GCCs transform from back offices to innovation hubs

Global Capability Centres, GCCs
With a projected $110 billion market by 2030, India's GCCs are creating millions of jobs and driving innovation.

Global Capability Centres have emerged as significant global players, particularly since the COVID-19 pandemic. Originally formed to leverage global talent, resources, and expertise from broadband training to network operations management and consultancy services, GCCs have evolved into hubs of innovation, collaboration, and technological advancement.

GCCs leverage specialised talent, cost arbitrage, and operational efficiencies across various locations. Their primary functions include spearheading innovation, managing IT infrastructure, conducting research and development, ensuring cybersecurity, and handling other technology-related functions.

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Evolution and functions of GCCs

The transformation of GCCs since their inception has been remarkable. Initially, these centres focused on cost-saving activities such as back-office processes and IT support. Over time, they have shifted to more value-added activities, becoming integral to the strategic operations of their parent companies. Today, GCCs are at the forefront of innovation in fields like software development, Artificial Intelligence (AI), cloud computing, data analytics, and cybersecurity. These centres play a crucial role in driving innovation by encouraging collaboration and tapping into diverse perspectives. They bridge global knowledge with local insights, fostering continuous improvement and developing future-ready solutions.

Global Capability Centres handle critical IT infrastructure, software development, cybersecurity, and other technology-related tasks, ensuring smooth operations for the parent company. In addition to these technology functions, GCCs manage essential back-office processes such as finance, human resources, procurement, and customer support, allowing companies to focus on their core competencies. Furthermore, GCCs analyse large volumes of data to derive insights, support decision-making, and drive business growth through data-driven strategies. Ensuring compliance with regulatory requirements and mitigating risks associated with global operations are also crucial roles played by GCCs.

GCCs in India: Hubs of innovation and collaboration 

India has become a hotspot for Global Capability Centres, thanks to its vast pool of skilled talent, cost advantages, and robust infrastructure. Initially, multinational corporations focused on establishing GCCs in cities like Bengaluru, Pune, and Hyderabad due to their advanced infrastructure and access to a large talent pool. However, as the availability of infrastructure and real estate at lower costs increased in other regions, tier-II cities such as Ahmedabad, Jaipur, Mysore, Vadodara, Kochi, and Coimbatore have emerged as important centres for GCCs.

By 2030, it is projected that India’s cities will host around 2,400 to 2,550 Global Capability Centres, up from the current 1,580. The growing startup ecosystem in India further creates collaborative ventures between startups and GCCs, driving innovation and growth. According to Goldman Sachs, revenues from GCCs in India have surged nearly fourfold at a compound rate of over 11% over the past 13 years, reaching $46 billion in the financial year 2023. During the same period, the number of GCCs more than doubled, employing 1.7 million people. The projections suggest that the number of GCCs in India will continue to grow, reaching over 1,900 by 2025.

Benefits of establishing GCCs 

The rise of GCCs has brought numerous benefits to companies and economies worldwide. One of the most significant advantages of establishing GCCs is cost efficiency. By tapping regions with lower labour costs, Global Capability Centres lead to significant savings in salaries, infrastructure, and operational expenses. This allows businesses to allocate resources wisely, improving their fiscal health and competitiveness.

Access to specialised talent is another major benefit. GCCs allow companies to access a global talent pool, bringing in professionals with the exact skills needed for innovation, problem-solving, and operational excellence. This access to diverse and specialised talent is crucial for driving innovation and maintaining competitive advantage.

Enhanced operational control is a key feature of GCCs. Direct oversight, smooth communication, and alignment with the parent company’s goals ensure that operations run efficiently and meet quality standards. This control is essential for maintaining regulatory compliance and adapting quickly to changing business environments.

Risk mitigation and business continuity are also significant benefits of Global Capability Centres. Spreading operations across different locations helps companies avoid regional challenges and ensure business continuity. This geographic diversification acts as a safety net, allowing businesses to operate smoothly despite unexpected disruptions.

GCCs also provide scalability and flexibility, enabling companies to scale operations quickly in response to market demands. This flexibility is crucial for handling sudden spikes in demand or taking on new projects, making businesses more competitive and agile.

Knowledge transfer and collaboration are facilitated by Global Capability Centres, which act as hubs for the exchange of best practices, insights, and innovative ideas across different business units. This cross-pollination of knowledge fosters a culture of continuous learning and improvement, driving sustained growth and innovation.

Lastly, GCCs enable companies to focus on strategic initiatives and innovation. By entrusting routine tasks to GCCs, companies can free up resources for product development, market expansion, and other strategic priorities. This focus on core functions and innovation sharpens the competitive edge and drives long-term growth.

The future of GCCs in India 

The domestic GCC market in India is projected to reach $110 billion by 2030. This growth is expected to create around 2.6 million jobs, with over 4.5 million people employed in these centres by the same year. The National Skill Development Corporation (NSDC) highlights the increasing demand for Indian talent across diverse sectors worldwide, including opportunities for women. Studies show that nearly 500,000 women are employed in GCCs, constituting 28% of the total workforce.

The expansion of Global Capability Centres into smaller cities is expected to generate more employment opportunities, contributing to the overall development of the economy. However, addressing rural unemployment and livelihood issues will require a local resource-based approach, appropriate skilling, and the application of optimum technologies for employment generation and improved living conditions.

Global Capability Centres are reshaping the future of business by driving innovation, enhancing operational efficiency, and fostering economic growth. In India, the surge in GCCs is creating new employment opportunities, boosting the local economy, and positioning the country as a global hub for technology and services. As Global Capability Centres continue to expand into smaller cities, they will generate more opportunities for skilled professionals and contribute to the overall development of the economy. However, addressing rural unemployment and livelihood issues will require a local resource-based approach, appropriate skilling, and the application of optimum technologies for employment generation and improved living conditions.

India’s journey with Global Capability Centres is just beginning, and the future holds immense potential for growth. As the country continues to develop its infrastructure and talent pool, GCCs will play an increasingly vital role in driving economic growth and positioning India as a global leader in technology and services.