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35 years ago, Indian Service Providers like Infosys, Wipro, and TCS built talent pools in India, with great L&D programs. Eventually, big tech and other companies swooped in, taking with them the crème de la crème of talent.
15 years ago, EPAM, GlobalLogic, Softserve, and others replicated this model in Ukraine. Again, a plethora of global and home-grown companies set up their centers and fought for the same talent.
Similarly, over the last 10 years, Softek and others, built talent pools in Mexico, while FPT and others replicated it in Vietnam.
Companies have been relying on globalization to diversify their footprint to leverage top talent, drive innovation, and recession-proof their businesses for several decades now.
Today, as the world heads towards a recession, companies again need to de-risk their business and build a defensible moat against a recession. But how? By setting up Global Capability Centers (GCCs) or Global Captive Centers (as they were formerly known as) in one of the global talent hotspots.
A recent Bloomberg report cited that countries like India (0%), China (12.5%), Brazil (15%), etc., in all likelihood, won’t be bogged down by a recession. Compare this to the US (65%), the UK (75%), Canada (60%), etc., where the probabilities of a recession are high to extremely high. In such a scenario, businesses need to not only build in resilience to withstand a recessionary environment but also diversify their risk by leveraging global talent hotspots around the world. This is where a multi-hub strategy comes into play, which reduces the impact of any one location’s economic, political, or social upheavals on a company. It also ensures business continuity.
Setting up Global Capability Centers or Global In-house Centers (GICs) can help businesses achieve significant cost savings, while also accelerating innovation and driving digital transformation initiatives. These centers are offshore or nearshore subsidiaries that enable organizations to extend their global reach and capabilities. In fact, many companies have seen more than 20% reduction in their Engineering, IT, and Operations costs because of their global centers, thus giving them a competitive advantage. Exploring the potential of a global center is beneficial in many ways –
1. Access to a wider, richer talent pool: A GCC can provide access to a broader range of skilled talent from around the world, allowing companies to find the right/best talent for their needs – both current and future.
2. Increased efficiencies: A GCC can enable streamlining of operations and bring in efficiencies by centralizing certain processes, such as customer service/experience, IT support, HR services, or the Finance function. GCCs also bring in cost efficiencies through access to affordable talent in hotspots such as India, at almost one-third the cost in the US. Lower labor and operational costs in offshore or nearshore locations lead to significant cost savings compared to running the same operations in more expensive locations. Additionally, the presence of a vibrant and well-established ecosystem of vendors and partners in India can also accelerate the GCC setup process. The conducive regulatory and compliance frameworks have added to the speed at which GCCs are now set up in India.
3. Improved customer experience: By diversifying risk and setting up GCCs in different time zones/regions, ensures 24X7 coverage and support, thereby enhancing customer experience.
4. Increased flexibility and scalability: A GCC can enable greater flexibility for businesses, especially in adapting to changes in the market, and scale their operations as needed.
5. Enhanced innovation: A GCC can offer exposure to newer markets, cultures, ideas, perspectives, and technologies, providing businesses with new opportunities for innovation and growth.
There are rich technology ecosystems in diverse geographies around the world, which serve as talent hotspots for organizations looking to de-risk their business. As part of Zinnov’s COE Hotspots of the World study, we identified 17 countries across North America, Latin America, Central and Eastern Europe, and Asia Pacific, and evaluated them across 4 key parameters – Talent Availability, Software Engineering Ecosystem Maturity, Ease of Doing Business, and Cost Analysis. Of the 17 countries evaluated, 13 are existing talent hotspots, while 4 are emerging locations. And India, Canada, China, Poland, and Mexico have emerged as the top 5 global talent hotspots, with the capacity to house full, scalable software product engineering teams.
India, China, and Canada have some of the most mature software engineering ecosystems, housing Z1000* companies’ global centers. In fact, these 3 countries are favored destinations for companies across industries to set up GCCs in – including Automotive, BFSI, Consumer Electronics, Industrial, Software & Internet, Telecommunications, Aerospace & Defense, FMCG, to name a few.
These top locations also have vibrant start-up ecosystems, along with dynamic Service Provider communities. With 20,400 start-ups, India is the third largest start-up ecosystem in the world, and follows the US at 72,560, among the evaluated countries. China rounds off the top 3, with 10,500 start-ups. These start-ups are a hotbed of innovation and act as steady pipelines of talent for other companies in the ecosystem.
From human migrations in the BCE era to the rise of the East India Company and British colonies – Globalization is as old as time itself. However, if we were to put the zeitgeist of the current times in one word, it would be Globalization. Today, having a robust multi-hub strategy is not just an imperative but a non-negotiable. The recent pandemic and now a recession, have already given us ample evidence of how having GCCs can not only safeguard companies against disruptions, but also keep companies ahead of the competition. Hence, companies that want to recession-proof their organizations, will overlook globalization at their own peril.
*Z1000 is the database of the top 1000 R&D spenders in the world
Global Capability Centers (GCCs) are in-house centers that include a global insourced team of full-time employees who work in alignment with the vision and culture of the company, establish expertise, and drive innovation. These centers add value to business-critical operations that drive global functions.
A global recession has compelled businesses to diversify their footprint to leverage top talent, drive innovation, and recession-proof their businesses. Global Capability Centers (GCCs) or Global Captive Centers (as they were formerly known) are helping organizations to de-risk business by leveraging the talent, innovation, and technology ecosystem in one of the global talent hotspots.
A multi-hub strategy can help businesses achieve significant cost savings, while also accelerating innovation and driving organization-wide transformation initiatives. In fact, many companies have seen more than a 20% reduction in their Engineering, IT, and Operations costs by setting up Global Capability Centers or GCCs in global talent hubs, thus giving them a competitive advantage.
A Global Capability Center offers operational and cost advantages to the global parent organization by helping gain access to new talent pools and innovative ideas, get round-the-clock support, stay up to date with digital needs, and achieve automation goals.
Global Capability Centers (GCCs) have always delivered cost savings. Enterprises set up GCCs as cost arbitrage centers, to access and run internal processes at a much lower cost, but also to drive innovation and de-risk the business. These centers are considered tech enablers and innovation hubs that help bolster business outcomes. In essence, GCCs maximize efficiency and unlock new business possibilities for the enterprise.
There are rich technology ecosystems in diverse geographies around the world, which serve as talent hotspots for organizations looking to de-risk their business. As part of Zinnov’s 2023 edition of the Global Talent Hotspots of the World study, we have identified 17 countries across North America, Latin America, Central and Eastern Europe, and Asia Pacific, that have the potential to house full, scalable software product engineering teams. We have evaluated them across 4 key parameters – Talent Availability, Software Engineering Ecosystem Maturity, Ease of Doing Business, and Cost Analysis.
India, Canada, China, Poland, and Mexico have emerged as the top 5 global talent hotspots, with the capacity to house full, scalable software product engineering teams across various functions, including product engineering, software development, and more.
India, China, and Canada have some of the most mature software engineering ecosystems, housing Z1000* companies’ global centers. In fact, these 3 countries are favored destinations for companies across industries to set up GCCs in – including Automotive, BFSI, Consumer Electronics, Industrial, Software & Internet, Telecommunications, Aerospace & Defense, and FMCG, to name a few.
The Global Capability Center (GCC) talent hotspots identified by Zinnov consist of vibrant start-up ecosystems, along with dynamic Service Provider communities. With 20,400 tech start-ups, India is the third-largest start-up ecosystem in the world, and follows the US at 72,560, among the evaluated countries. China rounds off the top 3, with 10,500 start-ups. These start-ups are a hotbed of innovation and act as steady talent pipelines for other companies in the ecosystem.
Today, having a robust multi-hub strategy is not just an imperative but a non-negotiable. The recent pandemic and now a recession, have already given us ample evidence of how having Global Capability Centers (GCCs) can not only safeguard companies against disruptions but also keep companies ahead of the competition. Hence, companies that want to recession-proof their organizations, will overlook globalization at their own peril.
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