I know what are these global capability centers and Covid just suddenly come
into prominence here, Reggie. Hi, Rush.
Good morning. In fact, for nearly four decades, India
has been the back office of the world, providing support operations such as
call centers for various multinational companies.
Now, these businesses have evolved a lot more.
They're doing much more sophisticated, complex work, getting into research and
development and product innovation for various industries, from finance to
pharmaceuticals. They once started out as these low cost
centers, but not anymore, because they're driving innovation for many of
these big companies. So much so that India is now home to the
likes of Goldman Sachs. Rolls Royce, you name it.
Victoria Secret, all the big names in India.
In fact, India is home to about a sixteen hundred such global capability
centers. They're contributing to about close to 1
percent of India's GDP. And what is quite interesting is that
this is leading to some sort of a structural shift in India's economy.
And it all started coming into prominence with the kind of rise that we
saw in services exports in December of last year.
These numbers started showing a massive spike.
And what is quite interesting in that in the last fiscal year alone, we've seen
services, exports for India are rising almost 27 percent, coming in at three
hundred and twenty three billion dollars.
As I said, many economists are saying that this isn't going to lead to a
structural shift in the economy have been improving India's trade deficit,
India's current account deficit deficits as well, and prop up the currency in the
long run. That has been depreciating for many
years. But yes, this is leading to a structural
shift of sorts in the economy and global capability centers have really redefined
the way how back offices in India were looked upon earlier.
You've listed out on the beneficial effects these centers or this area of
growth is having for the economy and jobs, but what potentially risk
depressing growth when it comes to GCSE as they've come to be known now?
Let me tell you. You know, very rightly pointed out that
this growth is going to be fraught with risks going forward.
Because one of the biggest concerns in this cruel cycle that we're seeing for
global capability centers is the lack of skilled labor.
And this despite almost 34 percent of the students in India at the university
level taking off subjects such as a science, technology, engineering and
mathematics. Despite India having such a big thriving
startup ecosystem or the third biggest in the world, we're seeing that if we do
not have enough, the country does not have enough skilled and trained people.
They have to be trained and retrained. And this is leading to a war for good
talent that has become the biggest, biggest concern of biggest risk as far
as the rise of global capability centers is concerned.
The second biggest risk is that is that it poses to various cities.
For example, Bengaluru. In India.
India. Silicon Valley.
That house is nearly 30 percent of such global capability centers.
We're seeing in very weak infrastructure in that city.
And that could potentially hurt the growth.
While industry bodies such as Nasscom are looking at other centres such as
bear guru Graham Boni Hyderabad as alternatives.
But the fact that Indian cities are not able to cope with such a big rise and
the influx of companies coming into the country, that is another risk.
And of course, if, if, if. Oh, we do see offshoring of jobs
becoming another big issue when the US presidential race heats up.
That could be the third big concern that such global capability centers will have
to deal with in the months and years to come.
The war for talent is one issues. Driving that course is also about
employability of new grads. How might that play out?
How will that weigh on the problems already?
You know, we have written about it. Haslinda Amin the boss, that
employability of young graduates is a concern.
And as I pointed out, despite 34 percent of the students taking up science,
technology, engineering and mathematics at the university level, we
know that the country is not able to find enough people, enough good people
in the workforce. This is leading to a rise in the war for
good talent. We do not have enough enough people who
can do this very highly sophisticated, complex work.
We do not have enough engineers that can look specifically into newer
technologies such as artificial engineering as well.
And this is something that Nasscom, that Nasscom, India's trade body, has
themselves highlighted time and again. So this is going to be a big concern
employee in terms of employability of these young graduates.