class with a historical penchant for tenacity and resiliency makes India the go-to destination for tech talent. GCCs enhance India’s reputation as a global technology leader. The investments and initiatives made by GCCs service providers India allow India to position itself as a talent and innovation hub. GCC service providers in India contribute about 35-40 billion dollars in revenue, and its impact on India’s GDP is far higher at almost 100 plus billion. The impact will increase to 200 billion within the next four to five years.

NASSCOM expects the number of GCCs in India to grow at a CAGR of 6-7% to over 1,900 by 2025. The growth of GCCs will correspond with the further development of India’s talent base. Indian GCCs offer a solution to the crippling shortage technical skills faced by the developed first-world economies.

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