Insourcing has now become prominent, with companies choosing to either set up or expand their offices in India, a departure from when they primarily set up back offices here or cost was the driving factor.
In the last three months alone, JPMorgan Chase, Citi, Lloyds Banking Group, Natwest and Deutsche Bank have either announced new offices in India or said they will be expanding their workforce in the country.
JPMorgan Chase, which announced its new centres in Mumbai and Bengaluru last week, said in a statement that the company’s corporate centres in India “have evolved” to provide tech solutions, business, and functional support.
This is also visible in the stats. Per a report by Nasscom, India currently has over 1,580 Global Capability Centres (GCC) or captives, with over 16 lakh people working in these companies. By 2026-27, Nasscom sees the number rising to 2,000-plus GCCs in India, a number that is believed to be understated. Both EY and Boston Consulting Group (BCG) expect up to 45 lakh people to be working in GCCs in the country by 2030.
A skilled workforce
But what is it that India offers beyond cost benefits? Deepak Mangla, CEO of Corporate Centers, India & Philippines, JPMorgan Chase, told Moneycontrol that the country’s skilled and diverse workforce is critical to the company’s location strategy and “contributes significantly to our innovation and development efforts.”
According to Mangla, the company’s 50,000-plus employees in India provide technology and business operations support for all lines of business and functions of the firm. “Our employees are at the forefront of global innovation, creating cutting-edge solutions in areas such as cloud computing, machine learning, artificial intelligence integration, blockchain, quant research, data science, business modelling & analytics, digital banking, and more. These solutions are used by our clients and customers across the world,” he said.
It is this shift, from employees of global firms in India being a support function to now being at the forefront, that has seen even companies that had previously shuttered their captives in India return.
This isn’t to say that cost isn’t important. Snehil Gambhir, Partner and Director of Transformation, BCG, told Moneycontrol that looking at a talent pool that provides a better cost basis is sensible. “The original ask of starting with cost has changed for many players. You find more players now saying that there is an inherent advantage in having a global footprint — an advantage to have the talent that India has. It is the availability of talent and scale,” he said. Gambhir adds that while a cost advantage is important to scale up, particularly in the current macroeconomic climate, it’s not the only reason India as a talent hub is growing.
Ramkumar Ramamoorthy, partner at growth advisory firm Catalincs, and former MD of Cognizant India, had previously told Moneycontrol that the availability of digital talent is the highest in the world, and it’s a “no-brainer” that the world’s best companies are making a beeline for India through their captives.
A crucial transformation
The other reason is that digital transformation is crucial, “With structural changes driven by digital, technology is no longer merely an enabler of business, but is the business. As such, digital transformation is core to every company’s differentiation and growth, thereby driving the need to ‘own’ those capabilities rather than ‘lease’ them,” he states.
BCG’s Gambhir also said that there is a lot of talent available in India in digital engineering, an area that’s becoming a prime ask. “Everything is moving to digital, across industries, so you're not just looking at a few people but talent at scale,” he says, with questions about whether a company can build teams that can build intellectual property.
“In general — and especially in ER&D — we’re seeing a trend that globally, engineering talent in a majority of European countries or America is ageing. The ability of people coming into the workforce there in specialised areas is smaller. In essence, there is a paucity of talent as well. That creates a virtuous cycle of saying, ‘Where can I go for good talent?’,” he adds.
Rising demand for talent
The manpower requirements of GCCs are also steadily rising, as evident from the requirements that staffing firms are seeing.
Lohit Bhatia, President of the Indian Staffing Federation, said that India has the demographic dividend not just by population but also a gainfully employed IT workforce. He added that India continues to remain a much lower cost base, although the arbitrage has reduced.
“Even the Indian Staffing Federation feels that GCC is one area of growth within the IT sector itself. And IT staffing is a very big area for the Indian Staffing Federation. So, a lot of our members actually do IT staffing as well, besides general staffing. And GCC has been a very big segment of growth for them in the last couple of years. In the last 2-3 years of COVID gone by, there are lots of active conversations of global majors still looking to either ramp up their GCCs in India, or set up absolutely fresh new GCCs,” Bhatia said.
JPMorgan’s Mangla also said that India is an important market, and the company’s decision to strengthen its presence is also a reflection of the country’s talent pool.
“The expertise, innovation and dedication of our Indian workforce has played a pivotal role in providing critical technological and business operations support for our customers and clients worldwide. With the growing demand for advanced technology and financial services, strengthening our operations in Mumbai and Bengaluru was a natural progression to leverage the immense potential of the Indian talent market and continue delivering cutting edge solutions to clients worldwide,” he said.
Per the NASSCOM report, Indian GCCs now have product and business ownership, far from the support and quality assurance functions they started with.
This is also evident in JPMorgan Chase’s employees and who it’s looking to hire. Mangla said that the company will invest in talent across talent areas, “with an enhanced focus on data and analytics, change and transformation within payments, platform engineering, cloud architects, product management, data science, and cyber security, besides financial planning and analysis, business advisory and compliance, and internal audit.
Banking on India
Gambhir says that while the evolution in the type of work in India has happened over a period of time, going forward, as the world supply chains, and manufacturing also start to evolve, India stands to be a leader, including in ER&D.
Various industry leaders have also said that they are banking on the India story.
“India's dynamic market environment allows us to tap into emerging trends and technologies, ensuring that we stay at the forefront of industry transformation,” Mangla said.
Similarly, SAP Labs Managing Director in India Sindhu Gangadharan earlier told Moneycontrol that the question is no longer ‘why India?’ but ‘how quickly in India?’.
“The market has changed, consumption power has changed, and the ecosystem has changed in the last decade,” she said.
However, industry experts do not think that this trend of insourcing will impact IT services firms.
“It will be a combination of leveraging both inhouse centres and third-party players because there are certain things that are commoditised and/or require enough investment, where you do really want and leverage third parties,” Gambhir said, adding that good and great companies will see where the advantages lie.
“Organisations will figure out the right mix of what that footprint should be. How they source, whether it is outsourcing or insourcing, and how they shore, whether it is onshore, offshore, nearshore or a combination thereof. I think that’s going to be an evolution. Good companies have been doing that for a while and I think more and more will start doing that,” he added.
By HARIPRIYA SURESH