Two decades ago, British retail giant Tesco opened a small back-office operation in India. Its first teams took care of IT and finance tasks that were meant to help the company’s main operation in the UK.
- What changes have Global Capability Centers gone through in India?
- Which Businesses Are Making Global Capability Centers Grow?
- Why is India becoming the best GCC hub?
- What effect is the GCC boom having on Indian real estate?
- Could India be the home of the future headquarters?
- What Problems Could Stop GCCs from Growing?
- How might geopolitics affect the future of GCCs?
- What does the future hold for Global Capability Centers in India?
Twenty years later, Tesco’s footprint in India has changed a lot. Today, its large campus in Bengaluru, which is known as India’s Silicon Valley, has become a key location. It is now part of the larger Global Capability Centres (GCCs) revolution and does more than just support work. It does advanced duties like vendor due diligence, inventory planning, demand prediction, and consumer behavior forecasting.
Teams in India now design the buildings for Tesco Express stores in the UK, which shows how far these businesses have progressed.
What changes have Global Capability Centers gone through in India?
At first, offshore back-offices were seen as ways to save money by doing low-value or repetitive work like customer service or fixing IT problems. But over time, Global Capability Centers have turned into powerful engines that help international companies come up with new ideas, make plans, and create value.
GCCs now handle more than just IT and finance. They now handle research and development, digital design, artificial intelligence, and even the whole process of making a product. Experts say that these centers are becoming more and more like digital twins of companies’ headquarters abroad, where they make important decisions.
This transformation is a big deal in how people see things. People no longer think of India as just a place with cheap labor. Instead, they see it as a center for intellectual arbitrage, where companies from around the world can find a lot of highly trained workers who can change whole industries.
Which Businesses Are Making Global Capability Centers Grow?
A lot of big companies are putting money into India’s GCC ecosystem. Big tech companies like Google and Microsoft, big banks like Goldman Sachs, and even lifestyle brands like Victoria’s Secret have all set up shop here.
The data show how big this change is. India had over 700 GCCs in 2010. That number has more than doubled to around 1,700 by 2023. Together, these centers employ more than two million people and make about $65 billion a year.
The momentum doesn’t seem to be slowing down. EY, a consultancy group, says that the Indian GCC industry will be worth more than $100 billion by 2030, rising at a rate of 14% per year. India is not only a participant in the growth of these institutions, but also a world leader.
Why is India becoming the best GCC hub?
A blend of talent, technology, and governmental support has helped India become the top choice for Global Capability Centres. Every year, the country creates a lot of engineers, designers, analysts, and other people with digital skills. This makes it easier for businesses to grow swiftly.
The increase of knowledge about artificial intelligence is another important factor. India is now one of the fastest-growing places in the world for AI expertise. It has the best skills in data science, machine learning, and advanced analytics. Because of this concentration of talent, global companies can come up with new ideas and get things done faster and better from their Indian offices.
Another important factor has been government backing. National digital rules and state-level incentives have made it so that global companies feel safe putting their money into the country. Cost-effectiveness is still important, but what really sets India apart is the high level of knowledge and the capacity to grow quickly.
Dan Schiappa of Arctic Wolf, a US-based cybersecurity company, said, “Bengaluru was very appealing to us because it had a lot of talent and we could quickly build a big footprint there.” Arctic Wolf just opened GCCs in Bengaluru and Noida, which shows how popular India is becoming. Read another article on Tesla India launch
What effect is the GCC boom having on Indian real estate?
The emergence of Global Capability Centers has had effects that go beyond the business sphere. The property market has been one of the most affected areas. There has been a huge rise in demand for office space, with GCCs accounting for around 31% of India’s total office space absorption in 2023.
This expansion isn’t just happening in the usual metro areas like Bengaluru, Hyderabad, and Pune. More and more, smaller tier-II towns are becoming popular places for new centers to set up shop. These locations not only give you access to new pools of qualified workers, but they also have reduced costs for real estate and running a business.
Pernod Ricard, a French alcohol company, is a great example of this trend. They have up a GCC in Nashik, Maharashtra. This growth outside of the big cities is anticipated to speed up even more, which will benefit both businesses and local economies.
Could India be the home of the future headquarters?
GCCs are currently far more than just support arms for some businesses. Target, a US grocery giant, now calls its operations in India a “second headquarters.” These centers are not only helping businesses reach their goals, but they are also making money, turning from cost centers into profit engines.
Experts in the field say that as more and more businesses use digital technology, some may even think about moving their headquarters to India. This may seem like a big goal right now, but the logic is plain. If most of the new ideas, digital design, and AI-led solutions are coming from India, it would make sense to move leadership closer to this busy place in the future.
What Problems Could Stop GCCs from Growing?
Even though things are growing quickly, there are problems on the way. India needs to overcome a number of obstacles in order to keep its lead in Global Capability Centers. Taxation and compliance are still complicated, which might make things unclear for overseas investors. To make global partners feel safe and secure, data protection frameworks need to be made stronger.
Another big worry is the infrastructure. Bengaluru and other big IT cities have trouble with basic city services. Sometimes, GCCs have to use private water tankers because there is no piped municipal supply. If these problems aren’t fixed very soon, they could slow down growth.
Lastly, even if India’s ease of doing business rankings have gone up, it will be important to make regulatory processes even easier if it wants to attract more global companies.
How might geopolitics affect the future of GCCs?
The state of politics around the world could also affect the future of Global Capability Centers. Countries like the US are becoming more protectionist, which could hurt growth. Lawmakers want to tax corporations that send jobs to places like India, which makes people worry about the long-term health of the economy.
India’s government is working hard with other countries to protect its IT and outsourcing industries. But experts warn that disruptive nationalist sentiments could make things uncertain for GCCs.
GCCs are a more serious question of sovereignty than traditional outsourcing, which mostly comprised support tasks. They are becoming more and more important to the parent firms’ product development and service delivery abroad. One business expert said, “These centers are changing who is in charge, and that can be a scary story in today’s world.”
What does the future hold for Global Capability Centers in India?
The tale of the GCC in India is still going on. What started as a test in the back office has turned into a strategic revolution. India’s involvement in the global business world is growing quickly. It now includes everything from building supermarkets in the UK to powering AI-driven cybersecurity solutions.
India might become the world’s nerve center for innovation, strategy, and digital transformation if it can solve problems with infrastructure, compliance, and geopolitics. In the next ten years, India may change the way multinationals do business, and Global Capability Centers will be a big part of that change.
