GCC revenue growth to be higher than ISPs
BUSINESS: Global capability centres (GCCs) in India continue to expand and revenue growth of information technology service providers (ISPs) is expected to accelerate over the next two to three years, a report released on Monday said. This is compared to a 3 percentage point increase in recent years. New GCCs are opening at a rapid pace and, more importantly, existing GCCs continue to expand, according to HSBC Global Research. “While this is difficult to generalise,” the report said, “based on a sample of over 30 GCCs observed this year, the outsourcing ratio from GCCs may eventually stabilise at 70:30 (especially for banks, currently around 65:35).
Better value proposition in terms of cost and service has driven growth in GCCs in recent years. However, GCCs’ per capita cost (salaries and overhead) is still 25-30% higher than ISPs. This is because the pyramid is low and salaries are similar at most levels. However, the report notes that foreign ISPs have made significant markups (prices/charge rates) and GCC costs are still 10-15% lower than these billing rates. GCC’s value proposition to its parent company has improved over the years and most strategic transformation work is now done by GCCs. Several GCCs noted that there has been significant growth in GCC leadership in recent years, indicating growing influence at GCC headquarters. According to Deloitte, Indian GCCs currently have about 5,000 global leadership positions. India has the largest number of tech centers of excellence in the world at 17% and currently employs over 1.9 million people. According to the latest NASSCOM-Zinnov report, the Indian GCC market is expected to grow to $99-105 billion by 2030 and is expected to have 2,100-2,200 GCCs and 2.5-2.8 million employees (2.5-2.8 million). million).
