If you are wondering what makes India the first choice for global firms wishing to set up their global capability centres (GCCs) in the country, here are some mind-blowing statistics. India’s tech talent pool has grown 1.2 times since 2018. In fact, there were two million digitally-skilled people in India as on March 2023. At least two million new STEM graduates are added to this pool every year!
Amongst the core skills available in this pool are application development & maintenance, software testing, infrastructure and database management and web development. Amongst the digital skills available are, blockchain, augemented reality (A)/virtual reality (VR), cloud computing, Al/ML, Big data, cybersecurity and Internet of Things.
No wonder India is the top sourcing destination in the world, housing the lion’s share of GCCs. The biggest advantage is that the STEM talent pool has a command over the English language too. Their skills in delivering processes across the value chain are commendable.
Another advantage is that the workforce is upskilled, and as of fiscal year 2023, about 30 per cent of the established industry talent is skilled in new-age digital capabilities.
The increasing acceptance of remote working and reverse migration, due to the pandemic, have also been instrumental in expanding the size of the talent pool available within India’s emerging hubs .
Matured hubs and emerging hubs
According to the Emerging Technology Hubs of India Report by Deloitte and NASSCOM, about 15 per cent of the total technology talent pool in India is working in Ahmedabad, Coimbatore, Jaipur, Lucknow, Indore, Kolkata and other such cities. These emerging new micro-IT hubs house about one lakh digitally-skilled workers. These cities are also home to over 140 GCCs.
Delhi National Capital Region (NCR), Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and Pune, are the mature and well-established technology hubs of India thanks to their thriving technology industries and the presence of domestic and international companies. These locations have developed because of favourable government policies, access to a quality talent pool, and the presence of similar hubs at a convenient distance. These hubs have matured over the past two decades and are now the powerhouses of the technology sector in India.
These hubs have enjoyed the advantage of good infrastructure and connectivity to global hubs as well as other hubs in India.
About 30 per cent of the workforce employed in these matured hubs has migrated from other parts of India. About 60 per cent of total tech and non-tech graduates in the country have graduated from institutions in these cities.
The experienced talent pool has a total strength of about eight lakhs. The GCCs employ about 60,000 people, while there are about two million total graduates.
Why is growth in the matured hubs slowing down?
Of late, the growth of matured hubs has started slowing down. This is mainly because remote work has opened up opportunities for techies to take up jobs outside these locations. At the same time, the pressure on the infrastructure of these locations continues to build. The costs of talent and operations is also going up. Companies are, therefore, looking at alternative locations to set up their offices or expand operations in India.
There has been a 30-40 per cent increase in talent pool cost in the past five years, in the matured hubs. The real-estate costs have also gone up by 60-80 per cent in the past five years.
In the emerging new hubs, however, the talent pool costs are 25 to 30 per cent lower than in the matured hubs. There is about 50 per cent cost arbitrage in real-estate rentals than in matured hubs.
In the matured hubs, the talent market is saturated, due to high levels of competition. The attrition rates are also as high as 25 to 30 per cent, which is affecting delivery to clients. Emerging hubs, on the other hand, face less competition and offer better talent. The attrition rates are also lower compared to the matured hubs.
While the matured hubs have a limited scope to expand in terms of real estate availability, in the emerging hubs the real estate development is happening at a good rate. Matured hubs are already facing heavy traffic and the power and water infrastructure is overburdened.
In the emerging hubs, commuting is easier and the state governments are encouraging infrastructure development.
Matured hubs are receiving less incentives from the government for establishing centres. Most are facing the repercussion of the discontinuation of tax exemptions in the special economic zones (SEZs) and software technology parks of India (STPI).
On the other hand, in the emerging hubs, companies are leveraging incentives provided by the government to set up units. Their policies advocate rapid development.