The year 2023 has been characterized by continued macroeconomic headwinds, geopolitical tensions, and ever-shifting workforce priorities. These undercurrents have significantly influenced salary, attrition, and hiring patterns for enterprises as they strive to strike a balance between business prudence and talent retention. Despite these global hurdles, India stood out as a favored destination for organizations establishing their Global Capability Centers (GCCs), or Global In-house Centers (GICs). A testament to this trend is the notable establishment of 18 new GCCs during H12023, showcasing a strategic thrust by global entities to harness India’s rich talent pool.
Adding to India’s emergence as a GCC powerhouse, driven primarily by its abundant skilled workforce, is the emergence of global roles within these centers. In 2022, over 5,000 such roles emerged, with expectations for further growth by 2030. These global leadership opportunities highlight India’s crucial role in directing global operations for multinational corporations.
The ascent of offshore centers and the proliferation of global roles have intensified the demand for skilled professionals, notably in Software & Internet, BFSI, Chemicals & Materials, and Retail sectors, thereby influencing overall salary structures. Organizations are strategically focusing on talent retention efforts while concurrently engaging in aggressive hiring, driven by the establishment of new GCCs. This has given rise to a competitive landscape, prompting companies to adopt innovative recruitment strategies and explore diverse talent pools to meet evolving demands.
After rollercoaster swings amidst the pandemic recovery, talent strategy for enterprises took an aggressive turn in 2022 – one shaped by intense competition, uncertainty, and imbalances in a disrupted job market. With borders reopening and demand for niche digital skills spiking, organizations embraced a ‘pull out all stops’ approach, extending generous salary hikes to attract and retain capabilities. However, in the musical chairs shaped by “Great Reshuffle” tailwinds, attrition also breached past records across tech and non-tech roles.
This paradox of high attrition despite healthy hikes, stemmed from a hunger for richer roles, flexible options, and career growth spanning not just pay. It mirrored a shift in employee expectations post-pandemic. In response, a 29% annualized external hiring velocity was triggered between January to September 2022 – nearly 1 in 3 open roles saw external fulfillment. But this recruitment overdrive further fanned attrition embers as job hopping continued. Essentially teams were caught in a complex vortex trying to meet stakeholder demands amidst uncertainty, transition, and realignment enterprise-wide.
However, caution has emerged as a prevailing sentiment in the corporate landscape in 2023, fueled by concerns over inflation. H1 2023 data reveals a moderation in the number of new GCC setups in India, accompanied by a softening hiring velocity at 16% annualized. While salary hike decisions turned conservative, prioritizing critical digital capabilities, premium tech talent, especially in ER&D domains, continued to command higher remuneration due to a demand-supply mismatch. Across broader functions, average salary increments dropped by 1-2%, and some organizations even deferred hikes amid recessionary murmurs to manage inflated wage bills.
Simultaneously, with job movement slowing down, attrition rates showed signs of tapering, aided by a better talent supply that helped enterprises curb excessive employee churn. However, ER&D attrition remained elevated as digital skills continued to be in high demand.
As we enter 2024, enterprises are adopting prudent strategies that align budgets with the macroeconomic reality. Several key dimensions are expected to shape compensation structures, workforce composition, and recruitment decisions in the coming year:
Given current macroeconomic conditions and a narrowing talent demand-supply gap, organizations are expected to de-emphasize substantial salary hikes. The focus will shift to technological advancements and skill development, potentially reducing funds allocated for annual salary increases. A distinct employee value proposition will be crucial for talent retention, moving beyond reliance on competitive salary packages.
Prudent recruitment strategies in Indian start-ups and IT firms during global economic downturns are anticipated to yield fewer job opportunities and decreased migration from GCCs. Companies, particularly those with Private Equity (PE) backing, may see a slight increase in involuntary attrition due to ongoing rightsizing efforts. The advent of Generative AI aims to automate entry-level jobs, focusing on enhancing human capabilities and creating new opportunities.
Anticipate differentiated hiring strategies aligning with specific business needs, particularly for GCCs backed by Private Equity (PE) firms and those emphasizing niche skills. A slight reduction in junior-level hiring may occur due to budget constraints, favoring available talent over fresh graduates. Senior-level roles prioritize internal talent development. Generative AI’s impact could lead to job redundancies, necessitating the hiring of specialized professionals or upskilling the existing workforce. In 2024, expect an uptick in demand for green skills driven by eco-friendly objectives, covering areas like carbon footprinting, sustainability consulting, and climate data analysis.
In essence, the GCCs of India are confronting new intricacies, attempting to strike a delicate balance between specialized demand and the cultivation of a diverse talent portfolio. The path to sustained excellence demands an integrated approach, aligning strategies to leverage India’s abundant talent pool while anticipating global aftershocks. Piecemeal interventions may yield short-term results, but the foundations for enduring success lie in cultivating inclusive, future-ready competencies. As the GCC landscape navigates these uncharted waters, the watchwords are adaptability, foresight, and a commitment to holistic growth.
Approaching the threshold of a new year, the imperative for organizations is to comprehend and adapt to market dynamics for sustained success. This imperative is encapsulated in our comprehensive report titled “Salary Increase, Attrition, and Hiring Trends – An India GCC View 2023-24.” This report distills the essence of the job market, providing insights into salary trends, attrition drivers, and evolving hiring patterns within Global Capability Centres.
The report deep dives into –