Empowering Global Capability Centres in India: Innovations Beyond Headcount Growth
Executives from the industry gathered in Bengaluru on Wednesday, emphasizing the urgent need for Global Capability Centres (GCCs) in India to pivot from mere headcount growth towards building more patents, fostering reverse innovation, and enhancing decision-making in products and solutions.
The Need for Innovation and Expertise
Despite India being a technology hub known for its talent pool, industry leaders stressed the importance of developing deeper expertise in emerging technologies such as deeptech artificial intelligence (AI) and quantum computing. During discussions at the Bengaluru Tech Summit 2024, panellists highlighted a critical factor: the skills development of talent for employability.
Patents and AI Development in India
“AI patents filed until the beginning of 2023 indicated that 60% came from China, 20% from the US, while India accounted for a mere 0.25%. This signals an area where Indian GCCs must significantly invest to enhance innovation,” stated Milesh J, Vice President and Head of Strategy & Operations at SAP.
Furthermore, he noted, “By the end of 2023, there were around 160 foundation models in existence. Of these, over 100 originated from the US, more than 20 from China, but none from India.” This data underlines the pressing need for India to elevate its status in AI innovation.
The Role of SAP in India
German software giant SAP operates in India through its subsidiary and SAP Labs India, which stands as its second-largest global research and development hub, employing over 13,000 professionals.
Shifting the Focus from Linear Growth
Vijai Kishan, the India Regional Chair at Fidelity Investments, commented on the necessity of moving away from a linear growth model that prioritizes increasing headcount. “We need to redefine our success metrics to focus more on the impact delivered to the business rather than merely counting roles,” he stated.
Preparing for Workforce Transition
Kishan also pointed out that as the workforce ages, Indian companies must carefully manage the transition into retirement. This shift necessitates a focus on innovative thinking and skills enhancement among the current workforce.
GCCs as Innovation Drivers
At the panel discussion titled “Making Bangalore the GCC HQ of the World,” industry experts underscored that most GCCs in India have transitioned from traditional cost centres to valuable creators of innovation.
India boasts over 1,700 GCCs contributing to a market share of approximately $64.5 billion within the technology services sector. Notably, Bengaluru is home to around 875 GCCs, reflecting a remarkable 41% compound annual growth rate (CAGR) over the past five years.
The Challenge of Compulsory Innovation
Pradeep Menon, Managing Director & CEO of HSBC Technology India, remarked, “GCCs are at times compelled to innovate, and while a pool of talented individuals exists, greater efforts are essential.”
Establishing Effective Leadership Structures
Andres Zimmerman, Senior Vice President and President in India for Target, echoed similar sentiments, stressing that GCCs based in India need to innovate strategically to ensure impactful outcomes.
“The leadership structure should promote innovation. Do we have the right global leaders in place? This requires substantial investments and a robust ecosystem to thrive,” she explained.
Embracing Reverse Innovation
According to SAP’s Milesh, the prevalent globalization culture, where headquarters dictate products and solutions, must evolve. “Now is the time for reverse innovation—taking products and solutions, trialing them in Indian and emerging markets, and feeding that innovation back to developed markets,” he emphasized.
Skilling for the Future
In the short term, Milesh argues that GCCs must prioritize skilling, as even though India has a burgeoning talent base in AI, there remain gaps in expertise particularly in deeptech AI and quantum computing.
Conclusion
The messages conveyed during the Bengaluru Tech Summit highlight a critical juncture for Indian GCCs. As these centres aim to redefine their roles in innovation and growth, a robust focus on technology advancement, skills development, and strategic leadership will be essential for future success.
Frequently Asked Questions
- What are Global Capability Centres (GCCs)?
GCCs are centers set up by multinationals to leverage India’s talent pool for innovation, R&D, and technology services. - Why is it important for Indian GCCs to innovate?
Innovation is critical for GCCs to remain competitive in the global market, transition from cost centers to value creators, and enhance their impact on the business. - What is reverse innovation?
Reverse innovation refers to developing products and solutions in emerging markets and then introducing these innovations back to developed markets. - What areas should GCCs in India focus on to improve their innovation capabilities?
GCCs should focus on developing expertise in deeptech AI, quantum computing, and other emerging technologies while also enhancing their talent’s employability through skills development. - How has the landscape of GCCs in India changed?
The landscape has evolved from merely increasing headcount to focusing on innovation, with many centres increasingly regarded as key players in driving technological advancements.
