The Future of GCCs- Key Trends, Insights and Industry Spotlight

In an era where global business dynamics are evolving rapidly, Global Capability Centers (GCCs) have emerged as transformational players in driving innovation and efficiency. The GCC landscape is undergoing a transformative shift, moving from traditional operational models to innovative, agile frameworks that prioritize growth and adaptability. This blog aims to highlight critical trends, statistics, and strategic shifts shaping the future of GCCs.

 

GCC Trends

Newly Set Up GCCs in India

India continues to solidify its position as a premier destination for GCCs across various sectors. The software and technology industries lead with four new establishments, while retail/CPG, healthcare and life sciences, banking and financial services, and travel and logistics each report two new setups from February 2024 to June 2024.

• • • Key Focus Areas: Over 78% of newly established GCCs prioritize building innovative tech capabilities such as AI/ML and data analytics.
    • Top Cities: Hyderabad and Pune are the leading destinations for new GCC setups, driven by a skilled workforce, strong infrastructure, supportive government policies, and an attractive quality of life.

Center Expansion of Established GCCs

The expansion trend is equally strong among established GCCs. The Banking, Financial Services, and Insurance (BFSI) sector leads with five expansions, followed by healthcare & life sciences with 4 establishments, retail/CPG with 3 centers, and software & tech also with 3 GCC expansions in the last quarter.

• • • Key Focus Areas: Approximately 80% of expansions focus on enhancing capabilities in AI/ML and data analytics.
    • Top Cities: Hyderabad with 7 center expansions, Bengaluru with 6, and Pune with 5 expansions of GCCs, have witnessed the highest expansion during the last quarter.

The Both Sourcing’ Approach

A significant trend emerging in the GCC landscape is the ‘both sourcing’ approach. This strategy harmonizes insourcing and outsourcing to create a symbiotic ecosystem that leverages the strengths of both models. By collaborating with service providers while maintaining a strong internal team, organizations can tap into a broader range of skills and capabilities.

Talent Management Trends in GCCs

Talent management remains a cornerstone of successful GCC operations. Recent trends indicate that service providers account for approximately 20% of total hiring within GCCs, while product companies contribute about 30%. Notably, 50% of GCCs prefer sourcing talent from existing centers in India to leverage domain expertise.

• • • Attrition Rates: The average attrition rate at GCCs is approximately 9.1%, significantly lower than the industry average of around 18%, indicating effective retention strategies.
    • Gender Diversity: Women constitute over 35% of the workforce in Indian GCCs. This figure is expected to rise as organizations increasingly focus on diversity in tech roles, with women in tech roles growing to 35% by 2027 from the current 25%.

Compensation Trends

Compensation remains competitive within the GCC sector:

• • • Salary Benchmarking: GCCs offer salaries that are 30-40% higher than those in traditional IT/ITeS/service sectors.
    • Employee Satisfaction: Over 60% of employees express satisfaction with their compensation packages, with 78% appreciating tax-saving benefits.

Real Estate and Workspace Trends in GCCs

GCCs have significantly influenced the real estate market in India:

• • • Leasing Trends: In Q1 2024, GCCs were responsible for leasing over 37% of total office space in India—translating to more than 5 million sq ft.
    • Top Leasing Cities: Bengaluru leads with a 60% share of leases, followed by Hyderabad at 26%.
    • Sustainability Focus: A notable 63% of leased spaces are green-certified assets, reflecting a strong commitment to sustainability among GCCs.

Return to Office Trends

As organizations navigate post-pandemic realities:

• • • Approximately 93% of GCCs operate in a hybrid model, with employees working on-site three to four days a week.
    • About 6% have adopted flexible work models that allow employees to choose their office days or work remotely.

Industry Spotlight: Retail/CPG Sector

The retail/CPG sector has emerged as one of the fastest-growing segments for GCCs in India:

• • • Major companies like BestBuy, 7-Eleven, Kraft Heinz, and Adidas have established centers between 2020 and 2024.
    • Over 50% of retail/CPG GCCs have been set up in the last eight years due to successful operating models that accelerate speed-to-value.

Key Technology Adoption

Retail/CPG companies are increasingly adopting advanced technologies:

• • • Key capabilities include AI/ML, data analytics, application development & maintenance (ADM), cloud services, and IT infrastructure management.

 

Caselets of Indian GCCs

• • Best Buy

The company noted a 15% increase in its e-commerce sales after establishing its GCC in India.

The GCC focuses on AI/ML, data analytics, application development and maintenance (ADM), and cloud services, significantly enhancing Best Buy’s digital capabilities and customer engagement strategies.

• • Kraft Heinz

Kraft Heinz reported a 20% reduction in supply chain costs attributed to efficiencies gained through its GCC.

The center specializes in data analytics and AI-driven supply chain optimization, allowing Kraft Heinz to respond more effectively to market demands and improve operational efficiencies.

• • Coupang

Coupang experienced a 30% increase in delivery efficiency, directly linked to innovations developed at its GCC in India.

The GCC is focused on AI/ML applications for logistics optimization, which has streamlined operations and improved customer satisfaction.

• • Lowe’s India

Lowe’s GCC has contributed to a 25% increase in operational efficiency, enhancing overall productivity.

The center has developed advanced analytics capabilities that drive innovation in product offerings and improve the customer experience through data-driven insights.

• • Adidas

Adidas has reported a 10% growth in online sales since establishing its GCC in India.

The GCC focuses on enhancing digital marketing strategies through data analytics and AI, leading to improved brand engagement and customer loyalty.

Conclusion

Recent studies underscore that Global Capability Centers are not just adapting but thriving amid evolving business landscapes. With an emphasis on innovation from day one, strategic talent management practices, competitive compensation structures, sustainable real estate choices, and a focus on diversity—GCCs are poised for continued growth.

As organizations worldwide look towards India for establishing or expanding their GCCs, understanding these trends will be crucial for making informed decisions that align with their strategic objectives.

Partner with Inductus GCC for a complete set-up roadmap and strategic guidance to establish a GCC in India. Email us at ho@inductusgroup.com