Cost Competitiveness of Global In-house Centers (GICs)

23 Mar 2012
by Anurag Srivastava

Executive Summary

Captives or Global In-house Centers (GICs) are an important component of the global services market. GICs were initially set up in low-cost locations to support technology and contact center operations in the 80s and 90s.  While GICs have largely delivered on their mandate of providing meaningful cost savings and adding capability to the parent organizations, questions continue to be asked around the actual impact of cost savings and their sustainability.  These are driven by multiple issues and concerns (e.g., cost inflation, exchange rate fluctuations, and labor market uncertainties) facing GICs and their parent entities.

In this context, NASSCOM and Everest Group conducted joint research of leading GICs in terms of their cost competitiveness. This study is based on inputs and perspectives from multiple leading GICs, supplemented with Everest Group’s proprietary knowledge and information base. In particular, special thanks to senior executives of Dell, Fidelity Worldwide Investment, Invesco, and Wells Fargo for their guidance and support. This study covered the following key dimensions with supporting examples and illustrations, as relevant.

  • State of the GIC model with growth and adoption trends
  • GICs’ current cost savings – taking an operating cost and total cost of ownership (TCO) view
  • Sustainability of GICs’ cost savings and impact of wage inflation and exchange rate fluctuations
  • Additional operational levers available to GICs to further optimize costs

This report was released in the NASSCOM GIC Conclave 2012 held in New Delhi, India (20-21 March, 2012) and is also available on the NASSCOM website.

 

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