Monday, March 4, 2024

India’s back office boom is fueling the war for IT talent

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International companies are accelerating the establishment of support offices in India, along with local technology development efforts. This has fueled a fierce battle for talent with traditional technology providers like Infosys and TCS, industry experts point out.

Companies offering data, cloud computing and analytics support have turned India into a powerhouse for exporting software services, and multinational companies have joined forces to open a growing number of back-offices, known as global competence centers, to develop technology domestically, including cyber security systems. And artificial intelligence..

These centers, which can also handle accounting and HR functions, are cheaper to operate in India due to lower labor costs. Unlike outsourced IT consultants, global competence centers are managed by the parent company.

“Tasks that were considered critical, and were not outsourced earlier, are now being outsourced to global competence centers in India,” explains KS Viswanathan, vice-president of industry initiatives at Nasscom, the trade body for India’s IT industry. But Viswanathan pointed out. The proliferation of these centers has sparked a “great war for talent”.

According to NASSCOM, global skill centers have grown by 11% annually since 2015, creating an industry worth $46 billion and employing 1.7 people in India. Colliers Real Estate Group estimates that the number of global competence centers in India will double to 2,000 centers by 2026, from 1,026 centers in 2015.

International banks are expanding their offices in India; A third of its subsidiary offices are located in the southern technology hub of Bengaluru. JP Morgan Chase opened its first Global Competence Center in India in 2002 with 75 employees and now has more than 50,000 employees working in facilities across five cities. Goldman Sachs and Wells Fargo have also expanded their operations.

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This year, Xveno, an Indian specialist recruitment firm, conducted a study of 80 global talent centers and found that one-third of the workers hired at these centers were transferred from IT service providers.

Kamal Karnath, one of the founders of Xveno, said: “Global talent centers attract a large number of IT services workers by offering huge pay packages.”

Technological innovation and economic pressure are creating demand for global competence centers, said Kumar Rakesh, IT analyst at BNP Paribas. He said: “One of the driving factors for this is every major development in the technology industry, such as the shift to cloud computing and companies wanting to keep some key jobs within their facilities.”

This key job scope includes important projects related to intellectual property and customer data. Another source of demand, Rakesh said, is “cost-cutting pressures from projects that cannot be outsourced, such as engineering associated with a core product.” “Both factors play a role at this point.”

Rakesh noted that he does not see the growth of global competence centers as a “structural risk” for outsourcing firms.

He added: “The added value of global competence centers and outsourcing firms is very different, and they have been successful in working together over the past two decades.”

“Companies cannot recruit the right talent in their own countries, so India becomes an attractive destination,” says Lalit Ahuja, founder and chief executive of ANSR, a developer of US bank Wells Fargo’s 30,000-person global talent centers. .

Ahuja said back-office workers earn an average annual salary of $15,000 to $45,000 for data specialists performing organizational functions such as human resources.

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ANSR, which Ahuja plans to list on Nasdaq next year, has developed a back-office subscription model for multinational companies that costs $1,300 per employee per month. Employees work for the company, while the physical office and facilities are available through subscription.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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