Until a few years ago, Global In-house Centres (GICs) were essentially seen as back-offices riding on labour arbitrage. MNCs then stepped up their game, insourcing vital functions around R&D and new product development. Today, GICs are witnessing a paradigm shift, as the arbitrage-first model is on the wane, as seen in the outsourcing sector. GICs are now looking to manage costs through geographical consolidation of support services as well as leverage the potential of the supply market to differentiate business performance. More than 60% of global MNCs across verticals have now set up their GICs in India due to talent availability, but face sourcing challenges in a competitive market.
GICs are built on the concept of the shared services model in functions like engineering, financial reporting and accounting operations, HR, real estate and facility management, procurement, product lifecycle services. The benefits are aplenty. Insourcing via GICs leads to vendor consolidation, which, in turn, lowers cost overheads. For instance, functions like application maintenance and development can be outsourced to a third party, who not only has industry experience, but also the expertise and scale of operations resulting in efficient delivery.
Large companies are also witnessing substantial increase in their operational efficiency. GICs allow control over data services, which is a major security concern. Increasingly, M&A activities and the resulting governance, risk and compliance requirements have also spurred the need for a centralised IT, HR or even a finance hub. Players in sectors like IT, financial services, insurance, life sciences, high-tech, natural resources, consumer brands, banking and retail are reaping the benefits of establishing GICs in India.
The talent challenge
MNCs got attracted to India due to the large English-speaking population, proliferation of IT services and technology companies, and emergence of disruptive start-ups, leading to ready availability of suitable talent. But as they move up the value chain, sourcing niche talent is the key challenge particularly for greenfield entrants. With limited HR systems to support in an alien environment, they are plagued by lack of understanding of the talent acquisition landscape and the policies that govern the land.
This scenario has created the opportunity for recruitment process outsourcing (RPO) players who, flanked by local expertise and experience, are able to fill the lacuna through accelerated speed of hire, portfolio rationalisation, cost benefit and scale.
RPO is the panacea
In this model, GICs can outsource all or even part of their recruitment processes. Typically, there are four categories of RPOs—skill-based (engineering, IT, finance, etc), project-based, consulting (sourcing strategy development, current state process analysis, etc) and end-to-end RPO across disciplines and full lifecycle.
Therefore, for better RoI, GICs need to consider the following before they deploy RPO solutions:
Cultural fit: This is vital. While speed, scale and efficiency, and standardisation are important for successful outcomes, if there is no culture fit then the RPO is bound to fail. For instance, based on the workforce diversity aspirations of the enterprise, sourcing plans must be defined to avoid any unconscious bias in the hiring process.
Clear definition of goals: This is true for enterprises in verticals like technology where there is skill shortage of critical talent. Metrics for creating talent pool and time to hire should be clearly set.
Local needs: While global expertise matters, understanding of local practices are essential. In-depth understanding of the geography, local sensitivities and industry vertical is key to success of any RPO.
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To conclude, GICs are witnessing a paradigm shift as they move towards a more strategic and accountability-driven model. However, as jobs in this sector become more mainstream, streamlining the supply side of talent to source different and niche categories will be critical. RPOs will drive the next stage of growth for GICs in India, but they need to be prudent and aware of how to best deploy and gain better traction.
Francis Padamadan is country director, KellyOCG India, a talent management solutions provider. Views are personal