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Two By Two Fri, 04 Jul 25 |
An abridged, narrative version of the latest episode of Two by Two, The Ken’s premium weekly business podcast. |
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All businesses are used to dealing with customers. Some are good at dealing with rivals. Indian outsourcers are still figuring out how to deal with hybrid creatures that are part-customers and part-rivals. They are called GCCs.
There are over 1,800 “Global Capability Centers” in India, each doing work across multiple functions like engineering, product development, customer support, finance operations, or HR services for its parent company. Want to know some of the most famous ones?
Microsoft, Amazon, Google, GS, JP Morgan Chase, Deloitte, Walmart, Bosch, Adobe, Target, Salesforce, Astrazeneca.
GCCs are so successful today that Indian policymakers and ministers fete their success. They employ close to 2 million Indians and generate over $40 billion in annual value.
So far, so good.
But every additional employee that works for a GCC is—and I’m simplifying a bit here—one less employee who could be working at an Indian outsourcer, providing those services to the GCC’s parent organisation via an outsourcing contract. That’s lost potential revenue.
That’s not all.
GCCs are growing much faster than Indian outsourcers. They often pay better too. And because they’re subsidiaries of their parent companies, they usually get assigned more interesting work. Which often means outsourcers lose talented employees to GCCs.
Are Indian outsourcers locked in a zero-sum game with GCCs? Is there room for both to grow, without stepping into each other’s turfs?
We decided to ask two GCC experts.
Karthik Padmanabhan, managing partner at Zinnov, a global management and consulting firm founded in 2002 that partners and advises global enterprises, outsourcers, PE firms around AI, automation, outsourcing, and well, GCCs. And Narayana “Naru” Ramamurthy, the founder and CEO of Workfutr, a company that enables US and European organisations to harness India’s offshore capability in technology, operations, and transformation.
Here’s some of what Praveen and I discussed with Karthik and Naru in the latest episode of Two by Two. (Lightly edited for brevity)
Is it a Zero-Sum Game for Revenue and Talent?
Naru: I’m saying, look at the numbers. Look at the results of all these companies. The outsourcers are growing at, what, 5%? GCCs are growing at 11–15%.
[…]
So, let me give you an example, okay? One of the big outsourcers had a big deal with a pharma company. We are talking about hundreds of millions of dollars—three, four hundred million dollars in one particular functional area.
Now, a year back, that company decided to form a captive in India. 300 million dollars gone, right?
[…]
Because the tap is leaking.
[…]
Today, many of these (outsourcing) companies are very happy bidding for 30–40 people deals.
Karthik: There are close to 20,000 organisations that are outsourcing to India. But there are only 1,800 GCCs, correct?
[…]
Today, we roughly estimate that only 34% to 35% of the global tech talent of those 1,800 companies is housed within those 1,800 GCCs. For example, if you take Walmart, let’s assume that they have 1,000 people in tech talent globally. Only 350 of them are sitting in India.
[…]
And we feel that that number can actually go up to even 60%, right? So, 50% to 60% of the global tech talent of an organisation has potential to be within India. Whether that’s in a GCC or a service provider is a different question.
GCCs, Outsourcers, and Talent
Naru: Okay so, many years back, TCS used to hire at Rs 3 lakh entry salary. I’m saying, 20 years back. Today, my guess would be it’s Rs 5–5.5 lakh.
Praveen: I don’t think so. I’ll be surprised. I won’t be surprised if it’s still around Rs 3 lakh.
[…]
Rohin: I just Googled it, by the way, it’s still under Rs 4 lakh.
Naru: Oh my God. So it’s not even five! I was being gracious here.
Karthik: I’m more worried that Rohin is still Googling and not using ChatGPT, but okay.
The Impact of AI on Outsources and GCCs
Karthik: Because I think India’s main calling card was the scale of talent.
And I think AI will, at some point, determine that the scale of talent is actually irrelevant.
It’s only the depth of talent that matters.
[…]
So today, and I’m not going far, rough estimates are between 30% to 40% of the code is AI generated. 30-40% of code, which was zero two years ago. Or maybe not zero, but 10–20% two years ago. I’m not talking about complex code. I’m talking about general code.
[…]
Which means that over a period of time, as technology matures, you are not going to need that many people writing code.
What you need is people thinking in terms of how do we best use that code?
What is the logic?
What are the algorithms?
What are the features?
What are the products?
What, how do we engineer it?
What do we do with that?
Listen to the entire episode to delve deeper into the world of GCCs.
You can always write to [email protected], or leave a comment on our website or app.
Regards,
Rohin
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Rohin is Co-founder and CEO at The Ken.
He hosts The Ken's leadership podcast, First Principles, and is the lead writer of the Sunday newsletter on mental models, careers and personal growth, also called First Principles. He is the co-host of the Two by Two and Zero Shot podcasts. He is also a columnist for The Ken's AI series, Zero Shot.
Rohin holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.
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