GCC’s: The Second Headquarters for Business Hubs

Global Capacity Centres (GCCs) have become second headquarters and replicate almost all the functions of business - including finance, information technology, human resources and core business functions - which will remain the key factor supporting the growth of the sector in the future.

Global Capability Centers are offshore units of multinational corporations which perform a range of strategic functions by leveraging special talent, cost advantages and operational efficiencies in various locations worldwide.

According to a Nasscom-Zinnov report, India’s GCC market size is currently valued at a substantial $46 billion, with an anticipated impressive growth rate of 11.4 per cent Compound Annual Growth Rate (CAGR).

In a conversation with Republic Business, Vikram Ahuja, Co-Founder ANSR, and CEO Talent500 attributed this shift to strong ER&D service provider community, mature start-ups, peer-GCC ecosystem and favourable government policies which are driving factors for this growth.

“Unlike a decade ago, today's GCCs are at the forefront of leveraging artificial intelligence (AI) and innovative technologies to drive efficiency, enhance productivity, and create new business opportunities,” he said.

These are also evolving as innovation hubs on the back of building niche skills and capabilities for adding data analytics, cloud services, treasury, sustainability, logistics and warehousing as operations for value addition, he added.

According to Rohit Arora, co-founder of financial Software as a Service (FinSaaS) provider Biz2x and Biz2Credit, Global capacity centres in India are no longer back offices.

“For companies like ours, who have businesses in the US and other parts of the world, GCC in India is not a back office anymore. It's a middle office and also it's a it's a spring head for a lot of innovation,” he said.

Apart from developing cutting-edge technologies and helping the workforce, he added that these GCCs will create local specific use of AI including large language models and the applications which will sit on top of it.

India as the Winner in AI

Arora feels four or five countries are going to emerge as “winners” in the AI race and everybody else will actually be just following them.

For India to become one of those winning countries, a shift from software power to hardware prowess is essential, but the US and China, which hold control over these technologies “are in no mood to share it,” Arora said.

One of the strategies is to foray into the Middle East, wherein the Saudi government is creating a $40 billion fund dedicated to AI technologies. 

Attracting GCCs and the right talent is equally crucial, and this trend is supported by the cross pollination of global talent.

“It has improved, but still you don't find a lot of non-Indians working in India.” he added.

Citing the example of Dubai and Singapore, he said the moving of talent to these centres helps elevate skill sets, increase exposure and also it gives a massive amount of stimulus to the economy because the ancillaries and spending goes up.

India’s next GCC Hubs

Ahuja said currently, most GCCs are concentrated in metros having a technical ecosystem, such as Bengaluru, Hyderabad,  Pune, Chennai, and Delhi NCR.

  “These  cities offer a robust infrastructure, a large pool of skilled  professionals, and proximity to leading educational institutions, making them attractive locations for GCCs across various industries,” he added.

Bengaluru has emerged as the foremost hub for both Marketing and Sales centres, according to the Nasscom and Zinnov report backed by its world-class infrastructure and deep talent pools.

Oracle, SAP, Adobe, and AstraZeneca are some of the companies with GCCs in the region. 

However, Mumbai and NCR also host strong clusters given their metro advantage.

But five years down the line, a gradual shift will be visible in the distribution of GCCs towards non-technical hubs and emerging Tier 2 and Tier 3 cities in India.
 
Backed by government incentives and improving infrastructure, apart from skilled professionals, Jaipur, Chandigarh, Coimbatore, Bhubaneswar, and Indore are likely to emerge as the next GCC establishments.

Arora also bets on Chandigarh, Jaipur, Indore, and Bhubaneswar which have seen an influx of IT service companies.

“GCCs  may increasingly explore locations beyond the traditional tech hubs to capitalise on cost advantages, tap into regional talent, and  mitigate risks associated with talent shortages and infrastructure challenges in major cities,” he added.

Backed by digital connectivity and remote working, GCCs may also consider setting up satellite offices or remote delivery centres in smaller towns and rural areas to tap into the talent in those regions, he added.