India: The Global CoE Epicenter
India tops global rankings as premier Center of Excellence (CoE) hotspot ahead of China and Canada
India’s reputation as the go-to destination for Global Capability Centers (GCCs) is widely known. However, what many may not realise is that it has also emerged as the undisputed global capital of Centers of Excellence (CoEs).
According to a Zinnov report, India is the premier hotspot for Centers of Excellence (CoEs) with a top score of 8.0. This leading position is due to a combination of factors, including a strong tech talent pool, cost efficiency, advanced software engineering capabilities, and increasingly a favourable business environment. In fact, India outperforms other countries in this ranking, with Canada scoring 7.4, China 7.1, Mexico 6.9, Poland 6.8, and both Brazil and Romania at 6.3.
In the past month alone, there have been a flurry of announcements regarding CoEs across the country. These include initiatives from fintech startup CASHe (will house about 150 new hires), LTIMindtree-IBM (Generative AI), Pfizer-Yashoda Hospitals (Adult Vaccination), IIT Kanpur-DRDO, Mahindra University (AI), Netplace Cisco CoE, and L&T Technology Services’ Simulation Centre of Excellence for Airbus.
Abundant and Skilled Talent Pool
India’s status as the global hub for Centers of Excellence (CoEs) is founded on several compelling factors. Central to this distinction is the country’s vast and highly skilled talent pool. Boasting over 30.74 lakh software engineers, India has one of the largest talent reservoirs in the world.
This figure continues to rise, buoyed by the country’s decent educational system and strong cultural emphasis on STEM education. Although there may be doubts about the efficiency of the education system on a large scale, the sheer numbers are undeniably impressive. The availability of such a reservoir of skilled professionals has ensured a steady stream of talent for companies seeking to establish CoEs.
Moreover, India’s prowess extends to advanced fields like artificial intelligence (AI) and machine learning (ML), with 4.46 lakh professionals specialising in these cutting-edge domains, positioning the country favourably in rapidly evolving sectors. This number is higher when compared to China.
“The exponential growth of the AI sector has made it a prime destination for talent, with AI-related roles emerging as some of the country’s most sought-after positions,” says Deepa Madhavan, VP Engineering & India Country Head at Genesys.
India was second globally in software engineering talent (30.74 lakh), which saw a 10 per cent growth from 2022 to 2023. Comparatively, China had 30.76 lakh software engineers, but with a slower growth rate of 4 per cent during the same period. The US, despite being a tech giant, has a smaller pool of 2.39 million software engineers and a 7 per cent growth rate. Other regions such as Brazil, Canada, and the UK have smaller talent pools of 9.25 lakh, 8.17 lakh, and 7.85 lakh respectively, with varied growth rates.
“India's abundant technical talent pool coupled with robust infrastructure and an increasingly favourable business environment also aid in bolstering contact centre capabilities and delivering exceptional customer experiences for businesses – thus, making it a compelling destination for establishing centre of excellence for businesses.” - Deepa Madhavan, VP Engineering & India Country Head at Genesys
Cost Efficiency
Cost efficiency is another compelling reason why India stands out as the preferred destination for CoEs. Setting up operations in India translates to significant cost savings, with potential reductions of up to 67 per cent compared to the US. This is primarily due to lower wage levels for skilled labour, which enables companies to maintain high-quality operations while optimising expenses.
Beyond labour costs, India also offers additional advantages in terms of operational expenses, ranging across infrastructure, utilities, and administrative costs, further supporting the financial appeal of establishing CoEs in the country.
Cultural And Linguistic Advantage
English proficiency levels vary significantly among Centers of Excellence (CoE) hotspots around the world, with China reporting only 10 per cent of its working population as proficient in spoken English, contrasting starkly with Mexico’s 40 per cent proficiency rate.
Meanwhile, in the QS Graduate Employability Rankings 2023, Indian universities such as IIT Bombay (29th), IIT Delhi (42nd), and IIT Madras (51st) emerged as global leaders in graduate employability. These rankings take into account various factors, including English language proficiency.
In addition, Indian professionals are renowned for their adaptability and ability to thrive in diverse, multicultural environments, easing the integration of Indian operations with global strategies. Also, India’s location provides western companies access to emerging markets in Asia, the Middle East, and Africa the opportunity to expand their reach and tap into new customer bases.
“Companies are increasingly realising that the key to success lies in looking beyond their traditional borders for talent. The Asia Pacific region, for instance, has seen a 13 per cent increase in its talent pool over the last year, as several global companies from Europe, North America, and the Middle East established centers in countries like India, the Philippines, Vietnam, and Malaysia, translating to installed workforce growth.” – Zinnov CoE Hotspot 2024 report
India’s maturing and dynamic ecosystem, combined with its status as the CoE capital of the world, is further supported by its vibrant startup culture, home to over 100 unicorns and a tech landscape valued at USD 250 billion. This serves as fertile ground for collaborations and technological advancements. Additionally, the presence of numerous universities and research institutes, including IITs elevates skill levels across various domains, crucial for companies aiming to innovate and scale rapidly.
In the recent years, government policies and support have helped India’s international appeal for establishing CoEs. Initiatives such as tax incentives, reduced thresholds for IP financing, and startup loans have created a better environment for international businesses. Moreover, India has made significant strides in improving its ease of doing business, streamlining operational processes, and reducing bureaucratic hurdles through enhancements in digital infrastructure and regulatory frameworks.
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