2-fold jump in capability, innovation space likely

Mumbai: The market size of capability and innovation hubs in India is expected to nearly double to $117 billion by 2027 from $65 billion valued at present, according to a report.Units engaged in oursourced work of overseas clients are referred as CIHs (capabilities and innovation hubs).

The domestic CIH market is on course to increase at a compounded annual growth rate of 16 per cent till 2027 and reach $117 billion from $65 billion now, consultancy firm BCG said in its report. India leads CIH ecosystem globally with around 1,600 centres, followed by the Philippines, Malaysia, Poland, Brazil, Ireland, Mexico, Costa Rica, Romania, Morocco and the Czech Republic.

The report said that CIHs are poised to play a more integral role in the growth of enterprises as they expand their portfolio of services to include front-end customer business facing operations and capabilities in upcoming technologies. Meanwhile, the report has projected the annual growth of global CIH spends at 10 per cent till 2027 to reach $715 billion from $475-515 billion at present. Of this, global in-sourced CIH spend, currently estimated at $275-295 billion, is expected to increase to $390-420 billion by 2027.

Though CIHs have tremendous benefits, an analysis of Fortune-500 companies shows about 45 per cent adoption across sectors, thereby restricting their competitive advantage in the market. The BCG report is based on a survey conducted in October among 50 companies, half of them from India, and centre heads spanning multiple industries and geographies which primarily focused on five key themes including CIH value proposition, the setup of such centres, digitalization and advanced tech, talent management, and governance structure.