GlC Conclave 2012-Co-creating Value

Document created by Nerurkar Diksha on Jun 16, 2016
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GICs have played an incomparable role in developing India as a powerhouse destination for IT-BPO services. Today there are more than 760 GICs operating out of India, across multiple locations. They generate almost 21 per cent of the industry export revenues, and employ 20 per cent of the manpower. GICs have also added significant value to parent organisations by saving costs, increased process efficiencies, faster time-to-market, establishing global best practices and developing solutions for the emerging markets.

 

Dynamic demand conditions have ensured rapid evolution in the GIC model. GICs are now uniquely positioned to drive value addition leveraging a set of acquired strengths including domain expertise, critical scale, co-location and understanding of emerging markets. The four key value dimensions likely to emerge and drive sustainable value proposition for GICs include operational efficiency, high skill capabilities, customer experience and revenue impact. India-based GICs continue to deliver strong stakeholder satisfaction, the next wave of operations excellence will require GICs to build distinctive capabilities in six areas - ( i) be a 'network manager', (ii) manage multiple governance archetypes, (iii) own end-to-end optimisation, (iv) increase focus on efficiencies, (v) manage business risks, (vi) drive business outcomes.

 

GICs continue to deliver 40-70 per cent cost savings even from a Total Cost of Ownership (TCO) perspective that includes costs associated with the setting up and management of GIC operations, in addition to the operating costs. Wage inflation in India is often touted as one of the drawbacks, but research shows that actual salary bands have historically increased at a much lower rate than what headline numbers sugge

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st. Further, GICs have been able to contain the impact of wage inflation by modifying the employee pyramid and using alternate talent pools. Additionally, lower growth of non-wage operating costs has ensured further moderation in overall cost inflation. Arbitrage-driven cost savings in India are likely to sustain for 12-15 years.

 

Additionally, with increased adoption of global network by GICs, the location strategy has become of paramount importance. Location selection is no longer a cost arbitrage decision as GICs now derive benefits such as innovation in services/processes, integrated acquisitions and market entry. The success of a GIC operation is increasingly depending on the benefits derived from a particular location, and the emergence of niche services is increasingly leading to the sourcing of talent across the globe.

 

At the same time, GICs in India have been investing significantly to build leaders of tomorrow. This not only includes nurturing leaders for global leadership roles, but building leaders who are in sync with new business models, and building a strong leadership pipeline including both in-grown and outside leaders.

 

GICs are an integral part of the industry, and NASSCOM and other stakeholders are committed to the continued success of this segment. As the GICs in India shape up for the next phase of growth, it is important to understand the extent of change that the industry has undergone, and the way forward.

 

You can purchase the report here: GlC Conclave 2012-Co-creating Value

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