“I am currently the head of Roche's Global Capability Centre (GCC), but prior to this, I led a digital centre GCC,” shares Raja Jamalamadaka, Managing Director of Roche Information Solutions India. “In this domain, whether you call them GCCs, or earlier they used to be GICs, or captives, I have been involved for about 14 years. Over this period, I have observed the transformation of this space. About 13-14 years ago, these centres were primarily about hiring whatever limited talent was available to handle basic projects. That was their main contribution.”
He continues, “But now, 14 years later, the role of GCCs has expanded significantly across various areas. These entities are no longer just small organisations hiring 100, 200, or 500 people compared to service companies that used to employ 100,000 people. Today, GCCs are hiring more people than even traditional service companies.”
According to the latest data from Quess, GCCs for the first time out-hired IT service companies in Q1 FY25. The 1580 GCCs across India, as of May 2024, employ about 16.6 lakh people in India. This momentum is only expected to grow, with projections indicating that the number of GCCs will increase to over 1,900 by 2025, reaching a market size of USD 60 billion. Employment in GCCs is likely to reach 45 lakh by 2030.
“GCCs have a huge impact on employment by hiring high-quality talent. And not only that, they train and upskill university recruits and take them on to work on advanced projects. This raises the innovation bar for both the parent organisations, state and nation, which is crucial to achieve national goals like 'Viksit Bharat' and more,” Jamalamadaka adds.
Beyond this, GCCs contribute to the local economy indirectly. Each job created by a GCC leads to the creation of multiple indirect jobs, impacting sectors such as real estate and local businesses, thereby boosting the overall state economy.
The contribution of GCCs has skyrocketed and they encompass a diverse array of functions today. Their evolution has not only transformed their operational scope but has also necessitated the development of comprehensive policy frameworks to support their growth. As these centres have become integral to global businesses, their impact on the economy, labour market, and technological advancement has increased significantly. Therefore, individual states are now pursuing policies that attract GCCs and their future development.
Beyond Tier-I Cities And Support For ER&D
Karnataka’s Bengaluru hosts about 30 per cent of GCCs located in India, but Hyderabad with its infrastructure support and friendly policies is fast becoming a good choice as well for global organisations. Beyond these hubs, Delhi/NCR (favoured by BFSI), Chennai, Mumbai (favoured by BFSI and Retail/CPG) and Pune (favoured by automotive and industrial) are GCC focal points.
GCCs are also now expanding beyond the six major metro hubs to other locations. This shift is largely influenced by high attrition rates and increasing inflation in established hubs, prompting companies to set up operations in non-metro cities. Leading the way among these new clusters are Ahmedabad, Bhubaneshwar, Coimbatore and Vadodara.
“It will be good to expand our GCC footprint beyond the 5-6 major Indian hubs. I think that will happen and it is a matter of time, especially as you start setting up more manufacturing, more factory capabilities elsewhere in the country. For GCCs, co-locating there would also have a natural play, depending on where the supply chain and where the business goes, particularly in the Engineering Research and Development (ER&D) space,” says Nanda K Lakkaraju, MD, Carrier Technologies India.
In Q4 2023 alone, 10 new GCCs were established in India and 60 per cent of these were in ER&D, IT and BPM.
Lakkaraju tells BW Businessworld ER&D will be very important for India and stresses that success in this field relies on establishing a strong ecosystem, which includes essential components like laboratories, manufacturing connections, suppliers and business networks. “Anything we can do in terms of really incentivising or, funneling more growth into ER&D space will be great, especially as we start competing on the global level.”
“As the number of global roles go up, whether it is Hyderabad or at any other hubs, and I believe it is set to quadruple over the next 4-5 years, we are going to get a lot meatier and higher order roles. There will be global roles out of our centres, which means that we need to really focus on the ER&D space, not just IT software” – Nanda K Lakkaraju, MD, Carrier Technologies India
Karnataka is also pushing its ‘Beyond Bengaluru’ initiative to encourage more companies to set up presence beyond the state capital, which doubles up as the India’s IT, startup and GCC capital. More is expected to be unveiled soon for GCCs with a focused policy making landfall later this year.
Focus On Talent, Education And Upskilling
As GCCs in India advance and take on more complex roles, their functions are expanding and evolving. With an increase in the number of centres, there is a rising need for high-value digital skills. This growing demand creates challenges in hiring and retaining skilled talent.
Although a broad talent pool exists, the rapidly changing skill requirements and the increasing demand for digital expertise necessitate targeted efforts from GCCs to maintain a steady flow of specialised talent. Therefore, it is essential for states to invest in universities and training programmes, focusing on upskilling initiatives to strengthen talent pools and address regional disparities.
“GCCs growth will also be pegged by focusing on deep think centres, innovation and R&D hubs and sub-GCCs in cloud and cybersecurity to meet customer needs. Many new roles will get created at entry and mid-senior level roles in GCCs, data centres, tech centres in BFSI, Pharma/Health, Automotive and ER&D sectors,” says Neeti Sharma, CEO, TeamLease Digital.
Regulations
A recent nasscom-KPMG survey revealed that regulatory compliance is a major concern for GCCs in India, with more than 55 per cent of leaders stressing its critical role in ensuring smooth operations. The survey identified transfer pricing as the foremost regulatory challenge, followed by SEZ/STPI regulations and labour laws.
“It is imperative that we drive a supportive policy and regulatory environment that helps attract GCCs and makes it easy for them to scale”
-Balasubramanian Sankaranarayanan, President and CEO, Thryve Digital
“Benefits, especially starting with the taxation and the transfer pricing and predictability in policy is very important,” opines Roche’s Jamalamadaka. “Without that, there’s always a worry on what could happen.”
The contributions of GCCs today go beyond mere cost arbitrage to driving strategic business initiatives. In future, possibilities are that business services could be led from here global leaders based from India. To sustain this growth and leverage the full potential of GCCs, a supportive policy framework is essential. By prioritising talent development, regulatory compliance, data security, and incentives for innovation, policymakers can create an environment in each state that ensures the continued success and evolution of the GCC landscape. Failing to do so may ultimately result in losing GCCs to competing states.
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