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Study Shows GICs Playing Critical Role in Enterprise Digital Innovation


While enterprises continue to predominantly rely on service providers for IT services delivery, they have started leveraging global in-house centers (GICs) model. Often called Shared Services, the GICs act as strategic partners that play a central role in digital transformation and innovation initiatives.

According to a new research from the Everest Group, insourcing has experienced constant growth, with the share of GICs in overall IT services delivery for global organizations increasing from 20% in 2010 to 28% in 2018.

The research shows, GICs are playing a critical role in helping enterprises adopt new digital technologies such as advanced analytics, machine learning, robotic process automation, blockchain, IoT and artificial intelligence.

“As GICs continue to evolve and deliver value beyond arbitrage, their role is becoming a more involved and critical one in supporting their enterprises’ innovation agenda and sustained competitiveness,” said Rohitashwa Aggarwal, practice director, Global Sourcing, at Everest Group.

“Most mature GICs have evolved to drive impact through high-value capabilities, operating as an integral team with core business teams, building the next-gen talent pool, and leveraging ecosystem partnerships to capitalize on digital opportunities,” Aggarwal mentioned.

The GIC segment accounted for 26% of the global offshore services market (estimated at US$196 billion in 2018). It has now grown to reach more than 3,100 centers and more than 1.4 million FTEs across leading offshore and nearshore locations.

The market saw a 20% year-on-year increase in 2018 in the number of new GIC setups, driven by new setups from the manufacturing; healthcare and life sciences; retail and consumer product goods (CPG); and banking, financial services and insurance (BFSI) sectors, said the research.

Europe-headquartered firms are setting up GIC centers in Central and Eastern Europe given proximity and language-skills requirements, while US-based companies are more inclined to leverage India due to the availability of large-scale talent for English language delivery, the study finds.

According to the research, a majority of GIC focus on a single function (such as operations, IT or voice-based business process services), but many have multi-functional capabilities. Technology and communications firms lead GIC activity in terms of the number of centers (37%), but the BFSI vertical has the highest share of FTEs employed by GIC centers (36%).

GIC setups by small companies have increased on the back of higher demand for R&D and innovation, say Everest Group researchers. In 2018 alone, small companies’ GIC setups increased by 65% over 2017.

The research report observes that while business process or operations continue to be the dominant function served by GICs, their R&D centers have gained traction during the last couple of years to help develop digital products and services such as machine learning, artificial intelligence, IoT, mobility, analytics, cloud and cybersecurity.

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