How To Heal Achilles Heel From India Internal World Centers
By Vidya Amarnath
Internal global centers, classified as owned or outsourced, value-added partner or strategic entity, or set up for profit enhancement or rapid business activation, transitioned from voice support centers in the late 1990s to today’s centers of innovation.
For the uninitiated, for those with partial knowledge of GICs, and others familiar with the model but eager to learn more, here’s an overview before we get to the hottest topic among us, which one can open doors to thousands, relieve hiring stress, usher in a new boom, and light up faces in the corner room.
The estimated revenue projection for the GIC vertical is $350 billion by 2025 (this is only the India figure, so now we have the full attention of CXOs, HR managers, recruiters and job seekers).
Simply put, a pure-play GIC is an offshore unit of a global multinational. The parent company may be in manufacturing, financial services, banking, software development, personal computing, pharmaceuticals, life sciences, aviation, and other areas that facilitate a bundle of deliveries from a remote location, for reasons of cost, efficiency, risk mitigation, or lack of cost-optimal resources in the country of origin.
Early adopters of the GIC model were call centers and transaction processing units of foreign entities. The outstanding performance of these pioneers encouraged a dynamic set of professionals (some of whom were running GICs early in their careers) to partner with VCs and create 3rd party call centers.
In the late 90s and early 2000s, the concept achieved remarkable success and incredible efficiency, giving rise to several new business models. Some of the captives became 3rd party centers.
At the turn of the first decade, BPOs were followed by KPOs which proved that India could expand its reach from cost and value to intellectual arbitrage. The niche stream dealt with the process outsourcing of knowledge-intensive and data-driven activities relating to areas such as life sciences, engineering design and development, data analytics, market studies and business research.
The pandemic, its sequels and its recurring waves are reviving the captive model of the GICs. The task of building a center of excellence is often entrusted to a 3rd left with a reputation for delivering high-quality talent, technology and leadership.
Now let’s get to the bottom line: if there’s one thing that India doesn’t lack, it’s talent, and when it comes to the space to create infrastructure, a decade and a half earlier, that’s was when cities realized that their peripheries could evolve into satellite cities and IT corridors to house global companies.
As the delivery continued to be seamless and the performance graph exceeded expectations, the low-key British boss exclaimed “Good Show”, while the American counterpart dubbed the concept a “Slam Dunk” and the impassive German Direktor said “Sehr Gut”.
‘Aiyo’ said Indians in the know. Being a stoic breed, we believe that all good things will come to an end, and the red flags of the GIC model are concerning. What could afflict an industry that, according to NASSCOM, has been growing annually at a CAGR of 11% since fiscal 2010?
The IT industry’s umbrella body says in a recent report that multinationals operate more than 1,000 GICs in India. Yet there is a gradual backsliding that few pay attention to: talent search, onboarding, training and retention. Four vacancies hunt every tech-savvy candidate and the demand for IT professionals has at least doubled in the past 14 months according to the Personnel Federation of India.
This is where we’ll return to GICs – and review the talent shortage that has manifested itself over the past few years and offer a solution before it’s too late.
With most of a GIC’s staff comprised of in-demand technicians, the instinctive solution is to consider incentives, ESOPs, and attractive compensation. Lame course. Explain the paradox of four offers for a candidate described above. University recruitment? Clever answer and you’re almost there. But I hope you can find a campus to recruit in the 4th wave.
The answer is to find off-campus freshmen or those who have recently entered the workflow. Ask a friend in HR and they’ll tell you that “new” means anyone with 0-2 years of work experience.
Arguably, the beginner path is as old as IT development centers, BPOs, and back offices. What compels us to see the current situation differently? Recognizing that emerging technologies are at the heart of GIC’s delivery, we must accept that today’s new graduate is not ready for the job.
The need today is development, for which new recruits must follow a two or three month program, focused on the requirements of the role they are expected to play in the GIC. What technologies are the GICs looking for? Cloud Computing, Data Analytics, Full Stack Development, Machine Learning, Linux, Big Data, Data Visualization, Data Science and more.
The major growth segments for which as many as 100 GICs are expected to set up shop in India this year are automotive, online travel, engineering, BFSI, retail/consumer packaged goods, manufacturing and health care. ANSR, a leader in the creation and operation of global capacity centres, estimates that new GICs and industry expansion will create 300,000 to 350,000 new jobs over the next three years.
Here is a checklist for building and maintaining a talent pool that is able and willing to deliver:
- Be in constant touch with the placement cells of leading colleges across India.
- Advertise in the media or on online job boards if you think the competition is preparing as well as you are.
- Create your own set of influencers.
- To ensure that hired candidates don’t feel out of place (a major reason for attrition), opt for local sourcing and placement.
- Source of “finishing schools” that help new graduates get up to speed in in-demand fields such as vision computing, AI, ML, vendor security, platform engineering, data engineering, IoT Cloud platforms and python programming.
It’s not just the GICs that are looking for talent. According to Monster’s annual trends report, IT as a vertical is expected to grow 7% in 2022, resulting in a gross increase of approximately 450,000 employees in the second half.
The good news is that hiring for freshmen accelerated in the last three months of 2021 and is expected to increase significantly in 2022, according to the Monster report.
India’s top four IT companies have doubled their 2021-22 hiring targets for freshmen, moneycontrol.com reports. The reason for the focus on freshmen is what we’ve been saying all along – India’s digital transformation journey and growing attrition among experienced professionals.
In the midst of such a shortage of talent, the penchant and practice of integrating only experienced professionals is almost utopian. Shortage of skilled talent and reliance on experienced resources will also drive up personnel costs in CPGs.
It’s time for GICs to attract and retain newbies through the Hire-Train-Deploy approach. It’s also time to develop a hybrid working model or shift to location-agnostic hiring. Those who stick to the old ways will have to fight attrition, engage in backfilling, and continue to heal their Achilles heel.
(The author is a pre-sales and profit specialist in the GIC vertical. The opinions expressed are his own).