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Aug 31, 2023

India: The Global Destination for Cost-Effective Talent Acquisition - A Goldman Sachs' Success Story

Unravel the success story of Goldman Sachs' talent acquisition strategy in India. Learn valuable insights to excel at hiring remote talent in India.

India: The Global Destination for Cost-Effective Talent Acquisition - A Goldman Sachs' Success Story

Introduction

In today's interconnected world, the search for cost-effective talent has become a vital aspect as companies plan to expand globally. Notably, India has emerged as a frontrunner and a preferred destination for companies looking to hire skilled resources at significantly lower costs. A recent article from the Financial Express in June 2023 highlights Goldman Sachs' remarkable journey in this regard, where their Bangalore office now stands as their largest office outside New York. Initially starting with a modest team of 300 IT support employees, Goldman Sachs has expanded its workforce to encompass quants and software engineers who develop systems for various critical functions, including trading and risk management.

This success story resonates with numerous other multinational companies that have established Global Capability Centers (GCCs) in India, contributing to more than 1% of the country's GDP. This trend showcases the immense potential of India as a destination for building global competencies, fostering confidence that such ventures hold promising long-term benefits.

In this blog, we will understand why India is regarded as an ideal destination by companies for setting up a global workforce. We will delve into the salary disparities across different roles, utilizing Goldman Sachs as a compelling case study. By analyzing the kinds of roles being filled in India, we aim to provide insights into the prevalent talent trends in the realm of global hiring.

Moreover, we will shed light on the challenges encountered by US-based startups when venturing into talent acquisition in India and offer practical solutions to overcome these obstacles.

India's Appeal as a Global Talent Hub

India has witnessed a sharp rise as a favored global talent hub, with companies looking to expand their operations on an international scale. This appeal of India can be attributed to several key factors, such as:

  1. Vast and Diverse Talent Pool: India boasts a massive talent pool that is both diverse and skilled, encompassing a wide range of industries and professions. From finance and technology to healthcare and engineering, India's talent spans numerous domains, making it an attractive choice for companies across various sectors. The country's growing population assures a steady influx of young and talented individuals, making it a veritable treasure trove of innovative ideas and fresh perspectives.
  2. Booming Tech Startup Ecosystem: As of 2023, India boasts the third-largest booming tech startup ecosystem globally, closely following the US and China, evident from its thriving number of startups and unicorns. This remarkable growth indicates that the country possesses a talent pool on par with some of the finest minds worldwide. From software development and data analytics to artificial intelligence and blockchain, India's talent pool encompasses expertise in cutting-edge technologies.
  3. Proficiency in English: English has emerged as the language of choice for business and communication in India. The country's proficiency in English empowers seamless interaction with global clients, fostering an environment of effective collaboration and understanding. The ability to communicate fluently in English eliminates language barriers, making India an ideal location for multinational companies seeking streamlined operations across geographically diverse teams.

According to Nasscom, India hosts over 1,600 Global Capability Centers (GCCs), which accounts for more than 40% of such centers worldwide. Bengaluru houses GCC offices for prominent companies like Saks Fifth Avenue Inc., Rolls-Royce Holdings Plc, Wells Fargo & Co., and Rakuten Group Inc. In 2022, approximately 66 global companies established their first GCC in India.

The Cost Advantage of Hiring in India: A Goldman Sachs Analysis

Employee Strength by Region

Goldman Sachs has established its second-largest talent base in India, showcasing the company's profound trust and confidence in the country's vast pool of skilled professionals.

Employee strength of Goldman Sachs by region. Data collected as of 25th July 2023.

Job Postings by Region

India's exceptional position is evident, surpassing all other countries with the highest number of job postings after the USA. This signifies that India is not only the prominent location for Goldman Sachs' largest office outside the USA but also highlights the company's unwavering commitment to hiring more resources and expanding operations in the country.

Employee Salaries by Region

One of the main reasons for Goldman expanding into India is the ease of access to top-notch talent at a fraction of the cost they would have incurred in the USA. The top 2 entry level job positions at GS India are Investment Analysts and Software Engineers. Here's a breakdown of the salaries for both roles across regions.

Salaries of software engineers (entry level) at Goldman Sachs by region.

Key Insights:

  • The USA stands out with the highest average total compensation of $120,605, which is significantly higher than other countries on the list.
  • India and Poland offer considerably lower average total compensation compared to countries like the USA, UK, and Canada. India’s average compensation is 21% of the salary being offered in the USA, making it clear that Goldman's strategy for hiring software engineers in India is proving to be successful.
  • Full stack developers, Data scientists, Web developers (Front-End), API developers (Back-End), and Site Reliability Engineers (SRE) are some of the top roles being hired in their India office. 
Comparison of salaries of investment analyst at Goldman Sachs in USA and India.

Key Insights:

  • Similar to the software roles, investment analysts in the USA have a higher base pay, and bonus component compared to their peers in India.
  • While the average total compensation is lower in India, this data should not be seen as a reflection of the quality of talent available. With an average compensation of $59,000+, it is important to note that this figure is considerably high for employees starting their careers in India. Many of these professionals are graduates of India's prestigious institutions, such as IITs, IIMs, and other renowned colleges, ensuring a pool of highly skilled and competent individuals.

How can US startups capitalize on hiring talent from India?

Despite the attractive Indian talent market, US-based startups planning to hire in India may encounter several challenges during the talent acquisition process. Some of the key challenges include:

  • Identifying and reaching out to the right talent in India can be challenging, especially for startups that may not have a well-established brand presence.
  • Operating across different time zones can lead to potential delays in communication and project coordination.
  • Adhering to India's complex labor laws and regulatory requirements can be daunting and will require local expertise.
  • Ensuring that their intellectual property and sensitive data are protected when working with a remote team in India.
  • Increased compliance costs in the USA for companies setting up an international presence.
  • Increased manual payroll, which can lead to increased errors and delayed/reduced salaries for international employees.

Best Practices for Hiring Talent in India

Companies can navigate the challenges of hiring in India by implementing one of the following strategies:

Hiring Contractors

This helps the company to begin operations quickly. However, from a long-term perspective, it is not advisable to hire contractors, as it will be costly. There is very little control over the work, and the risk of data privacy is high. Hiring contractors also limit the talent pool in India, as Indian employees prefer to work full-time.

Setting up own Entity

This is the most compliant method to hire an international workforce, as it gives complete control over the team and day-to-day operations. However, it is not advisable to begin setting up an international entity to begin with, as it involves effort and investment. This is more of a long-term strategy that should be undertaken only when the company is sure that it wants to expand internationally in a country like India.

Partnering with an EOR provider in India

The most convenient and straightforward method for global companies to hire Indian employees is by partnering with an Employer of Record (EOR). EOR partners, such as Wisemonk, take on end-to-end responsibility, from providing guidance on the talent market in India to compensation benchmarks for different roles within the company, as well as managing the employee's payroll and compliance. The global company retains control over the employee’s day-to-day operations. This arrangement ensures full compliance with local laws, while the employee benefits from being associated with a renowned global brand. 

Wisemonk: Your India EOR Partner

With Wisemonk's Global Employer of Record (EOR) solution, you can achieve full compliance with Indian laws without the complexities of setting up a legal entity. By leveraging the deep expertise of India's labor laws, compliance regulations, and cultural dynamics, Wisemonk facilitates seamless onboarding, payment, and equipping of employees from anywhere in the world. Whether expanding to India or other countries, Wisemonk empowers global companies to access diverse talent pools and establish a strong global presence effortlessly and efficiently.

Should you have any further questions on how to hire and manage talent in India, please reach out to us, and we will be happy to assist you.

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