Why India is a top location for Global Capability Centers

16 September 2020 Consultancy.in 3 min. read

India remains one of the globe’s most attractive locations for Global Capability Centers (GCCs), on the back of the country’s knowledge-driven workforce, solid infrastructure and supportive government policies. 

In a recent webinar hosted by Nexdigm, leaders from across the Global Capability Centers landscape convened to reflect on the state of the sector, and on how India is managing to maintain its competitive position. 

Global Capability Centers are facilities that concentrate workers and infrastructure to handle operations (back-office functions, corporate business-support functions, and contact centers) and IT support (app development and maintenance, remote IT infrastructure, and help desks), all with the notion that concentration can enhance productivity. Some large companies use GCCs as a center of excellence for innovation.

According to an estimate from Nexdigm, an international professional services firm, India is home to over 1,750 Global Capability Centers, which amounts to a massive 50% of all such centers globally. Domestically, GCCs employ over one million employees, generating a total economic value of around $28.3 billion. 

Half of Global Capability Centers are based in India

70% of India-based GCCs belong to US-headquartered companies, followed by 20% from Europe and 10% from the Asia-Pacific region. On average, these GCCs help their parents save up to 45% in operational costs over a three to five year period. Four out of ten (43%) of GCCs are singularly focused while 57% offer integrated services with a combination of IT, Business Processes, Engineering, and R&D from one cohesive center.

Consensus was achieved by the participants attending the webinar on India’s key strengths; including factors such as a large educated talent pool, young demographics, infrastructure requirements, well established intra-country connectivity, and appropriate policy support. 

Supportive government

“The government has created an exhaustive ecosystem,” said Peter Bendor-Samuel, CEO of Everest Group. Jerry Kinnick, President at Continuum Global Solutions, added “India as a country provides minimal business risk for companies due to suitable policy backing.” 

Another key factor is India’s frontrunning position in digital capabilities. Today, the country counts more than 4 million people in the workforce within the IT sector, and nearly 1/4th of them work in GCCs. With an increasing focus on digital, over 50% of India-based GCCs are investing in emerging technologies including analytics, cloud, robotic process automation, artificial intelligence, machine learning, and internet of things.

Speaking at the Nexdigm webinar, Rajiv Kumar, Joint Secretary, Ministry of Electronics & IT said, “With the vast talent pool, upgraded infrastructure, and right government policies, we have shown the world that India is a great marketplace to invest for GCCs.” 

The webinar also stated that the southern and western parts of India have been the primary locations for most GCC establishments. States such as Maharashtra, New Delhi and the National Capital Region (NCR), Karnataka, Tamil Nadu, and Telangana house the majority of Indian GCCs. However, northern India is booking the fastest growth in terms of newly established GCCs. 

In related news, a recent analysis by McKinsey & Company suggests that the Covid-19 pandemic and resultant ‘new normal’ is forcing companies to tweak their GCC operating models. “Executives should take concerted action to build on the lessons they have learned during Covid-19 and reinvent their GCC,” wrote partners Indraneel Banerjee and Akash Lal in the report.