Why is India the Hotspot for New GCCs?

In 1985, Texas Instruments did something that no one else did.

They set up the first Global Capability Centre (GCC) in India. This lit the spark for the offshoring trend that followed.

When the ‘90s rolled in, India threw open its doors to the world.

And big players like IBM, Accenture, and Microsoft took a chance.

Today India stands out as a compelling choice, driven by  its rich talent pool, cost advantages, and robust technological ecosystem.

This has led many businesses, explore new horizons for their Global Capability Centres (GCCs) in India.

But why India?  How can setting up a GCC here propel your business forward?

Let’s delve in and find out!

Why Set Up Global Capability Centers in India?

India's ascent as a hotspot for Global Capability Centers (GCCs) is backed by impressive numbers. Valued collectively at over USD 46 billion, India’s GCC landscape employs over 1.66 million professionals across critical sectors like Engineering Research & Development (ER&D), Healthcare, Analytics, and Finance.

Strategic Pillars of India's GCC Expansion

• Engineering Excellence

India's engineering capabilities form a cornerstone for the growth of GCCs. Of the more than 1580 GCCs, over 1440 are focused on Engineering R&D. This sector employs approximately 695,000 of the 1.66 million professionals in the GCC workforce. Indian ER&D GCCs are advanced, performing comprehensive activities across the entire value chain.

• Global Business Services (GBS) Leader

India stands out as a leader in Global Business Services (GBS), with more than 960 GCCs implementing shared services models. Over 110 organizations have established HR Centers of Excellence (COEs) in India. Key functions such as HR, IT, Finance, and Accounting drive the workload in these mature shared services or GBS models.

• Fostering Global Leadership

India's GCCs serve as a proving ground for global leadership, hosting over 5000 global roles, 18% of which are filled by women. The number of these global roles is expected to increase to more than 20,000 by 2030, underscoring India's pivotal role in nurturing international leaders.

• Expanding Beyond Major Cities

GCCs in India are spreading beyond Tier 1 cities, moving into Tier 2 and 3 cities to leverage cost advantages of 25-30%. This geographical diversification helps in tapping into new talent pools and reducing operational costs.

These pillars have set the stage for GCCs to expand their global roles, with projections of 20,000 such roles by 2030. GCCs in India are redefining global enterprise competition, leveraging local market insights to create additional value year on year.

Current Landscape of GCCs in India

Highlights:

• 1,580 GCCs employing 1.66 million professionals as of 2022-23.
• 18 GCCs set up in Tier I cities in H1 2023.
• Rise in Tier II cities
• 20% of Forbes 2000 companies have GCCs in India; expected to grow to 55% by 2030.

Rise in Tier II Cities

20% of new GCCs are established in Tier II cities.

Ahmedabad, Mysuru, Vadodara, Nashik, Tirunelveli, and Coimbatore are becoming key hubs.

Indutrywise GCC footprints

GCCs in India span across key sectors, such as

• Information technology (42%)
• Banking and financial services (20%)
• Manufacturing/Industrial (15%)
• Consulting (10%)
• Healthcare (8%)
• Automotive industries (5%) 

Sectorwise - Top GCC Hotspots

1. Bengaluru:
   • Information Technology (IT) and Software Development: Microsoft, Google, AWS, Cisco.
   • Automotive and Manufacturing: Volvo, Daimler.
   • Pharmaceuticals and Biotechnology: Biocon, AstraZeneca.
   • Aerospace and Defense: Boeing, Airbus, Collins Aerospace.
   • Retail and E-commerce: Amazon, Walmart.
   • Semiconductors: Intel, Texas Instruments, Qualcomm​ .
2. Hyderabad:
   • Information Technology (IT) and Software Development: Oracle, Facebook, Apple.
   • Pharmaceuticals and Biotechnology: Novartis, Dr. Reddy’s, Aurobindo Pharma.
   • Aerospace and Defense: Emerging hub for aerospace GCCs.
   • Retail and E-commerce: Strong IT infrastructure attracting e-commerce giants.
   • Semiconductors: Important location for semiconductor GCCs​​.
3. Pune:
   • Information Technology (IT) and Software Development: Infosys, Wipro, TCS.
   • Automotive and Manufacturing: Volkswagen, Mercedes-Benz, Tata Motors.
   • Financial Services (BFSI): HSBC, Barclays​​.
4. Chennai:
   • Automotive and Manufacturing: Ford, Hyundai, BMW.
   • Financial Services (BFSI): Citibank, Wells Fargo​​.
5. Mumbai:
   • Financial Services (BFSI): JP Morgan, Morgan Stanley, Goldman Sachs​.

Key considerations while setting up GCC in India

Specially Regulated Economic Territories/Zones

Special Economic Zones (SEZs)

Benefits: SEZs provide several incentives, such as tax exemptions, customs duty benefits, and relaxed regulations to promote business activities.

Requirements: Prior approval under the Special Economic Zones Act, 2005 is needed to set up a GCC in an SEZ.

Example Locations: Various states across India have SEZs. These zones offer different benefits based on the location and type of services provided.

International Financial Services Centres (IFSCs)

• GIFT City: The Gujarat International Finance Tec-City (GIFT City) is India's only IFSC. It offers significant fiscal benefits, including exemptions from customs duties and GST for procuring goods or services.
• Requirements: To set up a Global In-house Centre (GIC) in an IFSC, approvals from the International Financial Services Authority (Global In-House Centres) Regulations, 2020 are necessary. However, direct tax benefits in GIFT City are limited to financial services​.

Choosing GCC-Friendly Cities/States

Karnataka

Bangalore: Recognized as a prime location for platform engineering GCCs. The state’s Digital Economy Policies, Programs & Incentives handbook highlights Bangalore's strategic importance​.

Telangana

Hyderabad: Telangana’s ICT Policy 2021-26 focuses on strengthening the ecosystem for GCCs and easing the process of doing business to attract and expand GCC operations​​.

Uttar Pradesh

Fiscal Benefits: The state’s IT and ITeS Policy includes GCCs within the ambit of ITeS, offering various fiscal and non-fiscal benefits to incentivize their setup​​.

Andhra Pradesh

Supportive Policies: The Industrial Development Policy 2023-27 commits to supporting MNCs and companies establishing GCCs, making it an attractive destination for new setups.

3. Infrastructure Considerations

• Grade A Commercial Buildings: 

Locations should have sufficient availability of Grade A commercial buildings to ensure a conducive environment for growth and operational efficiency.

• Robust Infrastructure: 

Reliable power supply, high-speed internet connectivity, and transportation facilities are crucial for the smooth functioning of GCCs​.

Key Takeaways

India's journey in the Global Capability Centres (GCCs) landscape highlights its evolution into a global hub for innovation and operational excellence. With a rich talent pool, cost advantages, and robust infrastructure, India is an ideal location for setting up GCCs. The significant growth in Tier II cities and the diverse sector presence underscore the country’s expanding influence and potential.

For businesses looking to set up GCCs without the headache, Talowiz provides expert guidance and streamlined solutions to start your GCC journey immediately in India.

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