Top 4 reasons to set up a GCC in India
Part-I of a series of articles on setting up a captive GCC (Global Capability Centers) for your company
GCC’s are how well-funded startups and growth companies in the Western world leverage the cost arbitrage in India and implement a 24x7 continuous development process for their product development.
Are you considering one? If not, Here is why you should.
Outsourcing or setting up GCC is an old concept. From 1985, when Texas Instruments set up an R&D center in Bangalore, we have seen a constant stream of companies outsourcing work to India to leverage the cost difference and the availability of abundant English-speaking developers. Today we have at least 1500 GCC’s (Global Capability Centers) and many more who directly partner with the Wipro’s or the Infosys’s of the world to form a minor development team on their premises which acts as an extended arm of their existing team. Is this paradigm still a good idea? Post-pandemic? What are the new norms or skill sets available? Do I get an ROI? All valid questions. Let us explore.
Changing landscapes within India’s outsourcing story
First, outsourcing happened predominantly to fix Y2K issues and the need to repair old COBOL programs. A wave of call centers outsourcing then followed it. AMEX and American Airlines set up GCC’s in India starting early in the first decade following Yr-200. Indians were trained to speak with an American accent, given Caucasian pseudo names, and worked three shifts 24x7 to cater to customers’ needs worldwide. In the next decade, bits and pieces of high-end technology work started flowing into India with the rider that the South Asian nation would not have ownership of the product. The architecture team would be in the US or Europe, the larger team there, and they would send some coding, testing, and technical writing work to India. Software development projects followed this phase in languages like python, java, angular, etc. However, the customers and the end-users would still be in the countries where the company was selling its products, predominantly outside India. The Indian team would generally not own the outcome and would mostly work in a services model, developing applications for the needs of product owners in various countries. They would rarely meet the end customers and would have to just focus on the software requirements as captured in Jira or any agile scrum board.
Things are changing now.
Now global corporations are betting high on India to start full-fledged artificial intelligence and machine-learning technology centers. And the products are built from scratch in Asia’s third-largest economy. Tesla, Velodyne Lidar, Triton Electric, Bloom Energy are some of the well-known technology companies that have opened a captive GCC for their needs in India. Not just to develop software but end-to-end high-end solutions consisting of hardware, firmware, and software, including deployment and project execution worldwide. Corporations are now shifting towards machine learning application development from plain java. Large corporations such as Google & Microsoft outsource high-quality work involving cutting-edge technologies and staffing them with Indians.
Outsourcing and opening one’s captive GCC in India has become a very viable option to develop high-end products.
External Pressures
If you are a well-funded startup in Silicon Valley or a growth company, you probably face pressure from your investors to leverage India. If you have developers in the US from India, they have seen the efficiencies and speed of product development having an extended team in India. Almost all business plans in Silicon Valley are mandated to have an India strategy, and so what do you do?
Why India?
Now that you have decided to get some work done in India. What are the advantages of doing this, and why India?
Due to the pandemic, most jobs have become remote and Indian programmers have changed their nine-to-five mindset to work from home. Efficiency has increased, connectivity has become more robust, and about five million coders employed in the nation’s software sector brought in more than eight billion dollars last year alone. So you have an improved mindset and robust infrastructure available at hand and developers who are ready to work at hours that suit the company’s global needs.
As with the previous wave for SAP and Oracle programming, we now have a wave wherein developers are flocking to get an AI/ML degree or get themselves certified in various advanced courses. You will soon have an abundant supply of python programmers who know a bit about AI/Ml. But to harness this supply, you need to make sure you hire the right folks, set the proper process for hiring, provide timely feedback, give performance feedback, etc. In addition to robust infrastructure, you also have qualified and trained developers in the latest technology.
The cost has always been an alluring factor. You get three (3) developers for every hire in the US. Does that translate to 3 times the productivity? Probably not at the onset, but if you have a strong leader in your GCC, who can hire the best, maintain a fostering environment, be empathetic, chances are you will get close to that level of productivity.
The other advantage is 24x7 development, which is enormous. If you have a typical scrum team consisting of developers in the US and India, when the US team packs up for the day, their Indian counterparts can take up the same code and repeatedly hand it over to their teammates when their day ends. With development and testing happening in both time zones, you can have a shorter product development life cycle, which is enormous when you develop your product and improvise it with constant customer feedback in an agile manner.
In Conclusion:
IMHO, it would be best if you considered opening a GCC because:
- You have access to abundant English-speaking developers who prefer to work remotely equipped with robust connectivity
- This new breed of developers are well-trained in python, AI, ML and can take ownership of a product end-to-end.
- The lower cost of developers and lax labor laws have always been a significant selling point for sending work to Indian development firms.
- The 24x7 development process shrinks your development time, and you can iterate faster, sometimes overnight, and present changes to your customers the next day.
India’s outsourcing future looks promising, and it will continue to expand this decade and in the coming years. The startup ecosystem is robust, and it has already given birth to as many as fourteen (14) unicorns in Bangalore alone in the last two (2) years. For example, Indian companies have become billionaires through crypto and NFTs such as CoinDCX, CoinSwitch, Kuber, WazirX, ZebPay. You can also consider creating an accelerator program in the US and then shifting it to India.
Because of the pandemic, the mentality of the workforce is changing. People are willing to learn and work in new technology areas as it offers greater flexibility and higher pay.
There has never been a better time to open up your captive GCC or outsource to a development firm in India.
(Disclaimer: Author’s view only and are not representative of any company he is working for at the moment or has worked in the past)
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Thanks for reading.
