Tech Jobs In India: Global Capability Centres Pick Up Hiring Slack Amid IT Slowdown

Hiring by multinationals in India is set to outpace recruitment by India’s top-tier IT services firms, highlighting the shifting sands that is tech jobs in India amid a slowdown in the $250-billion outsourcing industry.

Global capability centres, or GCCs, are likely to create 3.6 lakh jobs by fiscal 2025, according to a TeamLease Digital report shared with NDTV Profit. In comparison, net hiring by India’s top 5 IT firms is likely to remain muted for the next two to three quarters after declines over the past four quarters, according to a December report by ICRA Ltd.

For GCCs, however, there’s still a lot of catch-up to do.

“The overall scenario depicts a noteworthy reduction in IT hiring figures, as the decline in volume from IT services entities has not been fully offset by the increasing contribution from GCCs,” Munira Loliwala, AVP-strategy and growth at Teamlease Digital, told NDTV Profit. But, “with 30% of GCCs now poised for substantial talent absorption, this shift is anticipated to significantly offset the diminishing demand in IT firms in the years ahead”.

India’s software services industry is staring at a slowdown, if not a total washout, in the fiscal ending March 31, 2024, as enterprises in the U.S. cut back on technology spending against the spectre of a shallow recession. Additionally, Accenture Plc—the world’s largest IT company by market capitalisation—has guided for muted growth in the year through Aug. 31, pointing to a delayed lift-off for Indian outsourcers in fiscal 2025.

The pain is showing in the eroding human capital of India’s top-tier IT firms.

India’s outsourcing industry shed more workers in the July-September 2023 quarter than in any comparable period in the past five years, according to Bloomberg. Fresher hiring, too, is set to halve in the ongoing fiscal as outsourcers skipped campus hiring—a first since at least the global financial crisis.

But GCCs are stepping in. 

The so-called global capability centres are anticipated to augment their workforce by 40,000 to 50,000 individuals in both second and fourth quarters, which typically witness heightened recruitment activity in the IT industry, the TeamLease Digital report said. Should the latter half of the fiscal unfold positively, this number can potentially rise to 2,00,000.

“As the IT services sector dominates over half the talent supply chain, GCCs are shelving out of their initial stages of their presence and the trajectory is moving towards an expansion driven by GCCs,” the TeamLease Digital report said.

“With over 30% of GCCs now poised for substantial talent absorption, this shift is anticipated to significantly offset the diminishing demand in IT firms in the years ahead.”

Except, there’s a problem—that of a ready workforce.

Every year, India produces about 65 lakh graduates but only about 44% are employable for tech jobs, according to TeamLease Digital. About 65% of India’s STEM (science, technology, engineering and mathematics) graduates need to upskill themselves for entry-level jobs. Even in the mid- to-senior level, 52% need upskilling to remain relevant and competitive.

The scenario is starker for GCCs.

Eighty-one percent of the GCCs in India experience talent shortage. In fact, less than 2% applications qualify for a role. Add to that, the rising cost of talent and we are looking at an attrition rate of about 12.5%—comparable to that of India’s top-tier IT firms.

Still, India is a bright spot for multinationals looking to set up shop.

By 2028, India will be home to more than 2,500 GCCs, generating a revenue in excess of $95 billion from a talent pool of 3.3 million, according to TeamLease Digital. That’s down to the fact that the country enjoys a demographic dividend like none other—65% of the largely tech-savvy population will be of working age by 2026.

EY sees GCCs in India becoming a “profit centre” rather than staying a “cost centre”, with emphasis on creating additional revenue streams for the parent organisation by servicing external clients.

“While the global economy faces headwinds from the tightening monetary policy cycle, slowing growth and rising inflation, India has enough tailwinds with political stability, a healthy domestic consumption-based economy, and a robust regulatory system for the financial sector,” Arindam Sen, partner and GCC lead at EY India, said.

“Given that backdrop, GCCs continue to play a pivotal role for multinational corporations as they move up the value chain to become centres of excellence for innovation and driving digital mindsets.”