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India is increasingly becoming a top choice for Global Capability Centers (GCCs). Currently, there are over 1,500 GCCs in India, and the number is slated to go up to 2,400 by 2030, according to an EY report.
The report also indicates that the GCC market in India is expected to reach $110 billion by the end of this decade.
Yet, despite the gold rush, there are numerous challenges GCCs face as they look to set up shop in the country. The most prominent among them, according to Innova Solutions president, APAC SBU, and India country head Pradeep Yadlapati, is branding.
“If you talk to engineers fresh out of college, they want to work for top IT companies because they don’t really know about these GCCs. They may be big brands in their respective countries, but they are not big brands here. So, they have a branding challenge as much as any other small company starting today,” Yadlapati told AIM.
Challenges for GCCs
As seen in the early days of outsourcing, there was scepticism, especially about outsourcing to India. Yadlapati pointed out that questions were raised on whether someone working remotely could effectively handle tasks traditionally done in-house.
Today, GCCs face a similar problem. “Teams have to collaborate closely with parent organisations to deliver value, manage change, and address cultural differences. Our research shows that nearly 30% to 40% of GCCs are unable to demonstrate value back to their parent organisation,” he said.
Other aspects that GCCs struggle with are estimating costs, operational expenses and economic models.
“Recently, I was speaking to a GCC in Hyderabad. They mentioned securing two floors in a building with less than 50% occupancy. They have plans to increase occupancy but are struggling to do so. They’re facing challenges in managing operational costs, which increase as they plan to expand. Additionally, navigating change in management introduces further complexities,” he said.
By solving this problem, Yadlapati believes GCCs can succeed in India and potentially solve the country’s employment problem. Referring to a recent report highlighting how campus placements have come down over the years, he said GCCs can fill the void.
“There are people scouting for opportunities, and GCCs can create these opportunities for them,” he pointed out.
Helping GCCs establish themselves in India
Nonetheless, as more companies look to set up GCCs in India, this presents a consultancy opportunity, and Innova Solutions, a relatively smaller IT company, is capitalising on it.
Innova Solutions has a substantial client roster in the US, comprising Fortune 1000 corporations and mid-market enterprises. Consequently, numerous companies seeking to establish GCCs in India are already part of their clientele.
“For the past two decades, we’ve collaborated with various clients, spanning financial services, analytics, healthcare, and other sectors, leveraging our extensive experience to facilitate their growth.
“This has helped us play a pivotal role in establishing them, providing India entry strategies, and supporting them in operationalising their ventures here,” Yadlapati said.
Adopting a four-tier strategy
So far, the Atlanta-based company has assisted numerous organisations in setting up GCCs in India across various sectors, including healthcare, BFSI (banking, financial services, and insurance), technology, automotive, and manufacturing.
“We begin right from the ideation stage and transition to what we term as the satellite state. Here, they focus on setting up operations, ensuring compliance, and strategising their workforce and workplace arrangements,” said Yadlapati, who has also spent over 26 years at Infosys.
Subsequently, they advance to become transformation catalysts for their organisations, establishing centres of excellence (CoE) and enhancing service maturity to drive value. They also enter the innovation phase, seeking transformation and new ideas.
“Throughout these stages, we provide support, leveraging our expertise in incubation, ideation, transformation catalyst roles, and innovation facilitation,” he said.
Furthermore, he emphasises that Innova Solutions’ presence across multiple cities in India, including Bengaluru, Pune, Hyderabad, Chennai, and Noida, serves as a significant advantage for the company.
“If you’re operating here, you understand that the cost structures differ between cities like Bengaluru, Hyderabad, and Noida. It’s not just about employee expenses; factors such as physical infrastructure, setup costs, and talent availability also vary significantly,” he added.
Given the burgeoning nature of this market, the company has also expanded its collaboration network to include independent consultants.
“We have onboarded seasoned professionals with 15 to 20 years of experience, bringing valuable insights to the table. They’ve previously led large businesses and are now part of our advisory team, enhancing our engagements,” Yadlapati said.
About Innova Solutions
Set up in 1998, Innova Solutions is a global digital transformation solutions provider that reports around $3 billion in annual revenue.
The company has over 1,100 customers globally and a strong presence in India. “We have a workforce of around 10,000 in India and about 50,000 globally.”
Even though the US remains the company’s biggest market, contributing 75-80% of revenue, India is emerging as an important market for Innova Solutions.
“Certainly, there’s a burgeoning revenue opportunity. Independent GCC advisors and consulting firms are instrumental in advising these companies. With the number of GCCs going up from 1,500 to potentially 2,400-2,500 in the next five to six years, there’s a clear need for expanded capacity in advisory and consulting services,” Yadlapati said.
Earlier this year, the company announced a comprehensive range of services tailored to meet the needs of GCCs, called Orion, which covers advisory and consulting, among other things.
This shift mirrors the evolution seen with SAP and Oracle, where a multitude of consultants became available as suppliers. This suggests that the GCC market may follow suit, becoming a supplier-centric ecosystem with an increased demand for advisory and consulting services, Yadlapati pointed out.
