Why India is the Mecca of GCCs

There is a striking synchrony between the evolution of global capability centers (GCCs) as an extended arm of enterprises and India as a destination. As GCCs have evolved from being an enabler of offloading non-core operations to becoming the launch pad for innovation and research, so has India developed from being an outsourcing destination to transforming into a hub for new product development for global enterprises. The evolution curves of both have merged at a point in time which represents the present day and it is the reason why India has in due course become the most preferred destination for global companies to set up their GCCs. As a result, more than 50 percent of the world’s GCCs are today located in India. A recent survey by Axis Capital says there has been a two-fold increase in the number of GCCs in India between 2012 and 2023.   

“As technology and BFSI sectors maintain dominance, the growing interest of occupiers from the engineering & manufacturing, and healthcare sectors promises to diversify the GCC landscape further,” said Arpit Mehrotra, Managing Director, Office Services, Colliers India, to ET. There are several reasons that have led India to its current position. The primary ones are the factors such as cost-efficiency of operations in India, the vast talent pool of the country, its robust IT infrastructure, and its strategic geographic location.       

Cost-Efficiency of Conducting Business

The attractiveness of India as a key destination for Global Capability Centers (GCCs) is largely linked to its strong cost-efficiency in business operations. The availability of a huge pool of skilled labor at competitive rates makes it financially beneficial for companies to have their GCCs in India. The country has an attractive cost-quality ratio allowing the organizations to optimize resources without sacrificing the output standards. Moreover, India enjoys a friendly regulatory environment and a growing technological infrastructure that makes it more attractive. Thus, the cost-efficiency of doing business in India is a major reason why the GCCs are moving to India.

For instance, multinational companies such as IBM, Accenture, and Google have set up GCCs in India because of its cost-effective nature. These firms have tactically selected India as their GCC location in order to enjoy its cost-effective business environment. These corporations leverage the talented Indian workforce at very competitive prices and thereby optimize operational costs while ensuring quality standards remains high. This choice makes them more competitive on the global market and promotes innovation and scalability. Hence, India’s cost effectiveness in business operations keeps attracting big players, which strengthens its position as a preferred location for GCCs.

Extensive Talent Pool   

The fact that India has the largest talent pool of all places to set up Global Capability Centers (GCCs) emphasizes its status as the most preferred destination. India has a population of more than 1.3 billion people with a very diverse and professional workforce in areas like IT, engineering, financing, and customer services. This talent pool allows companies to hire the best professionals who excel in the latest technologies and methodologies. In addition, India’s strong education system supplies the market with a constant stream of graduates with the skills required by the modern industry. Hence, the existence of a large skill base in India provides a good reason for MNCs to establish GCCs that will ensure continued availability of skilled resources for growth and innovation.

India is an attractive destination for setting up Global Capability Centers (GCCs) simply because of its huge talent pool, evidenced by the establishment of research and development (R&D) centers by multinational companies like Microsoft, Intel, and General Electric. India as a destination for GCC for these corporations has been strategically selected in order to exploit the skills pool the country has. Through exploiting the diverse talent pool of India, these companies interact with a huge number of engineers, scientists, and innovators, and hence, a research and development culture. This leads to the development of innovative products and solutions, promoting global competitiveness and market leadership. Therefore, India’s large reservoir of skilled labor is a constant magnet for the highest-ranking companies that make the country one of the leading GCC destinations.      

Robust Infrastructure

India is reaping the benefit of global companies setting up their Global Capability Centers (GCCs) because of its advanced infrastructure. The country has given serious attention to building modern infrastructures, particularly high-end office space, high-speed internet connectivity and reliable power supply. Such a system provides GCCs with a smooth operation and therefore, the highest efficiency in production. Furthermore, India's good transport systems and logistics enable the quick transportation of goods and the movement of people. Such infrastructure facilitates scaling up and sustainability of GCCs, which contribute to a favorable environment for the innovation and development. Therefore, India's well-developed infrastructure gives rise to an important condition for global companies to invest in the country for their GCC operations.

What illustrates India's strengths when it comes to having the Global Capability Centers (GCCs) because of the country's good infrastructure network is the case of the growing presence of companies like Amazon and Walmart in the country. These giant retailers invest in Indian e-commerce market, which is a potent force, using the nation's well-built logistics and transportation infrastructure. Driven by state-of-the-art fulfillment facilities and effective supply chain operations, these companies guarantee timely delivery of products to their customers across the country. India's infrastructure facilitates easy last mile connectivity and enable delivery to be completed in short time thereby, increasing customer satisfaction. Hence, it is the India’s infrastructure that creates a favorable environment for multinational corporations to set up GCCs and run operations with more ease and less time for the production expansion.

Going forward, India continues to surge as a preferred destination for setting up of Global Capability Centers (GCCs), and the prospects for this segment to grow are bright. The tendency of global businesses to minimize expenditure and to find creative ways to access talent is one of the main reasons why India will remain a GCC top destination, and will continue to unleash innovation and spur economic growth.