GCCs face talent exodus amid rising competition

Global capability centres have surged ahead of IT service firms in absorbing talent from campuses and the job market are facing attrition within their own coterie.  (Mint)
Global capability centres have surged ahead of IT service firms in absorbing talent from campuses and the job market are facing attrition within their own coterie. (Mint)

Summary

  • There is significant demand for mid-level data science, cybersecurity, and UI/UX professionals, especially women candidates with 4-10 years of experience—a prime target group for poaching activities.

BENGALURU/MUMBAI : Global capability centers (GCCs), which have outpaced IT services companies in talent acquisition both from campuses and the job market, are now grappling with attrition due to rising competition among themselves.

The skilled workforce at GCCs, accustomed to serving US and European clients, are prime targets for competing GCCs seeking to onboard personnel without delay, as they enter or expand operations in India.

"GCCs, too, are susceptible to attrition risk, in view of rising demand for talent across GCCs, particularly with a growing number of GCCs getting established. It is imperative for a GCC to be right on the top of their talent proposition and workforce strategy," said Shalini Pillay, India leader for GCCs, KPMG in India.

According to Pillay, talent is attracted by a compelling narrative, detailing the purpose, vision, and future roadmap, and an exciting array of new roles. "GCCs are working to move up the value chain, adopting new emerging technologies and driving innovation and transformation. Hence, if your GCC is not keeping pace (with competition), you run the risk of losing talent to the many others who are progressing along these lines," she added.

According to IT industry body Nasscom, GCCs account for 50-70% of global tech and operations headcounts. Around 1,500 GCCs and their 1.66 million employees, contribute to a market size of $46 billion.

GCCs emerged as bastions of stability and hiring, with IT service firms downsizing their workforce following a hiring spree through 2021 and the first half of 2022. Offering 1x-2x higher compensation than their services counterparts helped GCCs to attract top talent. But now, GCCs must remain vigilant.

"GCCs had hired a large number of junior-level executives, often comprising a cohort that leaves for higher studies or the next career opportunity. Middle management attrition is increasing because newer rivals want ready talent for their product platforms," said Vijayaraj Palaniraj, head, talent acquisition, Equiniti India, the GCC of UK-based share registrar. Palaniraj expects attrition numbers to rise in the first quarter of FY25 as appraisals will be completed by then.

Cost pressures in the US and Europe are also driving firms to expand their workforce in India, as compensation is lower than their global counterparts. This is likely to increase demand for talent, consequently leading to more exits.

There is significant demand for mid-level data science, cybersecurity, and UI/UX professionals, especially with 4-10 years of experience—a prime target group for poaching activities. Besides, demand for women professionals are also on the rise. Companies are also increasingly becoming aware of the need to enhance diversity quotas, which is further driving demand, said Kamal Karanth, co-founder of Bengaluru-based staffing firm Xpheno.

According to a study by Aon, while GCCs, like the rest of the IT sector, have witnessed an overall decline in attrition from 19.5% during the hiring frenzy of 2022 to 13% in 2023, industry watchers said it may start inching up again.

“In Bengaluru and Hyderabad, where most GCCs are located, average attrition remained steady at 18% since the post-covid peak of FY21-22 which should be considered high," said Karanth.

Retaining top performers will be a challenge, given that top GCC talent will receive 1.73 times the compensation of the average performer, according to Aon. Besides, GCCs recruited a significant number of (non-IIT) engineering students from tier 2 and 3 cities, when IT service firms had introduced stringent hiring requirements.

Balasubramanian Sankaranarayanan, president and chief executive of Thryve Digital Health LLP, emphasized the importance of offering long-term incentives to top performers across hierarchies to help "ringfence their top talent". Despite maintaining attrition in lower teens, a GCC with over 4,000 employees, must "enhance the compensation offered to niche skilled profiles" in order to retain them.

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