How GCCs in India are redefining Innovation and Driving Growth

In recent years, there has been a remarkable shift in the landscape of Global Capability Centers (GCCs) in India. Previously viewed solely as cost centers, GCCs have now developed into vital hubs for innovation, technology, and strategic significance

This blog explores the current trends, challenges, and opportunities that have contributed to the revitalization of GCCs within India.

The Development of GCCs in India

India’s GCCs have significantly evolved from their origins as providers of back-office support. Initially, these centers concentrated mainly on backend support functions and business process outsourcing (BPO). Yet, as time has progressed, they have ascended the value chain, transforming into vital contributors to knowledge process outsourcing (KPO) and centers of innovation. Recently, particularly over the last few years, there has been a notable increase in the demand for Grade A office spaces by GCCs, with larger deals becoming more frequent.

While the momentum was momentarily hindered by the COVID-19 pandemic and international geopolitical strains, the strength of India’s economic growth narrative has renewed trust among investors worldwide. For example, the second half of 2023 saw the most substantial leasing activity in the GCC since 2020, indicating a noteworthy recovery in the sector.

The Elements Fueling Growth in the GCC

India remains a favored choice for Global Capability Centers (GCCs) due to its strategic benefits. The nation boasts an extensive pool of skilled, tech-savvy professionals, fostering a talent-rich landscape that is difficult to rival. Additionally, the significant cost advantages regarding both real estate and labor are noteworthy. Enhancing the appeal for global firms aiming to improve operational margins, India’s IT infrastructure and regulatory framework facilitate a seamless business environment.

The noteworthy diversification of demand within the GCC is evident. Although the technology sector remains the leader, there has been a marked increase in leasing activity from sectors such as Banking, Financial Services, and Insurance (BFSI), Engineering, Manufacturing, and Healthcare. This trend reflects India’s wide-ranging attractiveness to multiple industries, all aiming to capitalize on the distinct advantages the country offers.

The Critical Significance of GCCs

GCCs are now essential components of the strategic functions within multinational corporations (MNCs). Between 2020 and 2023, more than 71% of the demand for office space from GCCs originated from firms based in the US, emphasizing the confidence and trust these companies have in India as a vital center for their international operations. The significance of these centers is further accentuated by their contribution to fostering innovation, especially in cutting-edge technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and sophisticated R&D activities.

Not only do India’s GCCs establish a low-cost structure, but they also build value through innovation and strategic thinking. The presence of major global companies from APAC, particularly Japan and South Korea which are establishing their R&D centers in India speaks to the growing stature of India in the world GCC marketplace.

The future of Indian GCCs

By 2025, there is potential for leasing activities of about 45-50 million square feet worth. This growth will be driven by both traditional sectors like Technology, and BFSI as well as emerging sectors such as Engineering, Manufacturing, and Healthcare. So too do the increased preference for flexible working spaces and environmentally friendly office complexes point out how global firms have evolved their perspectives on operating from India.

Moreover, India has a healthy economic outlook that creates an enabling business environment attracting multinational corporations. A combination of strong local economy performance; skilled manpower; and competitive pricing will ensure that the Indian GCC industry thrives over the next few years

Conclusion

The revival of GCCs in India is a reflection of the country’s continued attractiveness as a destination for global businesses. As these centers continue to build, they will provide an even bigger role in the future of global business operations. India’s GCC’s sectors history of experience, expertise, authoritativeness, and trustworthiness positions them well for any bright and changing future.