The Technology Sector and GCCs in India

The IT-BPM Industry

India’s IT industry is one of the most economically significant sectors in the country, contributing about 7.4% of its GDP in FY 2022, and it is expected to contribute 10% to India's GDP by 2025. According to the National Association of Software and Service Companies (NASSCOM), the industry reached a revenue of US$227 billion in 2022 and is projected to further increase to US$245 billion towards the end of 2023. This vast revenue is due to the strong demand for hyper-scale data centres offering cloud and other IT services, as well as computer software and hardware segments that attract massive value of foreign direct investments and exports

Furthermore, the industry is also one of the largest employing sectors with a total employment of 5.4 million people as of July 2023, with 290,000 additional jobs. This is expected to reach up to 60 to 65 million jobs by 2025-2026, requiring digital skills to support sub-sectors such as IT services, business processing management (BPM), software products and engineering services, and hardware.

To aid this ongoing growth, the government has drafted and imposed policies to ensure industry expansion, including:

Several key points are provided by the Union Budget 2023 for the IT sector such as:
- The establishment of three “Centres of Excellence” for artificial intelligence (AI) to enforce the government campaigns, “Make AI for India” and “Make AI Work for India,”, encouraging ed-tech companies and start-ups
- The government will set up 100 engineering labs to develop apps using 5G services to support the concept of smart classrooms to expand the reach of education, accelerate AI research and ensure job creation in the tech sector.
- Inclusion of micro, small and medium enterprises (MSMEs) in the Skill India Digital Platform that provides them with financial relief and growth opportunities.
- The implementation of Pradhan Mantri Kaushal Vikas Yojana (PMKVY) 4.0, the setup of 30 Skill India International centres, and the direct transfer scheme in the National Apprenticeship Promotion Scheme (NAPS) to forge skill development towards youth employability.
Significant improvements in the opportunities and benefits for foreign investors in the technology sector are presented in the Maharashtra IT-ITES Policy 2023 approved in May 2023. The policy aims to foster growth and attract long-term investments in fast-growing technology sectors such as Industry 4.0; financial GCCs; and animation, visual effects, gaming and comics (AVGC) industries.

With India’s competitive advantages along with its ongoing initiatives to foster IT services and BPM operations, the country has become an emerging technology hub for various multinational companies. These attract foreign investors to set up their support and technical centres that are now mainly comprised of the growing GCC ecosystem across the country.

How Big Is the GCC Sector in India?

The IT services and BPM operations in India are significantly strengthened by the growing number of GCCs across the country. As of June 2023, the number of GCCs that are established reached more than 1,580 with over 2,740 units. This number has grown by 60% compared to 2015 when GCCs in the country served only as back-end support. Currently, the IT services from the GCC ecosystem provide demand for application modernisation, cloud migration, platformization, and cybersecurity, while BPM operations have evolved into data-driven services and intelligent operations from back-end voice services.

Moreover, India’s GCC market reached a value of US$46 billion in FY 2023 with a CAGR of 11.4% from 2015 to 2023. The highest market value was contributed by engineering R&D (ER&D) at US$25.6 billion, followed by BPM at US$10.7 billion and IT services at US$9.7 billion. This remarkable growth is fueled by India’s continuous evolution of its digital capabilities such as end-to-end product ownership, propelling digital skills and talent, and strategic partnerships with academia and start-ups.

Overview of GCCs and Employment Landscape in India

Employment in the GCC sector has grown from 750,000 in 2015 to 1.66 million in 2023, a notable 10.5% CAGR in sector growth. The highest concentration of this talent pool belongs to ER&D with about 42.1%, followed by BPM at 34.5% and IT services at 23.4%. The employment ER&D segment is fuelled by the abundance of software and computer engineering roles in the country along with its low-cost wage. In line with this, India’s GCCs are gearing towards developing into portfolio and transformation hubs, enabling its GCC ecosystem to formulate and execute its own technology and architecture-related decisions to develop its own product and business ownerships. See Table 1.1 and Table 1.2 for examples.

Table 1.1: Select Key ER&D GCC initiatives Led by India in Major Sectors

Automotive	Semiconductors	Retail	Industrial	Horizontal Technologies
Advance driver assistance system (ADAS)	AI accelerator	AI-based optimization	Smart factories	Cloud-native platforms
Infotainment	On-chip memory	Warehouse management	Defect detection	Intelligent automation
Power electronics	Internet of Things (IoT) connectivity chipset	Cloud-based architecture	Smart predictive maintenance	AI

Table 1.2: Work Portfolio Intensity in GCCs in India by Industry Vertical

Distribution of Talent and GCC Units Across India

Tier-1 cities remain the key preferred locations for establishing GCC units in India due to access to the highest concentration of available talent and digital skills, and a strong industry presence. Based on industry reports, Bengaluru has the highest number of installed talent and established GCC units in the country, 42% of which accounts for the ER&D talent in Tier-1 cities, followed by Hyderabad and Pune. Together with the National Capital Region (NCR), they account for more than 48% of BPM talent in the country. In addition to these insights, Chennai’s GCC-installed talent is from BFSI and automotive verticals. Moreover, Bengaluru and Hyderabad are top destinations for new setups and expansions. As of Q3 2023, Bengaluru has seven new GCC setups and three expansions while Hyderabad has four new GCC setups and three expansions.

Table 1.3: GCC Units and Talent Distribution in Tier-1 Cities

* From total GCC units of 2,740+
**From total installed talent of 1.66M

Locations	% of GCC Unit Distribution*	% of Talent distribution**
Bengaluru	30	34
NCR	16	16
Mumbai	13	12
Pune	12	12
Hyderabad	12	12
Chennai	9	10

Meanwhile, several initiatives and state policies have led to the growing GCC industry in Tier-2 and Tier-3 cities. These include the adoption of remote work models to accelerate talent growth; ongoing infrastructures like GIFT City (Gujarat), Beyond Bengaluru, Tamil Nadu Start-up and Innovation Missions; state policies to increase IT/ITES exports; as well as initiatives to bridge industry and the government, like Karnataka Digital Economy Mission (KDEM), which aim to boost investments in the IT, science and technology sectors. Tier-2 and Tier-3 cities are also known for low-cost infrastructure and wages, as well as offering a variety of cost optimisation options compared to Tier-1 cities. Among the most preferred cities for GCC setups and expansions are Vadodara, Coimbatore, Kolkata and Ahmedabad. In Q2 2023, there were five new centre expansions in Tier-2 cities but there were no new center expansions in Tier-2 cities in Q3 2023,

Table 1.4: GCC Units and Talent Distribution in Tier-2 and Tier-3 Cities

*From total GCC units of 215
**From total installed talent of 71K+

Locations	% of GCC Unit Distribution*	% of Talent distribution**
Ahmedabad	17	15
Kolkata	14	18
Vadodara	12	13
Coimbatore	12	14
Thiruvananthapuram	10	15
Chandigarh	8	7
Kochi	7	5
Jaipur	5	6

India as a Global Business Services Powerhouse

With over 1,500 GCCs in India, more than 960 are considered to have a functional shared services model. Over the years, GCCs in India have been evolving from the traditional shared services model to a more strategic global business service (GBS). Currently, there are over 180 GCCs with matured shared services across the country that encompass a maturity of different functions such as sales and marketing, procurement, human resources, customer support, finance and IT. These GCCs have become more capable of handling globalised processes like ADM and testing, lead generation, requirement analysis and delivery management. Bengaluru remains a preferred GBS hub for GCCs in India by having the greatest number of mature shared services and installed talent for this field.

Table 1.5: Talent Distribution of Mature Shared Services in India

Locations	% of GCC Unit Distribution*	% of Talent distribution**
Bengaluru	32	39
NCR	16	15
Hyderabad	14	15
Mumbai	12	7
Chennai	11	12
Pune	10	8
Others***	5	4

*From total GCC units with Mature Shared Services Centres of 180+
**From total installed talent across mature shared services centres of 540K+
***Includes Tier-2 and Tier-3 cities in India

Hiring Demand Outlook for India’s GCCs

According to industry reports, the total number of GCCs is projected to increase to 2,400 and a market size of US$110 billion by 2030, with total employment expected to reach 4.5 million.

Amidst this growth, it is expected that several multinational companies across sectors will hire nearly half a million people in FY 2023-2024 who possess highly specialised tech skills, particularly in the banking, financial services, and insurance (BFSI); pharmaceutical/healthcare; energy; automotive; retail; and telecom sectors.

The BFSI sector is dominating the hiring trend with several new financial GCC expansions such as Citi, PwC and Deutsche Bank. These new setups are followed by the retail and telecom sectors with new expansions from Newgen, GlobalLogic, Neiman Marcus Group, Arby’s, Baskin-Robbins, Buffalo Wild Wings and Dunkin’. The automotive and manufacturing GCCs will also drive hiring for ER&D roles as these companies turn focus to research and development and design centres to develop their product portfolios. Refer to Table 1.6 for other skills and roles that are projected to be in demand through 2024.

Table 1.6: High-Demand Skills and Roles for India’s GCCs
in FY 2023-2024

Skills/Roles	Key Industry	Expected Demand in 2024
Skills
AI & Machine Learning	BFSI, Manufacturing	20-25%
Cybersecurity	Telecom, BFSI	15-20%
Cloud Computing	IT/ITES, Retail	15-20%
Data Analytics	Healthcare, BFSI	15-20%
Roles
Technology Development (e.g., full-stack developers)	Consulting, Automotive, BFSI, Telecom	28%
SAP	BFSI, Retail	16%

Table 1.7: Other in-demand roles and skills across sectors

Roles

Data scientists

Cybersecurity engineers

Computer-aided engineers

Cloud experts

System software design

Integration engineers

Skills

Enterprise SaaS business

Cloud, network, IoT, industry frameworks, Azure

Applied software applications and model build

Computer engineering, digital transformation

Embedded operating systems

3D modelling, power electronics and imaging

GCC Sector’s Challenges in Talent Recruitment and Retention

The GCC sector in India faces ongoing challenges in attracting and retaining talent amidst industry growth, including:

The diversified and multigenerational talent pool poses a risk in establishing effective succession planning in GCC leadership. The current IT talent pool in India is comprised mainly of Gen Zs and millennials who have a unique perspective at work compared to their older counterparts. To facilitate a seamless transition in the leadership pipeline, most GCCs focus on promoting talent retention and development programs, facilitating comprehensive knowledge transfer programs and improving benefits to attract young recruits.
Despite the availability of a large talent pool, GCCs find it challenging to onboard talent with highly specialised skills, such as emerging technologies (AI, ML, IoT) and software programming. GCCs in India are not branded as technology companies although they provide IT services and functions, and for this reason, they are competing with big multinational technology or internet companies that have an established “employer brand.” To mitigate this, most GCCs collaborate with specialised recruitment, workforce solutions and technology agencies, and academia to create, build and test their capabilities, and promote these for talent visibility.
GCCs and IT companies impacted by economic headwinds have resulted in moderate salary hike expectations and voluntary attrition of employees in the last two years as they switch to non-IT firms for job security. In 2023, it is estimated that this trend will continuously slow down, given that GCCs are improving their salary increase and attrition strategies.
Despite initiatives to promote diversity and inclusion, India’s gender equality level remains low. Continuous reinforcement and progressive developments to attract women into GCCs are being explored by several multinational companies to increase the representation of women in the workforce.