Capability and innovation hubs (CIHs) have an expanded portfolio of services today and India has an opportunity to capture a big share of this market, says Boston Consulting Group.
CIHs are centres that provide access to high quality talent and advanced technology to help businesses grow by playing a prominent leadership role in formulating and driving business priorities across the enterprise. In its latest white paper, BCG says CIHs’ portfolio today includes front-end customer facing business operations and capabilities in emerging technology.
Sreyssha George, Managing Director & Partner at BCG, says that global CIH spend is currently estimated at $265-290 billion and is expected to grow to $390-420 billion by 2027 (10% CAGR). “India is uniquely positioned to capture a 35-50% market, given its rich and scaled talent pool. Also, these hubs will bring significant innovation and talent upskilling to the Indian ecosystem,” she states.
Elaborating further, she points out that India is very unique with its multiple key value propositions on offer. “We have scaled talent pools across all the core towers like shared services (finance, HR, etc), technology as well as core business operations, giving us the breadth of skill sets required for the CIHs. Our workforce is also flexible, constantly upskilling including ability to run 24×7 operations, digitisation and BPR capabilities. Also we have a scaled middle and top management talent that allows centres to scale as high as 30-40K, while most countries have a ceiling of 1-2k employees in the hubs,” she says. George adds that as financial institutions face an increasingly competitive landscape, the evolution of such hubs into experience-led centres offers the unique opportunity for banks to leverage their full potential in driving innovation, efficiency and customer-centric value delivery. She gives the example of a US-based financial institution that drove continuous innovation in its CIH by focusing on end-to-end process digitalisation. “The bank saw a jump in customer satisfaction and achieved a more than 90% straight-through-processing rate, as well as 15–20% cost savings. Access to a rich talent pool focused on end-to-end digitalisation and availability of advanced technologies allowed them to make this leapfrog through their hub,” she adds. Financial Institutions (FIs), the white paper says, can transform their CIHs into cutting-edge innovation centres and value creators. Some of the key capabilities include being a talent magnet for high-skilled roles in which CIHs can attract niche, high-demand talent at scale, especially for scarce tech roles. They must also work towards being the custodian of digital innovation and emerging tech with the help of cross-functional talent that leads to end-to-end product development, enabling synergies across business units. “CIHs enable cross-border collaboration with standardised workflows and unified data lakes. By adopting these strategies, FIs can position their CIHs as central to driving innovation and business value,” the white paper states.
George points out that banks have a unique opportunity to transform or establish experience-driven centres across four key areas: delivery, talent, innovation and value excellence. “Leading banks have demonstrated that a partnership-focused operating model, rather than traditional service-provider approaches, yields better results. This model grants the CIH greater autonomy and a meaningful role in decision-making, including leadership participation,” she adds.
