IT firms

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	Global capability centres (GCCs), or captives of large multinational firms, are expanding in the country, and chipping away at the market share and talent held by domestic IT services firms.</div>
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	Traditionally referred to as captives or contact centres, GCCs are offshore units of large multinationals that perform designated technology operations. They emerged during the 1990s as large companies such as GE, Texas Instruments, Citigroup, and American Express began embracing this model.</div>
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	IT services providers commanded approximately 75 per cent of the market during 2012-13 with the rest held by GCCs, according to Nitish Mittal, partner, technology, at global research firm Everest Group. &ldquo;Now it has gone down to approximately 65 per cent, but the overall market has grown at 8-10 per cent CAGR (compound annual growth rate) to become almost 2.5 times in that time period. So, the share of GCCs has grown faster but the overall spend on both third-party IT (information technology), business process, and engineering services have increased significantly from a volume and value standpoint,&rdquo; he said.</div>
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	Over the last few years, about 30 per cent of the outsourcing work has moved to GCCs and it is a &ldquo;continuous process&rdquo;, says Harish Pillai, managing director, talent services firm Randstad Sourceright, India and Japan.</div>
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	&ldquo;Many of the existing GCCs have become more like services companies in terms of the scale they operate at and the complexities they are able to handle. In a way, they have become like in-house services units for their parent organisations,&rdquo; said Pillai.</div>
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	The captives are also getting more work as they offer a better cost proposition in the long term and are typically involved in high-end work like solution architecture, design, and R&D as enterprises prefer to keep it in-house and outsource development and maintenance-related work to service providers. &ldquo;Though initially, the capex of establishing a GCC is higher, over time, the ROI (return on investment) is better,&rdquo; said Pillai. Working at GCCs is an attractive proposition due to the global exposure on offer and the high-end nature of work. &ldquo;GCCs tend to mimic and mirror global practices. In services companies, only a few people have that level of global exposure. The rest of them do task-oriented work. Also, GCCs offer direct exposure to end users, which is preferred by a lot of the experienced talent,&rdquo; said Pillai.&nbsp;&nbsp;</div>
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	As of FY23, India is home to 1,580 unique GCCs, with several global MNCs opting to establish their first global centre outside of their headquarters in India, according to the latest Nasscom-Zinnov report. &ldquo;The growth trajectory of Indian GCCs stays unabated, primarily being fuelled by ER&D (engineering research and development), which accounts for approximately 56 per cent of the overall GCC revenue share. This growth is supported by long-term strategic deals, widespread adoption of digitalisation, and increased utilisation of cloud technology,&rdquo; the report said.</div>
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	A recent EY report predicted that by 2030, India will have 2,400 GCCs, with that number potentially rising to 2,550 as India emerges as the world&rsquo;s technology and services hub. The total number of new GCCs set up every year can also jump up to 115 from the current 70. The India GCC industry is expected to employ over 4.5 million people compared to about 1.9 million currently.</div>
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	The trend of GCCs getting more work is evident as companies continue to expand their centres in India. A large US-based insurance company plans to grow its GCC in India to 500 people, and a large American bank is looking to expand its presence in the finance and accounting operations in India in the next few months, people familiar with the matter said. &ldquo;The outlook of the GCC industry remains buoyant as companies look to set up their GCCs in India. GCCs are expanding their operations across different cities in India while exploring new areas of service and hiring talent with niche skill sets. With increasing number of global leadership roles based in India, GCCs will continue to move up the value chain through innovation, product development, and digital transformation,&rdquo; said Arindam Sen, partner and GCC sector lead, EY India. To be sure, services companies are also trying to up their game by moving into more products and platforms work. &ldquo;Many of the large providers are already creating and managing platforms, as opposed to just providing services,&rdquo; added Pillai.&nbsp;&nbsp;</div>
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MNC captives woo talent and biz from domestic IT services companies

Over the past few years, about 30% of outsourcing work has moved to GCCs

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