India Rises as Global Services Factory, Says Goldman Sachs

By siliconindia  |  Wednesday, 01 May 2024, 10:35:38 AM IST

India Rises as Global Services Factory, Says Goldman Sachs
India has experienced a significant surge in its global services exports over the past 18 years, driven largely by the rise of Global Capability Centres (GCCs). According to a recent report by Goldman Sachs titled 'India’s Rise as the Emerging Services Factory of the World', GCCs have played a pivotal role in the expansion, contributing significantly to the country's economy.
The report highlights Bengaluru as the leading hub for GCCs, with Delhi-NCR following close behind. Over the past 23 years, the number of GCCs in India has more than doubled, rising from 700 to 1,580. This substantial growth has also led to a notable increase in employment within the sector, with around 1.3 million individuals currently working in GCCs. By the fiscal year 2023, the total number of employees in the sector had reached 1.7 million, marking an 11.6% compound annual growth rate (CAGR).
The proliferation of GCCs has not only boosted real estate but has also contributed to the expansion of services exports, providing a significant catalyst for economic growth and job creation. GCCs, which are specialized offshore entities established by companies worldwide, support a broad spectrum of business processes, including IT, human resources, finance, and analytics.
Goldman Sachs' report indicates that GCC revenues in India have experienced remarkable growth over the past 13 years, with a CAGR of 11.4%, reaching $46 billion in FY23. The report forecasts strong growth in high-value services in the coming years, which is expected to drive top-end discretionary consumption and spur demand for commercial and residential real estate.
India's services exports reached nearly $340 billion in 2023, growing at a CAGR of around 11% since 2005, which is almost double the global growth rate. As a result, India's share in global services exports has increased from under 2% in 2005 to 4.6% in 2023. During the same period, its share in goods exports rose from 1% to 1.8%.
The report emphasizes that within the services sector, computer services remain dominant, accounting for nearly half of India's services exports in 2023. However, professional consulting exports have emerged as the fastest-growing sector, indicating a dynamic shift in India's services exports landscape.
India's ascent as a global services hub underscores its growing importance in the world economy. GCCs play a central role in this transformation, and continued innovation and growth in high-value services are expected to further strengthen India's economic trajectory in the coming years.

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