GICs in India transform to become revenue drivers2 min read . Updated: 10 Mar 2021, 12:06 PM IST
- Even as GICs drive revenues for their parent entities, they have not been able to transform into revenue centres because of the complexities involved
BENGALURU: Global in-house centres (GICs) in India, which began as cost centres of large multinational corporations, are now becoming key revenue drivers, generating sales and winning deals.
Traditionally, GICs were involved in technology building, but over the years the lines have blurred with increasing domestic opportunities. Large retailers such as Walmart and Tesco expect their Indian GICs to tap the huge domestic market for business, said one person familiar with the matter.
Also Read | The churn is on at the Kota factory
“It’s like an internal chargeback mechanism. GICs are now expected to not just provide technology support but also generate revenue by winning IT deals on their own. Besides, as GICs are developing their own products, they are also trying to sell to the market," said Harish Pillai, director and country head, Randstad Sourceright India, a talent management solution provider. "The parent companies are clear that if they are investing in a GIC, they should not merely be a cost centre but should be self-sufficient and generate revenues as well."
As Indian GICs move up the value chain, parent companies are increasingly leveraging common global leadership teams instead of regional leaders to manage operations.
“Earlier, there used to be a GIC head for every region. Now, the roles are more verticalized where each business is overseen by a global leader, not necessarily with any local reporting structure," Pillai said.
However, even as GICs drive revenues for their parent entities, they have not been able to transform into revenue centres because of the complexities involved.
“There are some tax implications if GICs are to become revenue centres as they are, by construct, service delivery entities that enjoy certain tax incentives such as being locating in special economic zones. So, the set up is done in such a manner that GICs do the core product development work and business is done through a separate legal entity," said Lalit Ahuja, founder and chief executive officer, ANSR, a GIC consulting firm.
ANSR wants to set up 20 GICs in India in 15-18 months, which will add up to 10,000 more employees to the ecosystem, Ahuja said.
India accounts for more than 45% of the GICs in the world and these centres are a “microcosm" of the global enterprise, according to Nasscom. India today has about 1,200 GICs employing more than a million people and generating $28 billion in revenue.
At present, most GICs in India are from the banking, financial services and insurance (BFSI) sector as it has strongly embraced digitization. Some of the top global banks have established GICs in India over the years, which have now become a core of their global technology innovation teams.
JPMorgan Chase & Co. has one of the largest GICs in the country with about 50,000 employees. It is followed by Goldman Sachs, Deutsche Bank, and United Healthcare, among others.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!