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Financial business case/ model for GIC in India

What are some of the key elements to be factored while creating a financial/ cost model for a new GIC in India? Including both one time and recurring cost elements. 

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  1. You can break it into three broad categories
    1) Operating Costs (recurring, but easier to quantify)
    1.1) People Cost – This will be the highest component of the total cost and will depend upon the type of work (i.e. IT, Operations, Analytics etc.) and skills (e.g. transactional vs. knowledge based)
    1.2) Facilities – This will depend upon multiple factors such as buy vs. build, location of the facility (SEZ vs. Non-SEZ). Lease terms if renting. Independent vs shared space. Facility size, utilities etc.
    1.3) Technology Infrastructure – Telecom bandwidth incl. backup
    1.4) Other Recurring Costs – Cost of attrition (attrition rates can vary between 10-20% depending on the type of work – which will directly impact the cost of backfilling those roles), employee transportation (cabs and other perks which are table-stakes these days), cafeteria meals (usually subsidized and hence a recurring cost), corporate security (will depend on the size of facility, # of employees etc).
    2) Cost of oversight (recurring, but difficult to quantify) – if the parent company is in another country then there will be a cost of time commitment required by the leadership and other horizontal functions to align the GIC to the parent companies processes etc (e.g. HR, Finance, Risk, Legal etc.), there will also be cost of BU oversight if the GIC is supporting different business verticals
    3) Transition Cost (one time cost to the company) – if the work is moving from the parent company to the GIC then there will be a cost linked to knowledge transfer, parallel processing, severance cost, travel. this may be spread over multiple quarters/years, depending on the transition plan.

    Hope this helps.

    Feel free to contact me if you have any follow-up Qs.

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