CxOs expect to continue to use Indian GICs even as technology shifts

01 November 2017 5 min. read

Global In-house Centres, formerly called captive centres, continue to play a role in the wider organisation of large global organisations. India remains home to more than 1,100 such centres, which leverage relatively cheap regional talent to provide a range of designated functions to enterprise. The centres are set to continue to play a key role in enterprise operations, as a majority of CxOs are expected to increasingly rely on their capabilities into the future.

Indian Global In-house Centres (GICs) have increasingly become part of the wider global footprint of large, often multinational, companies. These centres operate in an offshore setting, and are delegated functions by large multinational organisations. There are around 1,100 such centres in India today, employing more than 800,000 people and generating revenues in excess of $23 billion.

GICs, like many aspects of the wider economic environment, face disruption from rapidly advancing technology. In a new report from Bain & Company, titled 'Global In-house Centres India', commissioned by industry association NASSCOM, the strategy consulting firm explores key changes to the environment in which Indian GICs operate, as well as moves the centres can make to meet changing demand. The report is based on 30 interviews with CxOs from Fortune 1000 companies and 80 interviews with GIC leaders.

GICs operational environment

Technological development appears to be accelerating, with companies across the world increasingly leveraging digital technologies to operate their organisation as well as interact with customers and clients. Overall, companies are increasingly focused on IT as a means of business expansion, with companies now spending 45% of the IT budgets on such expansion, compared to 20% previously.


These changes in technology offer risks, as well as opportunities to GICs. Overall, the increased focus on digital for cost reduction, as well as the cost effectiveness of GICs, may result in increased leverage of their services in the IT cost-saving domain, particularly related to domain expertise and automation. The shift is likely to see the use of the centres shift away from IT toward emerging digital and date related capabilities.

Key benefits of GIC

When asked what CxOs from companies see as the strategic rationale for operating a GIC in India, cost savings take the number one spot – as cited by 90% of respondents. Access to high-skilled talent is seen as the number two factor (cited by 70%), with Indian graduates continuing to be well trained, numerous, and relatively cost-effective.

While centres spend around 65% of their operation on average on sophisticated work, a further 35% of their operation is focused on low- and medium-skilled roles, with 23% of respondents citing such activity as a strong reason to invest in GICs. Other reasons cited include 'partnering with Indian ecosystem' (11%) and 'east of operating business' (4%).

When it comes to the words that CxO respondents most readily associate with GICs, 'Cost-saving', 'Talented' and 'efficient, reliable, agile and IT', all arise. Other respondents note time-zone, dedication, energy, but also 'frustrating' as associated benefits and difficulties.

Active engagement

The results mirror a recent study by A.T. Kearney, which found that India is the globe's most attractive location for Business Process Outsourcing (BPO) – one specific component of such captive centres.

While concerns around economic nationalism continue to increase, the survey respondents said that they are relatively sure that the role of GICs is set to expand. 70% of respondents, for instance, say that they think that GICs play an active role in top-of-mind investment priorities for enterprise, while the figure is closer to 85% among GIC leaders.

Respondents also say that they forecast CxO presence in GICs to increase, with 20% of respondents saying that one level below the CEO will work from a centre within the next 3-5 years, while 50% say that two levels below the CEO will actively work from such a centre within 3-5 years.

Scope of GIC work

Many of the CxO respondents (around 40%) also predict the scope of GIC related work to increase in the next 3-5 years, while around 20% expect it to remain the same. GIC respondents were found to be even more optimistic, however, with close to 70% foreseeing the scope expanding in the next 3-5 years.

Catering for the future

The research also found that around 50% of the CxO respondents are expecting increased dependence on GICs over third party vendors, while around 30% believe that dependence will decrease. GIC leaders remain colourfully optimistic, with more than 60% anticipating increased dependence on their respective centres.

Capabilities priorities

When it comes to catering to the different needs of enterprise clients across the GIC operational capabilities, each need will require a different focus. If, for example, traditional IT/digital is required, then CxOs will want to find ways of reducing spending on traditional IT to focus funds on digital, as well as the implementation of new digital initiatives. For GICs, this would mean focus on reducing the cost of ownership of traditional IT through automation, and external spending optimisation.

Last year Bain & Company, which has three offices in India (New Delhi, Mumbai and Bengaluru), released a report on the state of India's real estate market, finding that demand in the sector is forecasted to grow by 9% per year in the coming period.