What is the critical mass of a IT Global Delivery Center? This question was answered by Management Consulting firm McKinsey in a report this month (McKinsey Quarterly September 2009). According to McKinsey, an IT delivery center in India should consist of at most 3,000 seats. Beyond this they feel that costs go higher and performance dips.

I found this discussion very intriguing. If 3,000 was the critical mass for a delivery center then most Indian IT pure plays were actually running centers that were sub optimal. For example, Cognizant’s new delivery center in Chennai has the capacity to house 20,000 people and is currently housing over 10,000. Infosys has an excellent training facility in Mysore (they just added another wing a few days ago) enabling them to train 14,000 employees simultaneously. Is Mc Kinsey suggesting that such companies are not as efficient as they should be?

Angelos Karageorgiou, an IT architect from Greece, feels that the number 3,000 was a field observation. The critical mass for a delivery center would actually depend on the structure and the culture of the region. For a European IT delivery center even 3,000 is a very high number for a critical mass, he feels.

Shuki Weiss, who runs a data mining firm in Israel, feels otherwise. He feels critical mass for a delivery center would depend on the organization goals, policies, value to customers and the multi markets a firm operates in. It is unfair to generalize all IT firms, because each one of them is unique in its own way. A critical mass of 3,000 might be optimal to a certain player and may not add value to another one.

This is true especially for firms in India. What McKinsey has overlooked is the fact that most Indian IT giants work for multiple clients out of the same location. If each delivery center were to cater to one client only, then the critical mass of such a center would be in the range of 1,000 – 2,500 seats. However, most IT firms have multiple client businesses run from the same delivery center, economizing costs. Therefore it is not accurate to consider multiple client delivery centers as one entity, just because they share a common building.