
India hosts approximately half of the world's Global Capability Centers (GCCs), with the sector witnessing an 11% growth from 2015 to 2023, surpassing the 7% growth of the Indian IT services sector during the same period. However, GCC expansion slowed down in 2023 compared to the previous year, potentially due to post-pandemic digital acceleration settling and macroeconomic concerns.
While some analysts attribute the slowdown to GCCs reaching saturation in the offshoring model, others suggest that the surge in 2021 and 2022 was exceptional due to the pandemic, drawing many global companies to India. Pareekh Jain, an outsourcing expert, notes that while Fortune 1000 companies have been scaling up their GCC presence in India, global headwinds are impacting this growth, with smaller companies likely to drive the next wave of GCC setups.
Arindam Sen, a partner at EY India, suggests that fluctuations in GCC setups could be influenced by seasonal factors, financial periods, budget allocations, and macroeconomic conditions. He emphasizes that while some sectors like banking and finance are experiencing temporary slowdowns, GCC growth reflects strategic adjustments by companies managing discretionary spending.
A survey by ISG indicates that globally, companies are considering measures like automation, relocation to cost-effective locations, or exiting GCCs entirely to manage staffing. Challenges vary for GCCs based on their operational tenure, with newer GCCs facing cost and complexity issues, middle cohort focusing on staff expansion, and older GCCs struggling with talent recruitment and operational complexity.
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