GCCs become attractive choice for talent on back of better pay, growth

At a time when leading Indian information technology (IT) services firms are offering minimal salary increments or delaying appraisal cycles, global capability centres (GCCs) are becoming an enticing choice for talent due to their ability to provide attractive career advancement opportunities and competitive compensation packages.

According to talent management firm Randstad, there is a 20-25 per cent lateral movement of talent from IT firms to GCCs across sectors due to several factors that extend beyond salaries.

“GCCs offer a shift from back-office roles to ownership of products and business functions, providing significant career advancement for individuals with three to 12 years of experience,” said Rohit Kishore, global delivery and talent officer, Randstad Digital.

IT services companies also seem to be losing some outsourcing work to GCCs.

For instance, US laboratory equipment maker Waters Corporation is now insourcing the technology (tech) work Infosys has been doing for it. During the launch of its GCC in Bengaluru last year, the management said that about 300 employees currently working at Infosys for Waters will soon be moving to its new centre on Waters payroll.

US-based online home store Wayfair, which established its GCC in Bengaluru last year, has hired over 300 professionals, including six experienced tech leaders, to lead and support a broad range of tech initiatives at the centre.

“Our establishment in India signifies an acknowledgment of India’s remarkable capacity for large-scale innovation,” said Rohit Kaila, head of technology and site leader, Wayfair India Technology Development Centre.

“The attraction of GCCs lies in their promise of long-term career prospects, offering professionals a deeper learning curve and comprehensive understanding through end-to-end project ownership and exposure to cutting-edge technologies. There is also a continued emphasis on acquiring talent with specialised skills, particularly in engineering research & development (ER&D),” Kaila added.

At Thryve Digital Health, a health care GCC, the company aims to attract a diverse pool of talent, including seasoned experts and fresh graduates in 2024.

“In the coming year, we see the need to continue capacity augmentation across both core and non-core operations and tech, with a deliberate emphasis on keeping discretionary spending in-house,” said Balasubramanian Sankaranarayanan, president and chief executive officer, Thryve Digital Health.

Talent with skills in ER&D command a premium over those with non-ER&D skills owing to its growing demand across sectors.

According to the latest National Association of Software and Service Companies (Nasscom)-Zinnov report, ER&D talent could receive an average salary increment of 12.3 per cent compared with 8.7 per cent in the case of non-ER&D talent.

“India’s reputation as a hub for engineering talent makes it an attractive destination for setting up ER&D centres within GCCs,” said Kishore.

The increased hiring activity in GCCs is also evident from the uptick in leasing activity. Over the next two years, GCCs are expected to lease about 45-50 million square feet (msf) of office space, accounting for approximately 40 per cent of the total office demand across the top six cities, according to Colliers’ latest report titled ‘GCCs in India: A newfound wave of confidence’. The second half of 2023 particularly witnessed the highest GCC leasing activity since 2020, reaching 12.4 msf.

GCCs in India have evolved from migration to germination, said Keerthi Kumar, partner, Deloitte India.

“We are now beginning to see the germination of new capabilities at an enterprise level being directly set up at GCCs,” said Kumar.

GCCs too are under some stress when it comes to salary increments.

“With the US economy facing macroeconomic headwinds, high-interest rates, and continued inflationary pressures, a conservative financial sentiment is expected to prevail across India GCCs. After extending generous merit increases in 2022-23, organisations may embrace financial discipline, moderating the overall sentiment for salary hikes,” the Nasscom-Zinnov report said.