Introduction

Global capability centers in India have become a cornerstone of innovation and transformation for multinational corporations. These centers, which began as cost-saving back-office operations, have evolved into strategic hubs driving technological advancement and business growth. India has firmly established itself as the “GCC Capital of the World,” hosting over 1,700 GCCs that employ more than 1.9 million professionals. The GCC landscape in India has experienced remarkable growth, attributed to factors such as a vast pool of skilled talent, cost-effectiveness, supportive government policies, and robust infrastructure. This growth has positioned India as an attractive destination for GCC operations, with many global companies looking to leverage the advantages offered by the country. Whether you’re considering setting up a Global Capability Centers (GCC) in India or seeking to understand the dynamics of existing operations, this article offers valuable insights into the thriving GCC ecosystem in India and its significant role in driving economic growth.

GCC Growth in India: A Statistical Overview

The Global Capability Centers (GCCs) in India have experienced remarkable growth in recent years. The global capability centers (GCCs) in India landscape has evolved significantly from 2021 to 2024, showcasing remarkable expansion and diversification.

In 2021, the GCC in India ecosystem comprised over 1,300 centers, employing 1.38 million professionals and generating approximately $33.8 billion in revenue. Global Capability Centers (GCCs) transitioned from cost centers to strategic hubs driving innovation and growth. By 2022, 36 new GCCs were established in the first half alone, with emerging sectors like ER&D, AI, and data analytics gaining prominence. The GCC in India workforce grew by 24% since 2019, expanding into tier-2 cities.

2023 saw further advancements with 18 new GCCs in the first half, focusing on AI, machine learning, cloud computing, and IoT. The sector diversified into healthcare, finance, and generative AI, with the workforce reaching 1.66 million professionals.

As of 2024, there are over 1,700 GCCs employing nearly 2 million professionals and generating $64.6 billion in revenue – a 40% increase from the previous year. Key sectors include IT, BFSI, Engineering, Healthcare, and Pharmaceuticals, with Bengaluru, Hyderabad, and Delhi NCR as prominent hubs.

By 2030, the sector is projected to become a $99-105 billion industry, with 2,100-2,200 GCCs employing 2.5-2.8 million professionals. GCC in India growth is expected to double its contribution to India’s GDP to 2% by 2030, driven by enhanced AI capabilities and supported by a vast talent pool, cost-effectiveness, and favorable government policies.

Why India for GCCs?

India has emerged as the preferred destination for Global Capability Centers (GCCs), offering a unique combination of advantages that make it an attractive choice for multinational corporations. Here are four key reasons why India stands out for GCCs:

Vast Pool of Skilled Talent

India boasts a large and growing workforce of highly skilled professionals, particularly in the technology sector. With over 5 million technology professionals and 1.5 million engineering graduates annually, India provides a deep talent pool for GCCs. The country's emphasis on STEM education and its robust higher education system ensure a steady supply of qualified candidates for various GCC roles, from software development to data analytics and AI research.

Cost-Effectiveness and Operational Efficiency

GCC operations in India offer significant cost savings compared to Western countries, with operational costs typically 40-60% lower. This cost advantage extends beyond just labor, encompassing infrastructure, real estate, and other operational expenses. The combination of high-quality talent and lower costs allows GCCs in India to achieve greater operational efficiency and deliver higher value to their parent organizations.

Supportive Government Policies and Infrastructure

The Indian government has implemented various policies and initiatives to support the growth of GCCs in the country. These include tax incentives, simplified regulatory processes, and initiatives like Digital India that enhance the overall technology ecosystem. Additionally, India's improving infrastructure, particularly in major GCC hubs like Bengaluru, Hyderabad, and Delhi NCR, provides a solid foundation for GCC operations.

Innovation Ecosystem and Technology Adoption

India’s thriving startup ecosystem and culture of innovation hubs create an environment conducive to GCC growth and evolution. The country’s rapid adoption of emerging technologies such as AI, machine learning, and cloud computing aligns well with the strategic goals of many GCCs. This ecosystem fosters collaboration between GCCs, startups, and academic institutions, driving innovation and creating new opportunities for GCC in India expansion and diversification.

Types of GCCs in India

Global Capability Centers (GCCs) can be set up in various forms to meet the specific needs of organizations. Here are the main types of GCCs that companies typically establish in India:

Shared Service Centers

These GCCs centralize common business functions such as finance, human resources, IT, and procurement, offering a range of support services that are integral to business transformation and innovation. By consolidating these services in one location, organizations can achieve greater efficiency and standardization across their global operations. Shared service centers often leverage economies of scale to reduce costs while improving service quality.

Innovation and R&D Hubs

Innovation-focused GCCs serve as centers of excellence for product development, research, and technological advancement. These hubs are crucial for companies looking to drive innovation and achieve operational excellence in business transformation, thereby staying competitive in rapidly evolving markets. They often collaborate with local universities, startups, and research institutions to foster a culture of innovation and develop cutting-edge solutions.

Technology Centers

GCCs specializing in technology focus on software development, data analytics, cybersecurity, and cloud computing. These centers play a vital role in driving digital transformation initiatives and developing new technological capabilities for their parent organizations. They often house specialized talent in areas such as artificial intelligence, machine learning, and Internet of Things (IoT). By moving up the value chain, these technology centers are enhancing their roles within multinational enterprises, taking on more strategic and innovative tasks rather than just basic support functions.

Customer Support Centers

These GCCs are dedicated to managing customer inquiries, complaints, and feedback. They provide multi-lingual support across various channels, ensuring high-quality customer service on a global scale. Customer support centers often leverage advanced technologies to enhance customer experience and streamline support processes.

Engineering and Design Centers

Engineering-focused GCCs handle complex design and development tasks for products and services. These centers are particularly common in industries such as automotive, aerospace, and manufacturing. They often employ highly skilled engineers and designers to work on cutting-edge projects and prototypes.

Global Capability Centers (GCCs) in India are strategically distributed across various cities, each offering unique advantages and industry-specific expertise. These cities have become key hubs for GCC in India operations, enabling multinational corporations to leverage their strengths effectively.

GCC Hubs in India: City-Specific Strengths

Bengaluru:

India’s IT capital, Bengaluru, is a leading services hub in GCC operations with a 40% market share. Home to two million tech professionals, it excels in IT/ITeS and R&D. The city’s thriving startup ecosystem and innovation in retail, aerospace, and semiconductors make it attractive for GCCs. Karnataka’s upcoming GCC policy is set to boost its appeal further.

Hyderabad:

A rising GCC hub, Hyderabad contributes 21% to the leasing market. Known for technology, pharmaceuticals and life sciences, the city benefits from proactive government policies and efficient urban planning. Its lower operational costs and enhanced lifestyle options make it an ideal choice for GCC expansion in India.

Mumbai: 

India's financial capital, Mumbai dominates in BFSI and fintech GCCs. The city leverages its financial expertise and skilled workforce to attract global banking and insurance corporations. Mumbai's status as a financial powerhouse makes it a prime location for finance-focused GCCs in India.

Pune: 

Known for automotive and manufacturing GCCs, Pune offers affordable real estate and a diverse talent pool. Its proximity to major engineering clusters attracts global firms. The city hosts numerous BFSI GCCs and sees growing interest from engineering, manufacturing, and technology companies for GCC operations.

Delhi NCR:

 A key player in e-commerce and retail GCCs, Delhi NCR benefits from its strategic location and diverse talent pool. The region's strong infrastructure and business-friendly environment make it attractive for global firms setting up GCC offices in India.

Cities like Chennai, Ahmedabad and Coimbatore are becoming increasingly attractive for GCC in India expansion due to their cost-effectiveness and growing talent pools. Demand for GCCs in these locations is expected to grow by 25-30% in the coming years, with job opportunities projected to increase by 35-40%. India's diverse cities provide tailored solutions for different industries, making it an ideal destination for setting up Global Capability Centers (GCCs) in India.

Setting Up a GCC in India: Key Considerations

Establishing a Global Capability Center (GCC) in India requires careful planning and consideration of several crucial factors. Here are the key aspects to consider when setting up a GCC in India:

Location Selection Based on Industry Focus:

Choose a city that aligns with your industry focus and offers the right ecosystem. For instance, Bengaluru is ideal for IT/ITeS and R&D, while Mumbai excels in BFSI and fintech. Consider factors such as talent availability, infrastructure, and cost of operations. Emerging tier-2 cities like Ahmedabad and Kochi are also gaining traction for their cost-effectiveness and growing talent pools.

Talent Acquisition Strategy:

Develop a robust talent acquisition plan to tap into India's vast skilled workforce. Consider partnering with local universities, implementing training programs, and offering competitive compensation packages. Focus on building a diverse team with the right mix of technical and soft skills to drive innovation and productivity in your GCC.

Regulatory Compliance:

Ensure compliance with Indian laws and regulations governing foreign investments, labor, taxation, and data protection. Familiarize yourself with the Foreign Direct Investment (FDI) policies, Company Act, and other relevant regulations. Consider engaging local legal experts to navigate the regulatory landscape effectively.

Infrastructure Requirements:

Assess and plan for the necessary infrastructure to support your GCC operations, particularly in the services sector. This includes office space, IT infrastructure, connectivity, and security systems. Consider factors such as power backup, data centers, and disaster recovery plans to ensure seamless operations.

How to Set Up a GCC in India

Setting up a Global Capability Center (GCC) in India involves careful planning, understanding regulatory and legal requirements, compliance with regulations, and strategic execution. Below are the key steps to set up a successful GCC in India:

Business Plan and Strategy Development:

Create a comprehensive business plan outlining your GCC's objectives, scope of services, and growth trajectory. Define key performance indicators (KPIs) and establish a roadmap for scaling operations. This plan should detail how your GCC will contribute to your global business strategy and drive innovation.

Legal Entity Formation and Compliance:

Register your company with the Registrar of Companies and obtain necessary licenses. Choose the appropriate legal structure, such as a Wholly Owned Subsidiary or Limited Liability Partnership. Ensure compliance with Foreign Direct Investment (FDI) regulations, labor laws, and tax requirements specific to your industry and chosen location.

Office Space and Infrastructure Setup:

Secure suitable office space that aligns with your operational needs and growth plans. Consider factors like connectivity, power backup, and scalability. Set up robust IT infrastructure, including high-speed internet, data centers, and disaster recovery systems. Implement necessary security measures to protect sensitive data and intellectual property.

Recruitment and Onboarding:

Develop a comprehensive recruitment strategy to attract top talent. Collaborate with local universities, recruitment agencies, and job portals. Create an efficient onboarding process to integrate new hires into your global organization. Implement training programs to align employees with your company's culture, processes, and quality standards.

Process Implementation and Quality Assurance:

Establish standardized processes and workflows that integrate seamlessly with your global operations. Implement quality management systems and obtain relevant certifications (e.g., ISO, CMMI) to ensure high-quality service delivery. Set up robust reporting mechanisms and performance tracking systems to monitor GCC effectiveness.

Scalability and Growth Planning:

Design your GCC with future growth in mind. Develop a phased expansion plan that aligns with your long-term business objectives. Consider factors such as talent scalability, infrastructure expandability, and technological adaptability. Regularly review and update your growth strategy to capitalize on emerging opportunities in the Indian market. Establish key performance indicators (KPIs) to measure growth and success, allowing for data-driven decision-making in your expansion efforts.

For more information, refer to our article "How to set up a Global Capability Center (GCC) in India: A Step-By-Step Guide". This resource provides in-depth information to help you navigate the process of setting up your GCC in India successfully.

Tips to Design an Effective GCC Workspace

Creating an efficient and productive workspace is crucial for the success of Global Capability Centers (GCCs) in India. Here are key elements to consider when designing an effective GCC workspace:

Flexible and Collaborative Spaces

Design open floor plans with mobile workstations to encourage collaboration and creativity. Include "jump spaces" for ad-hoc conversations and multi-purpose areas that can transform into social hubs for town halls or break-out sessions. This flexibility supports the diverse needs of GCC operations and fosters innovation.

Ergonomic Workstations

Prioritize employee health and well-being by incorporating ergonomic design principles. Provide adjustable desks, ergonomic chairs, and suitable lighting to reduce strain and enhance comfort. This focus on ergonomics contributes to employee satisfaction and sustained productivity in GCC India operations.

Technology Integration

Seamlessly integrate advanced technologies to support GCC functions. Ensure reliable Wi-Fi, implement state-of-the-art audio-visual systems, and provide collaboration tools. This tech-savvy environment enhances communication with global teams and supports the digital transformation agenda of GCCs.

Functional Zoning

Implement a three-zone approach: Quiet, Transitional, and Interactive. This design principle helps manage acoustics and supports various work styles. The Quiet Zone caters to focused individual work, while the Interactive Zone promotes collaboration and socialization. The Transitional Zone bridges these two, offering versatile spaces for less intense concentration.

Branding and Cultural Integration

Incorporate elements that reflect both the parent company's culture and local Indian influences. This approach helps in creating a unique GCC identity and fosters a sense of belonging among employees. It also aids in attracting global talent by showcasing a blend of international and local work cultures.

Challenges in Setting up GCC in India

Setting up a Global Capability Center (GCC) in India presents several challenges that companies need to navigate carefully. Here are the key challenges faced when establishing a GCC:

Initial Setup Challenges:

The initial phase of setting up a GCC is critical. Weak initial setup, including expecting the office manager or recruiting team to handle both operational and strategic tasks, can lead to a poor start.

Regulatory Compliance:

Companies often struggle with understanding and following the various laws and rules set by the Indian government. These include regulations on how to price services between the GCC and the parent company, special rules for operating in certain business zones, and strict labor laws. There are also new data protection laws and rules about handling foreign currency. 

Talent Acquisition and Retention:

Finding and retaining skilled professionals is a significant challenge, especially in competitive markets. GCCs must compete with established IT and technology companies for talent, and high attrition rates can disrupt operations.

Operational Model and Integration:

Setting up an efficient operating model and ensuring tight integration with the parent company can be challenging. Without proper alignment, GCCs may struggle to deliver expected outcomes at scale, face cost overruns, and have difficulty aligning with organizational roadmaps.

Government Initiatives and Support

The Indian government has implemented several initiatives to support the growth of Global Capability Centers (GCCs) in the country.

National Level Initiatives

The Ministry of Electronics and Information Technology (MeitY) is indeed working on a comprehensive policy framework for Global Capability Centers (GCCs). Key features include:

• Focus on long-term talent-building in frontier areas such as generative AI, healthcare, and financial intelligence
• Emphasis on creating dedicated office zones in areas with space constraints
• Encouragement for GCC expansion into tier-2 and tier-3 cities

It's important to note that while the policy is in development, specific details about tax breaks or additional stimuli are not yet confirmed.

State-Specific Policies

Several Indian states have introduced or are developing GCC-specific policies:

Karnataka: Known for its proactive policies, Karnataka is a leading hub for GCCs. The state's initiatives include tax incentives and simplified regulatory processes to attract and retain GCCs.

Uttar Pradesh: Uttar Pradesh has introduced policies aimed at attracting GCCs, offering incentives such as stamp duty exemptions and payroll subsidies.

Maharashtra: Maharashtra is actively developing policies to support GCCs, focusing on investments in technology parks and Special Economic Zones (SEZs).

Key Support Areas

Designated areas offering tax incentives and simplified regulations for GCCs. These zones provide a favorable environment for foreign investment and operational efficiency.

Infrastructure Development:

Investments in physical and digital infrastructure, particularly in emerging GCC hubs. This includes improvements in transportation, real estate, and IT infrastructure.

R&D Promotion:

Incentives for innovation and research activities within GCCs. This encourages the development of new technologies and products, aligning with the strategic goals of many GCCs.

By providing a supportive regulatory environment and infrastructure, the government helps GCCs in India to thrive and contribute significantly to the national economy.

Wisemonk: Your Partner for GCC Success in India

Wisemonk, a leading Employer of Record in India, can support global companies in navigating the complexities of setting up and managing Global Capability Centers (GCCs). Our comprehensive suite of services is designed to ensure a smooth transition and operational efficiency for your GCC in India.

Talent Acquisition and Management:

Wisemonk offers end-to-end talent acquisition services tailored for GCCs. We develop effective strategies to attract top professionals from India's vast skilled workforce. Our team handles resume screening, conducts initial interviews, and submits qualified candidates to you for final selection. We also provide onboarding support to align new hires with your parent organization culture and operational standards.

Payroll and Contractor Payment Services:

We manage comprehensive payroll services for your GCC employees, ensuring timely and accurate payments. Our team handles all aspects of payroll processing, including tax calculations and deductions. For contingent workers, we provide contractor payment services, ensuring compliance with local regulations and timely disbursements.

Legal and Regulatory Compliance:

Navigating India's regulatory landscape can be challenging. Wisemonk helps ensure compliance with Foreign Direct Investment (FDI) regulations, labor laws, and tax requirements. Our local expertise minimizes risks and ensures adherence to all necessary legal frameworks, allowing you to focus on your core business operations.

Infrastructure Setup:

Wisemonk supports the selection of suitable office space for your GCC, considering factors like location, cost, and scalability. We assist in establishing necessary IT infrastructure, including high-speed internet and data centers. Our team also implements robust security measures to protect your sensitive information and intellectual property.

Administrative Support and Equipment Procurement:

We offer ongoing administrative support to ensure smooth day-to-day operations of your GCC. This includes handling various administrative tasks and managing vendor relationships. Our team also takes care of equipment procurement, ensuring your GCC has all the necessary tools and technology to operate efficiently.

Operational Support:

Wisemonk helps establish efficient operational frameworks and standardized processes that integrate seamlessly with your global operations. We focus on quality assurance to ensure consistent high-quality service delivery from your GCC. Our team works closely with you to implement best practices and continuous improvement initiatives.

By partnering with Wisemonk, you gain access to local expertise and a range of services designed to facilitate the successful establishment and operation of your GCC in India. 

Let us help you unlock the full potential of your Global Capability Center (GCC) and drive innovation within your organization.

Contact us today!