As service recruitment dwindles, Gccs starts to slow again, CIO News, ET CIO

[ad_1]

With large IT services companies reducing their workforces in the first quarter of 2023-24, global capability centers (GCCs) – the technology arms of multinational companies – look set to outpace the rest of India’s tech industry in hiring this year. And if that happens, it would be a first and an example of the rapidly growing attractiveness of Indian tech talent for global companies.

The big four IT services companies combined saw a reduction of nearly 18,000 people in the quarter ended June. Only TCS saw a net addition: just 523. Infosys, Wipro and HCL saw headcount declines of 6,940, 8,812 and 2,506 respectively. They have been hit by weak macroeconomic conditions and recession fears in the West, resulting in longer decision-making cycles and slower business acceleration. The headcount reduction is even worse than in the first quarter of AF21 when the pandemic hit.

On the contrary, many GCCs are hiring and many new ones are entering India in search of talent. Lalit Ahuja, founder of workspace and HR solutions platform ANSR, expects the GCCs to make an incremental addition of 4-5 lakh employees in the 2023-24 financial year. She says that regardless of business cycles, GCCs work in conjunction with the company’s core agendas. Many global companies, she says, are likely to replace their onshore contractors (third-party service providers) with their own GCC workforce.

Ramkumar Ramamoorthy, partner at growth consultancy Catalincs, says that because digital transformation is key to differentiation and growth, GCCs want to “own” those capabilities rather than “lease” them. “In the past three weeks, Citigroup, Deutsche Bank and NatWest announced plans to hire thousands of employees, adding to their combined workforce of more than 60,000 professionals in India. Looking at the quarterly earnings of publicly traded companies over the past two quarters, I am more than convinced that the incremental net headcount addition in GCCs this calendar year will be significantly higher than that of traditional third-party IT/BPM companies,” he says.

Nasscom estimates show that of India’s total tech workforce of around 5 million, the GCC’s talent pool is over 1.6 million. Eight years ago (2014-15), the GCCs had about half that number, at 750,000. India has 1,580 GCC technology centers and that number is increasing every month.

US luxury retailer Neiman Marcus Group (NMG) recently established a GCC to develop a new digital playbook that enhances in-store, online and omnichannel experiences. The company plans to hire 500 people for the Bangalore tech hub in the next 8-10 months. The $31 billion Inspire Brands, the second largest restaurant chain in the US with brands like Arby’s, Baskin-Robbins, Buffalo Wild Wings and Dunkin’, recently established a technology innovation center in Hyderabad.

India is home to approximately 25% of GCCs of global retail/CPG (consumer packaged goods) companies, employing over 50,000 people. About 63 retail and CPG companies including Walmart, Target, Tesco, Lowe’s, Nestle and Pepsico have technology centers in the country.

Venkat Shastry, Indian chief executive of US-based technology services provider Allegis Group, says GCCs have emerged as the innovation powerhouse of enterprises that blend foundational and contextual knowledge to drive scalability. “GCCs are powerful value creators, catalyzing innovation beyond arbitrage. They are key to future-proofing the technology capabilities of global enterprises with the customer as the parent entity,” she says.

Posted on July 24, 2023 at 09:35am IST

Join the community of over 2 million industry professionals Sign up for our newsletter to get the latest insights and analysis.

Download the ETCIO app Get real-time updates Save your favorite items Scan to download the app

[ad_2]