Over the past several years, companies have been setting up global in-house centers (GICs) to meet growing array of functions, especially in India. Prateek Majumdar, a partner with Bain's Technology practice, explains how GICs can reevaluate their actions and become huge strategic assets for their parent companies.
Read the Bain Report: Global In-house Centers in India
Read the transcript below.
PRATEEK MAJUMDAR: Technology and data are now central to any company's strategy and operations. And this does need access to a different kind of talent and more investment dollars.
What we're seeing—and what we've been seeing over the last couple of years, and actually this other trend has been continuing for a couple of decades now—is that companies have been setting up offshore centers, or centers in localized geographies with access to good talent to solve this problem. And even if I look at India alone, there are about a million people employed in such offshore centers. And this is growing. This is growing in lower double digits.
And we call these centers global in-house centers (or GICs)—some people call them captives. And over the last five to six years, what we've been seeing is GICs do all kinds of functions: Be it software product development, research and development, IT, analytics, taking over operations—for instance, a claims processing operations for an insurer or finance and accounting operations. So GICs are really growing.
What we, however, see—and this part I find interesting—is that when we talk to companies who have GICs in India, I consistently hear back a theme around the NPS not being too high.
In fact, when we did a poll, we realized the NPS, or the advocacy, of GICs were actually negative. And that negative NPS, to me, was a wake-up call. It's time for GICs to really think of their strategy again.
What capabilities will they invest in? Where will they help their parent companies innovate even faster? How do they still remain cost effective? And most importantly, what is the talent strategy? How do we make sure the talent in the GIC is really integrated with that of the parent company?
GICs that successfully do this will become huge strategic assets for their parent corporates.
Global In-house Centers in India
To get ready for the future, global in-house centers must focus on six key priorities.