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Learn how the Global Capability Centres affects India's required scale, redefining economic, social, and geopolitical interactions between the regions.

How GCC changes the requirement scale in India

Global capability centers (GCCs) are booming in India.

In the last 12 years, the number of GCCs in India has grown: From 760 GCCs in 2012 to over 1,600 GCCs today. In the next few years, this number is expected to touch 2,000. These GCCs will account for a market size of over USD 60 billion. Close to 1.6 million people are employed in these GCCs.

GCCs operate across multiple service sectors: Software product development, IT services, BPO and engineering services. Importantly, they are creating immense value across various industry segments. These segments include, banking, financial services and insurance, aerospace, oil and gas, healthcare, pharma, software, telecom, semiconductor, and automobile.

The scale of operations in the GCC space is mind-boggling. Multinational companies are, in fact, investing huge sums of money, to transform their GCCs into centers of excellence. They find the cost structure of operating in India very competitive and lucrative. Further, the government’s policies, the digital infrastructure being offered and the available high-quality talent pool are enabling and supporting this boom.

Not just another back office

A couple of decades ago, India was an investment destination for global companies that wanted to set up back-office operations here. No longer. The focus now is on setting up and operating a high-quality center that creates phenomenal value.

Here are some examples of how companies are thinking about a GCC operation in India.

  •   Some companies are transforming their India operations to include a GCC with top-end digital capabilities. This means bringing in artificial intelligence and machine learning capabilities into their operations. Companies are not just thinking for this decade alone, they are imagining a future and building capabilities to embrace that future.
  •   Some companies are making their GCCs product development hubs. Which is new digital product development is undertaken here. These products are then launched in other countries.

Counting on high-quality talent

A major factor contributing to the growth in the GCCs space is the availability of high-quality talent in India. This talent is not just passing out of college in large numbers each year. This talent pool is spread across India’s thriving startup ecosystem. So, at one level, GCCs are tapping into the strong engineering research and development (ER&D) network in India. At another, India’s robust startup culture offers exceptional talent across industry segments. And, finally, there’s talent available in the GCC universe itself.

Almost every GCC is out there in this buzzing talent marketplace. They are not just recruiting. But they are creating a vibrant culture of innovation. There are, for instance, several incubators and accelerators that have been set up in collaboration with startups. These initiatives are creating a fertile environment for global talent attraction, acquisition and development.

Value gets created when people collaborate seamlessly. For example, an automobile industry GCC is working with startups to come up with better fuel efficiency solutions. Another GCC in the healthcare space is working with startups to develop cutting-edge medical software products.

Some of the global talent acquisition among GCCs is happening from India’s tier 2 cities. The reason is simple: Of the 1.5 million engineering graduates that come out of college annually, a majority are from tier 2 cities. Many of these graduates are conversant with English. They are also full of ideas and are willing to walk the distance to make a mark in industry. So, attracting such talent, training them and deploying them to innovation projects is sound thinking. Their hunger for growth helps GCCs succeed.

State government initiatives

Another factor contributing to the growth of GCCs, and to the impressive scale and reach of their operations, is the support being offered by various state governments in India. Almost every state in India is rolling out a red carpet for GCCs.

This support comes through financial subsidies. Land is cheaper and acquiring land is being made possible without hassles and red tape. Cheaper and uninterrupted power supply is another major contribution.

State governments are also make sector-specific growth policies. They facilitate the process of helping the GCC to connect with tier 2 and tier 3 cities. This ensures that the talent pipeline is place and that there is a steady inflow of talent. Specifically, these GCC-friendly policies of state governments include tax cuts, incentivization of capital investments in research and development, fast tracking on the patenting, intellectual property rights and licensing processes, offering research grants and helping launch innovation hubs.

Conclusion

Even so, despite all the growth that GCCs have seen and are continuing to see, the sector is expected to further boom. GCCs are actively looking to make their understanding of India’s cultural diversity into a competitive advantage. Which is, if you have learned to do business in India, you can do it very, very well. One aspect of this will involve optimizing cost efficiencies while growing rapidly. It is in mastering this complex process that GCCs can really scale up.

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