How GICs in India can help global companies to better compete amidst recession and turbulent times?


How GICs in India can help global companies to better compete amidst recession and turbulent times?
Posted : June 12th, 2023

Introduction

India is considered the top location by MNCs for generating high-quality work in an efficient and cost-effective way according to the reports from NASSCOM. Over the past 20 years, GICs have flourished and gained in popularity in India. As more GICs are founded, the road to being a part of a global workforce and technical innovation is paved for top IT professionals in India. Top IT talent in India will have access to GICs as they gradually broaden their activities across sectors and create multiple opportunities.

Global In-house Centers in India provide a cost-effective, highly skilled, educated workforce, a favourable time zone, and supportive government policies, making it an ideal destination for multinational corporations looking to expand their global operations.

Despite the challenges posed by the pandemic, GICs in India have remained resilient and continue to be a favoured destination for multinational corporations. The Indian government has implemented various measures to support the IT industry and GICs, such as providing tax incentives, reducing regulatory burden, and facilitating infrastructure development.

In addition, GICs in India have adapted to the changing business environment by adopting remote work models, investing in digital transformation, and diversifying their service offerings. This has allowed them to remain competitive and continue to provide high-quality services to their clients. Overall, GICs in India are expected to continue to grow and play a significant role in the global economy, leveraging the country’s skilled workforce and favourable business environment.

Factors driving recession-hit global businesses to Indian GICs

Recessions can have mixed effects on global capability centers, which are typically offshored or outsourced operations centers that provide support services to multinational corporations. On the one hand, recessions can lead to cost-cutting measures by companies looking to reduce expenses, which can increase demand for outsourced services and drive growth for capability centers.
Additionally, companies may turn to global capability centers to access cost-effective talent in countries with lower talent costs.

Reduction in budget and workforce:
Cost arbitrage of multinational corporations has been a significant driver of the growth of capability centers in India. MNCs tend to lay off employees because of constraints on budget and expensive workforce in developed countries like the USA and European countries.
India has emerged as a preferred destination for these centers due to its large pool of skilled talent, lower talent costs, and stable business environment. Companies that establish capability centers in India can benefit from significant cost savings, with studies suggesting cost reductions of up to 70% compared to onshore operations.

Robust infrastructure and latest Technology stack:
Indian GICs have a robust technology infrastructure that can support complex operations of businesses. This includes high-speed internet connectivity, data centers, and cloud computing services, making it an attractive destination for companies looking to establish their GICs. Capability centers can provide a range of IT services, including software development, application management, infrastructure support, and data analytics, among others.
At Systems Plus we have employees skilled in over 150+ technologies.

Favourable government policies:
The Indian government has been supportive of foreign investments in the country, offering tax incentives and subsidies for setting up GICs. This has led to a conducive environment for businesses to operate in India.

  • Ease of Doing Business: The Indian government has taken several steps to simplify the process of setting up a business in the country. The Ministry of Corporate Affairs has introduced an online portal, which enables businesses to complete the registration process within a day.
  • Tax incentives: The Indian government offers several tax incentives to foreign companies setting up GICs in the country. IT is regarded as one of the top 5 priority industries in India. IT is a part of the national agenda, and policies are framed so as to obtain maximum benefit out of IT outsourcing to India.
  • Special Economic Zones (SEZs): The Indian government has set up SEZs, which offer a range of benefits to companies, including tax holidays, duty-free imports, and infrastructure support. SEZs are designed to promote exports and are an attractive option for companies looking to set up GICs in India.
  • Single Window Clearance: The Indian government has set up a Single Window Clearance mechanism to simplify the process of obtaining various clearances and approvals required to set up a business in the country. This reduces the time and effort required to complete the process and encourages more companies to invest in India.

“During this era of talent disruption, a proactive talent strategy is vital to weather the storm. Organizations must move beyond tactical approaches to technology talent and embrace a more strategic mindset.
The value generated by talent increases as the approach becomes more strategic. With talent accounting for 40-60% of an IT cost structure, failing to optimize IT talent means failing to optimize the IT budget.”
– Sapan Choksi
CEO, Systems Plus

Strategies for businesses to navigate the recession through GICs

The global recession has created challenges for businesses across industries. Many companies are struggling to maintain profitability and generate revenue, leading to increased pressure to cut costs and streamline operations.

The strategies that businesses can adopt to navigate the recession through Global In-house Centers (GICs) are:

  • Focusing on cost-effectiveness: One of the primary benefits of leveraging GICs is cost savings. By outsourcing non-core activities to GICs, businesses can reduce their overhead costs, lower their wage bill, and improve their bottom line. GICs can provide access to a skilled and cost-effective workforce that is trained in specific areas such as IT, engineering, research and development, and other critical functions. GICs can also offer competitive pricing and flexible engagement models, enabling businesses to scale up or down as needed.
  • Focusing on Talent productivity: GICs can help businesses improve productivity by leveraging advanced technology, best practices, and specialized expertise. GICs provide access to a highly skilled workforce with a deep understanding of the business and the industry. This enables GICs to provide solutions that are tailored to the specific needs of the business. The use of advanced technology and tools can also help to streamline processes, reduce errors, and increase efficiency. GICs can also offer flexible engagement models and operate around the clock, enabling businesses to maximize productivity and reduce downtime.
  • Diversifying services: By diversifying their services, businesses can increase their revenue streams and mitigate the impact of declining demand in specific areas. For example, a company that specializes in software development can leverage GICs to offer more advanced skills and technologies like AI & ML, and data analytics for assorting further customer data. This can help businesses tap into new revenue streams and broaden their customer base.
  • Investing in innovation: Innovation is critical to driving long-term success and competitive advantage. By investing in innovation through GICs, businesses can access cutting-edge technologies and specialized expertise to develop new products and services. This can help businesses differentiate themselves from their competitors, tap into new revenue streams, and adapt to changing market conditions.
    GICs can provide businesses with access to advanced research and development capabilities, including state-of-the-art infrastructure and specialized professionals with experience in developing new products and services. By leveraging GICs, businesses can drive innovation and create value for their customers and stakeholders.
  • Embracing digital transformation: Digital transformation is another key strategy that businesses can adopt to navigate the recession through GICs. The pandemic has accelerated the adoption of digital technologies across industries, and businesses that embrace digital transformation can gain a competitive advantage. GICs can provide businesses with access to cutting-edge technologies and specialized expertise to support digital transformation initiatives. This can include advanced analytics and data science capabilities, artificial intelligence, machine learning, and cloud-based services. By leveraging GICs to embrace digital transformation, businesses can improve their operational efficiency, enhance their customer experience, and drive innovation.

The outlook of GICs in India

India is a favorite destination for foreign players due to its focus on global efforts. An intercontinental mindset, proactive thinkers, and cutting-edge engineering capabilities are some of the other reasons why India is a top choice. India also has an advantage over nations like China because of traits like extensive English fluency, cultural adaptation, and alignment with MNC culture.

We as a GIC service provider are focusing on a few areas to develop:

  • Enhancing capabilities, leadership quality, and the existing talent pool:
    GIC providers like us are prioritized in building the right leadership and mindset for next-generation business leaders. With the growing complexity of business functions, it is imperative to have a strong leader with domain expertise who can fulfill the enterprise’s strategic objectives.
  • Invigorating an innovative work culture:
    An organization’s culture is crucial in determining its viability. It is essential to establish an innovative workplace culture in a world driven by digitization. To retain harmony with the parent organization, employees and management should be encouraged to embrace rapidly evolving technology with high levels of cross-company communication.
  • IT, automation, and data analytics:
    We are prioritizing adopting the latest technologies from A.I. to data analytics to generate a sustainable competitive advantage for the enterprise in its function.
    It’s a must for us to perform key tasks in areas including process excellence and automation, IT security, and business intelligence.

As a GIC unit navigating through a recession-hit industry, it is important to stay proactive and adaptable to changing market conditions. While the current economic climate may present challenges, there are steps you can take to weather the storm and come out stronger on the other side.

First and foremost, it’s important to focus on cost optimization. This may involve finding ways to streamline operations, reduce unnecessary expenses, and leverage technology to improve efficiency. By controlling costs, you can improve your bottom line and increase your organization’s resilience in the face of economic volatility. In conclusion, while a recession can be a challenging time for businesses across industries, there are several strategies you can employ to navigate through the uncertainty and emerge stronger. By focusing on cost optimization, diversifying your services and offerings, investing in talent management, and staying informed about market trends and regulatory changes, you can position your organization for long-term success.

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