GCCs In India – Building Resilience For Sustainable Growth

As organizations navigate the complexities of the modern business landscape, the Indian Global Capability Centre (GCC) ecosystem emerged as a beacon of growth and innovation due to unprecedented expansion. We have witnessed the establishment of over 1,580 GCCs by FY2023, with many new GCCs being established and existing ones expanding every quarter.

Several factors like access to a wide pool of digitally skilled talent, the drive to adopt new technologies, and the imperative to make greater customer impact are driving GCC growth and is expected to continue over the next 2-3 years.

However, this rapid growth has also brought to the forefront some associated considerations and challenges that need to be addressed.

The paper identifies and delves deep into four considerations for GCCs as they move up the value chain and offers mitigation practices, case studies and best practices.

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Key Findings

Over 72% of GCC leaders identified talent management as a key priority for GCCs.
Key talent related considerations include talent availability, capability, and employability, attracting and retaining talent, growing need for leadership talent and maintaining cost arbitrage.
Mitigation measures to address talent related considerations include investing in future talent availability, deployability, and capability, attracting and retaining top talent, and cultivating a strong leadership pipeline and also understanding the nuanced narrative around cost arbitrage as GCCs are moving up the value chain and embracing complex, specialised functions.

96% of the interviewed leaders cited adoption and leveraging of emerging technologies (ET) as a crucial priority for achieving sustained growth.
Various considerations regarding emerging technologies which need to be addressed and mitigated include-
- External considerations related to third party, regulatory and compliance considerations, and tech landscape and cyber threats.
- Internal considerations include quality and reliability of content, data, considerations related to governance and ethics.
Mitigation measures include rethinking the skills of the future service delivery models and governance structure; redefining the customer experience, partner ecosystem, and delivery models and reimagining the value proposition, solution design etc.

81% respondents mentioned transfer pricing as the top regulatory priority for GCCs in India. More than half of the respondents highlighted SEZ laws and STPI regulations (67%) and labour laws (60%) among key regulatory priorities.
For the CXOs surveyed, the top 5 regulatory considerations include corporate tax especially transfer pricing, SEZ and STPI compliance, labour laws, DPDPA, and FEMA.
Mitigation measures include maintaining clearly defined ICAs, processes for statutory declaration and compliance tracking, internal controls for background checks, designing and implementing privacy policies and procedures in line with DPDPA requirements, documentation to support foreign tax credit claims and treaty benefits, among others

44% of the interviewed stakeholders expressed that it is imperative to de-layer concerns around concentration. Only 20% of survey respondents view the concentration of GCCs in India as perceived risk.
By adopting a variety of metrics, GCCs can accurately identify critical exposures, thoroughly assess potential vulnerabilities, take proactive measures to mitigate the concerns and provide comprehensive reports to global organisations.
Some of the mitigating measures include understanding the concern by conducting joint workshops to arrive at a shared understanding of ‘concentration concern’, assessing through a multi- pronged approach of a combination of qualitative and quantitative to assess whether concentration consideration exists and evaluate its severity.

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