The landscape for Global In-house Centres (GICs) within India has undergone a massive metamorphosis. What started out as low-cost centres have now transformed into places of innovation.
The numbers look promising, with India being the most-important destination for GICs globally, boasting 1,448 GICs that employ close to 74,500 employees and churning out $19.4 billion in revenues on average yearly with a 17% growth rate, going by a report of CMS IT Services.
It is estimated that GICs in India will touch $50 billion by 2020, said the report.
“As a GIC market, India has several things going for it; the first is its stature as a rapidly-growing digital economy. The country is already home to the world’s second-largest smartphone user base, as well as the second-largest internet user base,” said Arun Balasubramanian, managing director of Qlik in India, which is a global data intelligence company with a broad presence in Latin America.
Thanks to all this, Latin American firms (based in countries in both Americas where Spanish or Portuguese is the main national language) are looking to India, with Chile’s retail giant Falabella already surfing the GIC wave. To formulate a digital commerce strategy, the firm has partnered the Indian arm of software consultancy company ThoughtWorks.
What is interesting to note is that Falabella is the first Latin American enterprise to open a GIC in India.
Ashish Grover, global head of e-commerce and India technology head for Falabella, said, “The biggest advantage that India offers is scalability. It is possible to get good talent in a Latin American country but it is impossible to scale up easily.”
KS Viswanathan, vice-president of industry initiatives at National Association of Software and Services Companies (Nasscom), said that the availability of a different variety of skills plays a greater role than cost arbitrage. “The type of skills required for mobile commerce and internet commerce at the C- scale is widely available in India owing to the high number of qualified graduates,” said Viswanathan.
Siddharth Pai, founder of venture capital firm Siana Capital, said, “India has specific talent in areas such as technology, which is not available in Latin America. Hence, they come to India for greater capability and capacity.”
“Even if there is capability in the US or other developed markets, the cost is too high,” said Pai.
Qlik’s Balasubramanian pointed out that India has one of the largest and youngest populations in the world and will become the youngest nation by 2020. “At a time when countries such as the US, Japan, and China are facing the issue of growing dependency ratios, almost two-thirds of the Indian population is of the working age,” he said.
Sudhir Tiwari, managing director of ThoughtWorks India, said, “India is experienced not only in tech skills but also in understanding project management and the country has what it takes to deliver high-quality projects.”
Making another important point, Tiwari said that India acts as a central hub for most of the global digital transformation service providers and information technology (IT) companies. “Our Indian office works with all the global regional centres of ThoughtWorks, hence if you want to know what is happening globally in retail, come to ThoughtWorks India,” said Tiwari.
Nasscom’s Viswanathan said that India, and especially Bengaluru, is the global hotbed for retail currently. “If they are retail or e-commerce players, their main go-to place is India -- the world’s e-commerce strategy originates from Bengaluru.”
Viswanathan added, “Almost everybody (global enterprises) are here looking for people, skill and capabilities from Indians. For countries across the globe, including the likes of Japan, e-commerce strategies are being built in India.”
But Latin America has been late to the party. ThoughtWorks’ Tiwari explained: “The first wave of companies that opened shops were from the US, Europe, Australia and Germany. The second wave of companies was led by Malaysia and South-east Asia.” The third wave could come from Latin America, Tiwari said.
Language is an inhibiting factor
Despite the promise, language barrier poses a problem for Latin American firms looking to India.
“Language is a problem; however, what I’ve noticed is when you know that language is not common you work extra hard to understand and the work is done better,” said Falabella’s Grover.
In an ideal world, it would’ve helped if Latin American companies widely used English.
Viswanathan said, “So any industry that is language-centric might not come to India, while industries that are non-language-centric could see growth here.”
Clear bright future
“CxOs must concentrate on improving the data-readiness levels across their Indian GICs by deploying dedicated data literacy initiatives and leveraging advanced visual and conversational analytics, such as those offered by Qlik,” says Qlik’s Balasubramanian. (CxO is a collective term referring to all C-level corporate executives who have "chief" and "officer" in their job titles.)
The landscape looks set to host Latin American companies for their digital transformation journeys, with Falabella the first and the only one among them to have set up shop so far in India. Many non-Latin American firms have also entered the country in the past. For example, US insurer MetLife Inc. started operations in India about a decade ago, while Anheuser Busch Inbev NV, a Belgium-based company engaged in the brewers industry, came in 2016.
The future looks bright for Indian digital transformation providers. Nasscom’s Viswanathan said, “North Americans understood and played their cards really well. The knowledge is now moving towards Latin America and there are many more opportunities to come towards Indian IT companies from the region.”