Our experience over the last decade & half in working with several multi-national technology companies with India GICs (Global In-house Centre), tells us that these GICs, in general have not exploited India’s strength in global strategic sourcing to the fullest.

Barring large companies such as IBM, Dell etc., most others especially the medium sized software development companies have used India GICs largely as a development center and to some extent as global back office for shared services. At best, the procurement teams here lead Asia regional sourcing. We truly believe, there is a strong case now for building a global strategic sourcing organization in India GIC that complements well with the sourcing teams elsewhere (US, Europe etc.).

BPO phenomenon that started around 2000, gave a required impetus to the thought that many global activities can in fact be managed and done from India. Initially it was restricted to only extreme transactional activities such as call centers, low level data entry etc. But over period, these activities evolved up the value chain.

Back in 2007 at Dell, procurement team had started something that was new at the time. Dell used the local infrastructure in India to support global procurement team at Austin HQ on some basic transactional activities. It started with analytics support and soon moved to other RFP activities – coordinating NDA signatures, market research etc., eventually program managing RFP process. However, the strategic sourcing process and negotiations were left with the global category managers at the HQ. This move helped the category leads to effectively free up their bandwidth to focus on the all-important aspects for Dell supply chain – continual cost reduction and supply availability.

Later at Genpact India in 2009, one of our partners was among the first leaders hired to establish a strategic sourcing services organization. Thus far, Genpact had been servicing on procure-to-pay activities such as vendor setup, accounts payables, PR-to-PO etc., but strategic sourcing services was an experimentation starting with a few GE companies as clients. This team not only was able to establish a strong strategic sourcing process that delivered outstanding results but also was able to display that such high-end activities can indeed be managed from India. The team worked very closely with the client teams but at the same time were independently managing a relatively large spend.

At another assignment, a $2B software company, we had established a strategic sourcing team in India-GIC that climbed the value chain successfully in a span of 4 years – from tactical procurement to global strategic sourcing activities.

Currently, we are helping some other similar companies to establish global strategic sourcing organization in their India GIC, one of which has already delivered strong results and where entire global strategic sourcing is managed from India.

So why companies must evaluate this aspect critically and try to implement in their respective GICs? Single most important driver – high Return on Investment leading to a strong bottom-line impact.

In our experience, above model works very effectively. Over the years, the risks have reduced significantly due to high availability of rich talent pool – both functional & soft skills. Also, the advances in collaboration & communication tools allow greater flexibility and acceptance from global supplier community to deal with team in India.

Especially for IT/ITES companies, many key suppliers have large delivery presence in India or Asia region – for example, contingent workforce, IT & telecom etc., that makes the case stronger.

So why do companies still struggle to exploit such an opportunity? There could be many drivers, but most critical ones we see are –

1. • Lack of awareness of such a possibility, among the decision makers at the company headquarters.
   • Lack of strong local leadership and vision to experiment with this model.