SAP, Intel, Google, IBM bet big on India as strategic base; GCCs shift from East Europe amid cost, talent squeeze
HYDERABAD: Be it steel giant ArcelorMittal, beer maker Heineken, BFSI giants Deutsche Bank or UBS, or even tech giants Google, IBM and SAP, among others, - they are all moving their global capability centres, in part or full, from Eastern Europe to India.
UBS has already consolidated some of its tech operations from Eastern Europe into centres in Pune and Hyderabad. Deutsche Bank, on the other hand, is relocating risk and compliance work from Romania to Bengaluru and aims to scale its India headcount to over 10,000 by 2026, sources in the GCC enablement ecosystem said.
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"MNCs that previously nearshored to Poland and other Eastern European countries like Hungary, the Czech Republic, and Romania are now hitting a dead end due to the diminishing cost arbitrage on account of escalating operational costs and limited scalability due to talent saturation," JoulesToWatts founder & CEO Priti Sawant says.
SAP, Intel, Google & IBM: Major firms eye India as strategic base
SAP, which earlier operated out of Poland and the Czech Republic, has stepped up hiring in Bengaluru and Gurgaon, even as Wells Fargo is building out its AI and risk teams in Hyderabad. Intel too has beefed up its India engineering centres, pulling back slightly in Eastern Europe, they added.
Google too is moving software engineering (Android, Chrome, and Cloud) as well as QA capabilities from its Krakow engineering hub in Poland, even as IBM is going for a strategic relocation of cloud services roles to India from its Warsaw hub, according to GCC enabler JoulesToWatts Business Solutions (J2W).
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ArcelorMittal has set up a GCC in Hyderabad to focus on digital, analytics & global support for HR, IT and finance, even as companies like Bosch, PepsiCo and BT Group are learnt to be deepening their India presence while streamlining their cost-efficient operations in Europe.
Neeti Sharma, CEO, TeamLease Digital, says over the last 12-18 months, there has been a clear rise in GCCs shifting operations from Eastern Europe or expanding their presence in India as a strategic hedge.
"It's largely driven by a mix of geopolitical instability in Europe due to the ongoing Russia-Ukraine conflict, rising costs in countries like Poland and Romania, and India's growing strength as a mature, scalable destination for global delivery and innovation," she says.
Already, 15-20% GCCs with a base in Eastern Europe are learnt to be actively exploring India as a long-term alternative. Estimates provided by GCC enablers suggest that over the next 2-3 years, over 500 new GCC setups or major expansions driven from Eastern Europe could happen here, as companies realign their global delivery strategies and double down on India for talent and innovation.
According to J2W, Eastern Europe block houses over 1,500 GCCs employing 0.5 million techies and generating $42.3 billion in revenue. However, ANSR says the region houses about 800 GCCs and GBS including over 420 in Poland, more than 140 in Romania, over 105 in Czech Republic and over 110 in Hungary.
50% BENEFIT IN SALARIES
"If you take average salaries in Eastern Europe vs India, you are looking at a 50% benefit. So there is definitely a cost arbitrage by coming here," says Rohan Lobo, partner, Deloitte India.
While pointing out that though Eastern European GCCs offer language capabilities in all European languages, Lalit Ahuja, founder & CEO, ANSR, says because of the much smaller talent pool, the demand-supply dynamics has sent talent costs soaring there.
"India offers talent that takes accountability, understands the business and is culturally adaptable." adds Ahuja. "India offers a better cost-to-skill ratio, especially in areas like AI, analytics, cybersecurity, and financial services. There's also greater flexibility and scale when it comes to hiring digital and engineering talent," adds Sharma. "India also offers the entire gamut from product engineering, R&D, IT operations, business process operations, or even HR and finance functions," Lobo adds.
"As long as we keep the hustle culture going, we will always be in demand," adds Sawant.
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