Global capability centres double India’s services exports in 18 years: Goldman Sachs

• Follow

Calling India the services factory of the world is certainly a hyperbole today, but if a report of Goldman Sachs is to be believed, this country has firmly set its eyes on that goal. The global capability centres (GCCs) that multi-national corporations are setting up in India, thanks to its cost advantages and skill pool, have quietly doubled India’s share in global services exports in the past 18 years, a report from the global investment bank said on April 29.

“Revenues of GCCs in India have grown nearly 4x at a CAGR of 11.4% over last 13 years to $46 billion as of FY23. The number of GCCs has more than doubled from 700 to 1,580 over the same time period, with the sector adding around 1.3 million employees (11.6% CAGR), taking the total employee headcount to 1.7 million in FY23,” reads the report titled “India’s rise as the emerging services factory of the world.”

GCCs are offshore entities set up by companies operating across the world and as the name implies these are crucial to building capabilities of different business processes, including IT, human resources, finance, analytics, among others.

What is significant is that the GCCs are taking a value-added step to transition from a round-the-clock back-end operation to emerge as captive tech centres for MNCs driving cutting-edge innovations for their parent companies sitting elsewhere in the globe. According to media reports, India has now more than 1,580 captive centres that generate employment for 16 lakh people.

“Over the next few years, we expect strong growth in high-value services to continue. We expect the growth in high-value services to domestically drive top-end discretionary consumption and commercial and residential real estate demand,” the report further stated.

Goldman Sachs noted that services exports from India rose to about $34,000 crore in 2023 at a CAGR of around 11% from 2005 (nearly double global growth) which was a pace faster than the export of goods. “As a result, India’s share in global services exports rose from under 2% in 2005 to 4.6% in 2023, while India’s share in goods exports only increased from 1% in 2005 to 1.8% in 2023,” said the report.

The investment bank admitted that computer services accounted for about half the value of the remain the services domain in 2023 but the export of professional consulting is also coming up fast as a sub-sector.