GCCs Revenue Growth To Be Higher Than ISPs: Report

New Delhi: As global capability centres (GCCs) continue to expand in India, their revenue growth is estimated to be 1-2 per cent higher than that of IT service providers (ISPs) in the next two-three years, compared to 3 per cent higher in the past few years, a report showed on Monday.

New GCCs are opening at a fast pace and, more importantly, existing GCCs continue to expand, as per HSBC Global Research.

“It's tough to generalise but based on our sample set of over 30 GCCs we met this year, GCC-to-outsourcing ratio may stabilise at 70:30 eventually (especially for banks) and we are currently at c65:35,” the report mentioned.

Improving value proposition in terms of cost and services have driven GCC growth in recent years.

However, a GCC's cost per head (salary and overheads) is still 25-30 per cent higher than an ISP's. This is due to inferior pyramid and higher like-to-like salaries at most levels.

However, ISPs have significant offshore mark-up (pricing/billing rate over costs) and compared to those billing rates, GCC costs are still 10-15 per cent lower, the report mentioned.

GCCs' value proposition to their parent companies has improved over the past few years and a lot of strategic transformation work is being executed by GCCs now.

Multiple GCCs mentioned that there has been a significant expansion of top management at GCCs in recent times, which reflects the growing influence of GCCs on their headquarters.

According to Deloitte, nearly 5,000 global leadership roles are currently in GCCs in India.

India has the largest base of 17 per cent of global technology capability centres, currently employing over 1.9 million (19 lakh) people. By 2030, the GCC market in India is estimated to grow to $99-105 billion, with the number of GCCs reaching 2,100-2,200 and headcount rising to 2.5-2.8 million (25 lakh-28 lakh), as per a latest latest Nasscom-Zinnov report.