Global Demand for Back Office Support from India Turns Higher
International companies are looking towards India with hope. Companies like JP Morgan Chase predicted the growth and potential of talent in India in 2002 and, hence, established their set-up with only 75 members. Today, this count has surpassed the figure of 50K across India.
The reason is to nurture talent in India. Now, traditional IT solutions providers like Infosys and TCS are boosting the trend of setting up global capability centres. These units have made this Asian country a strong exporter of software services. Here, these centres, also called global capability centres (GCCs), are able to provide back-office support for account, human resources, data management, cloud, and analytics with cyber security systems and artificial intelligence.
Global Capability Centres (GCCs) are such commercial units that leverage local talent pools and resources. These resources provide specialized services such as IT, finance, research, and development. These centres emerge as a helping hand for companies that get exposure to global markets. With their support, the beneficiary companies enhance operational efficiency and foster innovation without compromising on their core functions and processes.
Let’s figure out why global demand for back-office support from India is turning higher through these GCCs.
Let’s try to find them out below.
Reasons Why Back Office Outsourcing Is Increasing from India
Focus on value creation
Global businesses expect solutions, and beyond that, value. After the outbreak of pandemics, the export of services from India has sharply increased its GDP. Its impact was seen on the growth rate of exporting businesses, especially between FY20 and FY23. Certainly, the primary reason for its fostering was the pandemic. And later, the Russia-Ukraine war triggered global inflation, which put pressure on wages. All these circumstances encouraged global companies to prefer India for supporting their back-office operations and balancing their budget.
At present, these corporate entities no longer view GCCs as back-office assistance services but as vital to build global solutions and generate ways for additional revenues.
These days, PwC India is guiding them in implementing automation and best practices for data governance so that new capabilities can be derived in the domains of artificial intelligence and machine learning.
Cost-effective back-office services
Another reason for increasing back-office service demand in the global market is cost. This country has human resources and IT infrastructure available at an affordable price, which is a low operation cost in India. Overall, the labour cost here is low if one collaborates with back office support companies in India. So, multiple developed countries hire human resources as a third party to fulfill their backend requirements without breaking the budget.
Assisting Start-ups with Global Technologies
India has a robust engineering research and development (ER & D) service providers’ community; GCCs leverage it with startups and peer communities. These GCCs have set up more than 15 incubators, 40+ accelerators, and many partnership programs to collaborate with Indian start-ups. Considering the healthcare and pharma GCCs, they have aggressively started partnering with new companies and academia to evolve new technology. These collaborations are aimed at establishing innovation labs and backing hackathons and start-up incubators.
Acquiring Talent Pools in Tier-2 Cities
Considering the infrastructural and technological aspects, India has significantly improved. This is why the count of GCCs here is increasing like never before. And this could not be possible without the requisite talent pool and its capabilities.
With nearly 1.5 million engineering students graduating every year, this developing country occupies the maximum number of tech talent. This is why global companies are coming here to share space with the GCCs. Additionally, this nation has the lowest gap between demand and supply, which is 21.1% if you compare it with the leading tech nations like China, the US, and the UK. At present, it has over 1600 global capability centres, and out of them, 78% of them are engaged in augmenting a better talent pool, as per a source.
Global capability centres have proliferated and expanded at a rate of 11 percent a year since 2015 to become a $46 billion industry employing 1.7 million people in India, according to NASSCOM. Real estate group Colliers predicts the number of GCCs in India will multiply from 1,026 in 2015 to 2,000 by 2026.
These GCCs are doubling their workforce in 2023, which is 92% located in tier-1 cities like Bangalore, Hyderabad, and Chennai. And the preferred Tier-2 locations for these centres are Ahmedabad, Kolkata, Vadodara, and Coimbatore. And the prospective cities can be Jaipur, Nagpur, Kanpur, Visakhapatnam, Chandigarh, Indore, Guwahati, and Lucknow.
Favorable Policies of the Government
The Indian government is promoting the growth of these units to increase the export of back-office services. Its positive approach appears in favourable policies, such as land subsidy under the UP IT and ITeS policy 2022–27, which provides 50% of the CoE set-up cost, incentives for personnel, an IT park incentive, and FSI. This government collaborated with IIT Kanpur, IIT BHU, and IIIT Prayagraj.
Likewise, there is another policy called Tamil Nadu ICT Policy 2018–23, which provides land subsidy, IT park incentive, FSI, stamp duty, power subsidy, IP/patient, and OSR provisions for SEZ. This policy aims at promoting TNSDC to upskill over 100,000 in the coming four years through kills and training centres, joint training programs, and certificate courses.
These are the main reasons that are increasing global demand for back-office solutions from India.
Summary
Global demand for back-office solutions from India is scaling for multiple reasons. The first reason is the value for investment, talent pool, favourable government policies, and value additions by the global capability centres that are backed by multinational companies like TCS and NASSCOM.
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