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Global Capability Centre Sector Can Scale Up To USD 60-85 Billion In 5-6 Years: Report

The number of employees in GCCs has grown 75 per cent (from 7,50,000) and overall revenues expanded by 11 per cent CAGR (compound annual growth rate) from USD 19.4 billion in 2014-15

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The global capability centres (GCCs) sector can potentially scale up to USD 60-85 billion in the next five-six years, according to a report by Nasscom-Deloitte.

According to the report titled 'GCC value proposition for India', the country has become home to capability centres of over 1,300 global organisations, directly employing over 1.3 million people, generating about USD 33.8 billion in revenue as of FY2020, and creating a strong ripple effect in the Indian economy.

The number of employees in GCCs has grown 75 per cent (from 7,50,000) and overall revenues expanded by 11 per cent CAGR (compound annual growth rate) from USD 19.4 billion in 2014-15. About 20 per cent of the growth in centres came from new organisations.

GCCs are captive centres that handle operations (back-office functions, support functions, and contact centres) and IT support to enhance productivity. Some large companies use GCCs as a centre of excellence as well.

'While India has significantly contributed towards the growth of global orgnisations with GCCs leveraging quality talent and capabilities in India, GCCs have also contributed significantly in return.

'The first wave of GCCs was primarily driven to provide the 'wage and cost arbitrage' benefits to the global organisations who were eagerly looking to free up capital to invest in their growth,' the report said.

It added that the sector has provided value far beyond the anticipated 'wage and cost benefits'.

The report said the GCC sector contributes USD 99-103 billion of the total gross output, USD 5.4-5.6 billion in taxes, and provides employment for 5.2-5.5 million people.

'...there is an opportunity for growth among existing GCCs to increase penetration in global operations as well as attract new GCCs from global organisations, not present in India,' it said.

It said the majority of GCCs are not at scale, and that an average GCC penetration of 3.5-4 per cent presents headroom for growth across sectors, along with smaller centres also scaling up.

The report said the sector could grow at 12-20 per cent CAGR, resulting in the sector touching USD 60-85 billion in about five years.

The additional growth would also amplify associated benefits of GCCs — increase in CSR spending, infusion of global best practices, and increased investment in human capital, it added.

The report noted that a few GCCs have successfully experimented with mentoring start-ups, which has significantly accelerated the evolution of the start-up ecosystem in India.

'While GCCs were set up with the intention to provide value to their global organisations, they have, in fact, emerged as a strong contributor to India's progress,' it added.

The report also said the sector has emerged not only as an employer and a source of rich skills for the ecosystem but also as a significant channel to bring global best practices to India, enhance India's reputation as a global tech major through creation of world leaders, as well as provide the talent pipeline for India's start-ups. P

(PTI)