What are the different types of business structures available for GCCs in India?

Setting up a Global Capability Center (GCC) in India involves choosing the right business structure to align with your strategic objectives, regulatory requirements, and operational needs. Here's a detailed overview of the different types of business structures available for GCCs in India:

Wholly Owned Subsidiary (WOS)

A Wholly Owned Subsidiary (WOS) is a company where the parent company holds 100% of the equity shares. This structure provides the parent company with complete control over the GCC's operations, strategy, and decision-making. Key features include:

• Ownership: The parent company owns all shares, ensuring full control.
• Compliance: Must comply with Indian company law, including having at least two directors (one must be an Indian resident).
• Taxation: Subject to Indian corporate tax rates, with potential benefits from Double Taxation Avoidance Agreements (DTAAs).
• Repatriation: Profits can be repatriated to the parent company, subject to certain conditions.

Joint Venture (JV)

A Joint Venture (JV) involves a partnership between the parent company and a local or international entity, where both parties hold equity in the GCC. This model can offer:

• Shared Ownership: The parent company and the partner share ownership, often with the parent holding a majority stake.
• Local Expertise: Access to local knowledge, networks, and resources through the partner.
• Risk Sharing: Both parties share the financial and operational risks.
• Governance: A joint venture agreement outlines the governance structure, including board composition and decision-making processes.

Branch Office (BO)

A Branch Office (BO) is an extension of the parent company, operating under its name and legal identity. Key aspects include:

• Control: The parent company retains full control over the BO's operations.
• Liability: The parent company is liable for the BO's actions and debts.
• Compliance: Must comply with Indian regulations, including obtaining necessary approvals from the Reserve Bank of India (RBI).
• Taxation: Subject to Indian tax laws, with potential benefits from DTAAs.

Limited Liability Partnership (LLP)

An LLP combines the benefits of a partnership with the limited liability of a corporation. Here are its features:

• Partnership: At least two partners are required, with one being an Indian resident.
• Liability: Partners have limited liability, protecting personal assets from business debts.
• Flexibility: Offers flexibility in management and profit sharing.
• Compliance: Must comply with the Limited Liability Partnership Act, 2008, and file annual returns.

Captive Model

In the Captive Model, the GCC operates as a subsidiary fully owned by the parent company. This model provides:

• Control: The parent company retains complete control over the GCC's operations, strategy, and decision-making.
• Cost Efficiency: Leverages cost advantages in India, including lower labor costs and favorable exchange rates.
• Compliance: Must comply with Indian labor laws, tax regulations, and data protection norms.

Shared Services Model

Under the Shared Services Model, the GCC provides services to various business units or divisions of the parent company. Key features include:

• Centralized Services: IT, finance, HR, and procurement services are centralized for efficiency and cost savings.
• Standardization: Promotes standardization of processes across the organization.
• Cost Savings: Reduces duplication of efforts and optimizes resource utilization.

Virtual Captive Model

The Virtual Captive Model is a hybrid approach where a third-party service provider sets up, owns, and operates the GCC until the parent company is ready to assume ownership. This model offers:

• Bridge Period: Allows the parent company to leverage the service provider's expertise during the setup phase.
• Flexibility: Provides flexibility in transitioning to full ownership.
• Service Provider: Typically large service providers with substantial operations in India.

How Wisemonk Can Help You Set Up a GCC in India

Wisemonk, as an Indian payroll and employer of record (EOR) expert, can streamline the process of setting up a GCC in India:
‍Strategic Guidance: Wisemonk provides strategic consulting to help define your GCC's objectives, ensuring alignment with your global business strategy.
‍Legal and Compliance Support: We handle all legal formalities, including company formation, registrations, and compliance with local labor laws, reducing the setup time by up to 60%.
‍Talent Acquisition: Our extensive network and partnerships with educational institutions help in sourcing and onboarding the right talent quickly.
‍Infrastructure and Operations: Wisemonk can assist in finding suitable office space, setting up IT infrastructure, and managing ongoing operations, ensuring a seamless transition.
‍Cost Efficiency: By leveraging our established infrastructure and local expertise, you can eliminate upfront capital investment and optimize operating costs by up to 15%.
‍Time to Value: With our end-to-end solution, the setup of your GCC can be completed within 4-6 weeks, significantly reducing the time to value.

By partnering with Wisemonk, you can expedite the setup process, reduce costs, and ensure compliance, allowing you to focus on leveraging India's talent pool and driving innovation through your GCC.