The market size in India for the MNC tech centre — also known as global capability centre (GCC) — touched $28.3 billion in 2018-19, compared to $19.5 billion in 2014-15, says a study by Nasscom and consulting firm Zinnov.
That’s a compounded annual growth rate (CAGR) of nearly 10% — faster than that of the IT services sector during this period. India has by far the biggest presence of GCCs in the world (the segment’s size has been estimated by multiplying the number of employees with the average cost of the employee).
GCCs now employ more than 1 million people — up from 7.5 lakh in 2014-15. They account for a quarter of the total workforce in the country’s tech sector. TOI has reported previously that their average salaries are among the best in the sector.
The report says there are over 1,250 MNCs with GCCs in India now, and among the latest entrants are Chinese smartphone players Oppo and Vivo, Koch Industries of the US, and Australian software company Atlassian.
Some eight global unicorns, including Grab and GoJek, have GCCs in India. Although the US has led the GCC story so far, the report said APAC-based MNCs are increasingly leveraging India to set up global centres. “Japan and Singapore contribute more than 64% share of installed APAC-based GCCs in India,” the report said.
Most of the new GCCs in India and increasingly the older ones work in cutting edge areas like data analytics, AI, IoT, cloud and mobile. In the early 1990s, GCCs in India were set up merely as back-office centres focusing on operational efficiency, driven by cost arbitrage and abundant talent availability. “Over the last two decades, GCCs have transitioned ... to value creators. GCCs have gained maturity, evolving from being single-function to multifunction centres, local to global governance, delivery focused to business focused,” the report said.
Engineering, research and development (ER&D) is leading the GCC growth story. This segment grew to $15.7 billion in 2018-19 from $10.2 billion in 2014-15 — a CAGR of 11%. The ER&D centres do core engineering in areas like software, aerospace, telecom and automobiles. “ER&D will dominate the GCC market space in the coming years with an increased focus on digital transformation and endto-end ownership of global and local products from India,” the report said.
The technologies being developed in India, the report said, are used for creating generic malware signatures, machine learning-based security solutions, customer analytics, disease detection and connectivity platforms. In finance, they are leveraged for fraud detection, data analytics in cash management, chatbots, loan processing automation, insurance claims processing automation, payment analytics, and treasury management.
Bengaluru continues to be the hub for GCC talent in the country, followed by Delhi-NCR, Hyderabad, Mumbai and Pune. Pune and Chennai have a strong presence of GCCs that require automotive domain expertise. Tier-2 locations like Coimbatore, Ahmedabad and Vadodara are also increasingly being leveraged.