Margins from hires in Global Capability Centres (GCCs) are three times greater than those in information technology (IT) staffing, as reported by Quess Corp. The staffing firm noted a 16 percent year-on-year increase in GCC headcount for the quarter ending September 30, 2024.
“In GCC recruitments, we achieve margins at least three times higher than in IT, whether in percentage or absolute terms,” stated Guruprasad Srinivasan, Group Chief Executive Officer of Quess Corp.
This surge in GCC margins coincides with the rapid expansion of the sector, raising concerns about its potential impact on IT companies’ revenues.
Quess has capitalized on this trend, amassing a strong client base of over 200 GCC clients. Of these, approximately 140 are longstanding clients with whom the company has developed solid relationships, while the remaining contracts were secured between Q4FY24 and Q2FY25.
To maintain and enhance its client relationships with GCCs, Quess Corp has established specialized acquisition and account management teams. “For us, the GCC approach is more about realizing value than merely increasing headcount,” Srinivasan explained.
The swift growth in its GCC clientele is reflected in the financials as well. In the July-September timeframe, revenue from GCCs rose nearly 5 percent year-on-year to contribute 68 percent of total revenue.
Sequentially, this figure saw an increase of over 15 percent. The threefold margin Srinivasan mentioned is also evident in the cash operating margin, specifically the earnings before interest, tax, depreciation, and amortization (EBITDA), which rose by 5 percent to Rs 92 crore in Quess’s Workforce Management division, which encompasses IT staffing.
Despite any confusion surrounding the terminology, all indicators point to the increasing prominence of GCC manpower and a decline in traditional IT services. Notably, approximately 70 percent of the Workforce Management division consists of GCC personnel.
Comparing salaries, Srinivasan highlighted that GCC roles command significantly higher wages than those in IT staffing. The average salary for GCC hires ranges from Rs 75,000 to Rs 1 lakh per month, nearly double the typical IT staffing wages of Rs 30,000 to Rs 35,000.
Additionally, specialized positions within GCCs can earn salaries of Rs 8-10 lakh per month, underscoring the high demand for specific skill sets. This demand also creates challenges in recruitment, as sourcing and negotiating with candidates possessing five to eight years of experience for these high-paying roles is quite complex.
“GCC pricing is undoubtedly more favorable than IT services, due to two main factors. First, we do not fill entry-level positions. Second, because we focus on niche skills, some roles command salaries as high as Rs 8-10 lakh, roughly translating to a top-line wage of about Rs 7 to 10 lakh per month,” Srinivasan elaborated.
He anticipates that growth in the IT sector should begin to stabilize by the first quarter of the next financial year (Q1FY26).