In this blog, we’ll explore the essential steps and key considerations for setting up a Global Capability Center (GCC) in India. From understanding the strategic benefits to navigating legal, operational, we’ll guide you through the process of establishing a successful GCC.
KEY TAKEAWAYS
India has become a top choice for companies looking to set up a Global Capability Center (GCC), thanks to its unique combination of factors that support innovation, cost-efficiency, and operational excellence. Here’s why India should be at the top of your list when considering how to set up a Global Capability Center in India:
1. Cost-Effectiveness
Labor Cost Advantage: India offers competitive labor costs, significantly lower than many Western countries. This makes it an attractive destination for companies aiming to streamline operations while optimizing costs.
Operational Efficiency: The availability of skilled professionals at a lower cost allows businesses to maximize their return on investment (ROI) in terms of human resources and infrastructure.
2. Skilled Workforce
Talent Pool: India boasts a vast pool of highly educated, English-speaking professionals, with expertise across various domains such as IT, finance, engineering, and customer support.
Quality and Innovation: Indian professionals are known for their technical prowess, problem-solving skills, and ability to drive innovation, making them a valuable resource for any GCC.
3. Robust Infrastructure
Tech and Business Hubs: Cities like Bangalore, Hyderabad, Pune, and Chennai are not just IT hubs but also have state-of-the-art infrastructure supporting both business and technology growth.
Connectivity: With modern airports, top-notch telecommunications, and reliable internet services, India offers excellent connectivity to global markets.
4. Government Support
Incentives and Policies: The Indian government has introduced several policies to support foreign investments and the growth of GCCs, including tax incentives, ease of doing business, and initiatives like “Make in India.”
Attractive FDI Policies: India offers favorable Foreign Direct Investment (FDI) policies, especially in sectors like IT, finance, and manufacturing, making it easier for global companies to set up operations.
5. Scalable Operations
Flexibility in Scaling: India provides the flexibility to scale operations rapidly due to the large pool of available talent, advanced technology infrastructure, and a supportive business environment.
Regional Diversification: Setting up GCCs in different cities allows companies to diversify their operations regionally, enabling access to varied skill sets and cost efficiencies.
The success of Global Capability centers is reflected in their rapid growth and significant contributions to both global corporations and India’s economy. Below is an overview of the key statistics and success indicators:
| Metric | Value |
|---|---|
| Number of GCCs in India | Over 1,700 |
| Projected number of GCCs by 2030 | 2,100 to 2,200 |
| GCC market size in FY2024 | $64.6 billion |
| Projected GCC market size by 2030 | $99 billion to $105 billion |
| Number of employees in GCCs (current) | Over 1.9 million |
| Projected employment in GCCs by 2030 | 2.5 million to 2.8 million |
| Sector | Focus Areas |
|---|---|
| Information Technology (IT) | Software development, IT support, R&D |
| Financial Services | Back-office operations, analytics, risk management |
| Engineering and R&D | Product development, innovation hubs |
| Customer Support and BPO | Call centers, customer service operations |
| Healthcare and Life Sciences | Clinical trials, research, data management |
| Artificial Intelligence & Data Analytics | 80% of GCCs focusing on AI, ML, and data analytics |
| City | Percentage of GCCs |
|---|---|
| Bengaluru | 30% |
| Hyderabad | 19% |
| Delhi | 15% |
| Mumbai | 12% |
| Pune | 10% |
| Chennai | 9% |
Setting up a Global Capability Center (GCC) in India involves several strategic steps to ensure success. From understanding the local market to navigating legal frameworks, each phase plays a crucial role. Here’s a step-by step guide on how to set up a Global Capability Center in India:
1. Define Your Strategic Objectives
Identify the Purpose: Clarify the main objectives of setting up your GCC. Whether it’s cost optimization, tapping into local talent, or strengthening global operations, understanding your goals is the first step in ensuring the center’s success.
Select the Function: Determine which functions (e.g., IT services, R&D, finance, HR, etc.) will be managed from the GCC. Aligning these with business needs is essential for effective operations.
2. Choose the Right Location
Evaluate Tier 1 and Tier 2 Cities: India has several cities with a robust ecosystem for setting up GCCs. Tier 1 cities like Bangalore, Pune, Hyderabad, and Chennai offer advanced infrastructure and talent, while Tier 2 cities may offer cost advantages.
Consider Accessibility and Costs: Choose a location that balances the availability of talent, operational costs, and accessibility to key business hubs and markets.
3. Understand Legal and Regulatory Framework
Register Your Entity: To legally operate in India, you will need to establish a business entity. Options include setting up a Wholly Owned Subsidiary (WOS), Joint Venture (JV), or Limited Liability Partnership (LLP).
Comply with Local Laws: Ensure compliance with labor laws, tax regulations, intellectual property rights, and any other local legislation relevant to the GCC’s functions.
Real-time Insight: India’s Global Capability Centers (GCCs) are projected to reach a market size of $100 billion by 2030, employing over 2.5 million professionals, according to a report by Inductus.
Source:Outlook Business
4. Choose a Business Structure
Entity Selection: Based on your long-term strategy, decide whether a subsidiary,
branch office, or a representative office is most suitable for your GCC.
Taxation and Financial Implications: Consult local experts to understand tax policies and the best structure to minimize tax liabilities while maintaining compliance with India’s legal framework.
5. Recruit and Build Your Team
Talent Acquisition: India offers a large, skilled talent pool, especially in technology, finance, and engineering. Work with local recruitment agencies or headhunting firms to attract the best professionals.
Training and Development: Design training programs that align with your global standards and ensure that your team is well equipped to contribute to your GCC’s success.
6. Develop Infrastructure and Technology
Office Space: Depending on your team size, secure office space either through leasing or partnering with coworking spaces. Ensure the location has essential infrastructure, including reliable internet and power supply.
Technology Systems: Implement IT systems, security protocols, and cloud infrastructure that are in line with your global operations. Cloud services and SaaS platforms can facilitate smooth integration with your headquarters.
7.Establish Operational Processes
Define Processes and KPIs: Set clear operational processes for various functions managed by the GCC. Define Key Performance Indicators (KPIs) to track the efficiency and effectiveness of your operations.
Integration with Global Teams: Align the GCC’s operational processes with the global business, ensuring seamless communication and collaboration across different time zones.
8. Continuous Monitoring and Improvement
Performance Tracking: Continuously evaluate the performance of your GCC using
KPIs, client feedback, and operational audits.
Adapt and Scale: As the GCC evolves, be ready to scale operations or adapt strategies based on market demands, technological advancements, or changes in global business priorities.
The rise of Global Capability Centers (GCCs) in India has been nothing short of remarkable.
From a humble beginning as cost-saving hubs to becoming innovation powerhouses, GCCs have evolved into critical parts of global business operations.
The future of Global Capability Centers (GCCs) in India is an exciting and transformative journey. Over the years, these centers have evolved from simple cost-saving structures to pivotal hubs of innovation, technology, and business strategy. As we look ahead, India’s GCCs are poised to play an even more central role in global business operations, shaping the next wave of digital transformation, advanced technologies, and strategic decision-making.
India’s GCCs are undergoing a digital renaissance, embracing cloud computing, big data, and the Internet of Things (IoT). The future will see these centers becoming more digital first, driving large-scale digital transformations for global businesses. Companies will increasingly rely on GCCs to build, deploy, and manage innovative tech solutions that fuel their global expansion and competitive edge.
In particular, cloud adoption is set to skyrocket, as businesses continue to migrate to more flexible, cost-effective cloud infrastructures. GCCs will not only manage cloud platforms but also leverage data to extract actionable insights and optimize operations on a global scale.
The role of GCCs in India is no longer limited to cost-cutting measures or back-office functions. In fact, India’s GCCs are increasingly central to their parent companies’ global strategy. The shift towards higher-value roles will see Indian GCCs playing an integral part in global decision making, offering insights and driving critical business transformations. This move into strategic and innovation driven roles positions India as a leader in global business operations.
In the end, India’s GCCs will not just be operational backbones for global companies they will be the engines of growth, drivers of technological innovation, and leaders in global strategy. The future for India’s GCCs is bright, and their evolution will be a story of continued growth, disruption, and innovation.
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