Explosive Growth of Global Capability Centers in India, Fueled by Talent and Favorable Business Environment
Introduction
The Global Capability Centers (GCCs) in India have experienced a significant surge in their operations, thanks to the country’s skilled workforce, cost efficiency, and business-friendly environment. Leading real estate consultancy CBRE South Asia Pvt. Ltd and recruitment agency Zyoin have jointly published a report highlighting the growth trajectory of GCCs in India and the key factors contributing to their success.
Rapid GCC Expansion in India’s Major Metro Areas
The report reveals that GCCs are concentrating their growth in India’s top six metropolitan areas, namely Bengaluru, Hyderabad, Chennai, Pune, Delhi-NCR (National Capital Region), and Mumbai. These cities offer exceptional talent pools, enabling expansion and future development of GCCs. Notably, during the first half of 2024, around 53 million square feet of office space was leased by GCCs across these cities.
Increased Leasing Activity and Diversification
The GCC leasing activity across the six cities increased by 8% year-on-year during the first half of 2024. GCCs accounted for nearly 37% of the total office leasing activity in India during this period, solidifying their role in the country’s business landscape.
In terms of industry sectors, the banking, financial services, and insurance (BFSI) GCCs saw significant growth, accounting for 22% of leasing activity during the first half of 2024. This was driven by the expansion of global banking and insurance firms in cities like Mumbai, Bangalore, and Pune. Additionally, technology companies have leased approximately 15 million square feet of office space in the last two and a half years, highlighting their continued dominance in the GCC market.
Furthermore, niche firms such as hedge funds and private equity firms are recognizing India’s talent strength and expanding their operations in the country. Engineered and manufacturing (E&M) companies are also expanding their footprint, likely driven by supply chain diversification strategies. The life sciences sector is not far behind, displaying an increased appetite for expansion to digitalize services and foster product development.
Key Skills in Demand
The analysis conducted by CBRE and Zyoin also shed light on the key skills in demand within GCCs. In the technology sector, skills such as Java, SQL, software development/coding, engineering, and programming languages like C, C++, and Python are highly sought after. In the BFSI sector, knowledge of banking, investing, insurance, mortgages, securities, financial analysis, risk assessment, and financial planning is essential. The engineering and manufacturing sector prefers individuals with skills in manufacturing, software development, and mechanical engineering backgrounds.
Foundational Pillars of GCC Success
According to the report, the three foundational pillars of GCC prosperity in India are the global landscape, human capital, and real estate. India currently employs approximately 1.66 million professionals in GCCs, establishing the country as an attractive destination for GCCs due to cost efficiency. On average, the salary of software professionals in India is only one-tenth of that in the United States for similar roles. This cost advantage allows GCCs to thrive by utilizing India’s large and affordable tech workforce.
As the GCC ecosystem matures, Indian tech talent has started taking on product ownership and moving beyond traditional service roles. This significant shift can be attributed to the creation of global leadership positions within GCCs in India. These leadership roles nurture homegrown talent and equip them with the skills and experience required to lead global teams and initiatives.
Leading GCC Hubs in India
Bengaluru retains its position as the leading GCC hub in India, commanding a 40% share in the country’s GCC leasing market from 2022 to mid-2024. The city boasts the largest GCC talent pool, accounting for 34% of the talent in the Jan-Jun’24 period. With a mature technology ecosystem, a thriving start-up landscape, and a two-million-strong technology workforce, Bengaluru continues to attract global companies.
Hyderabad has also emerged as a prominent GCC hub due to the proactive policy framework of the government and efficient urban infrastructure. The city offers a compelling proposition to GCCs, including a high standard of living and lower costs.
Chennai has witnessed a significant rise as a GCC hub, supported by its vibrant technology sector and robust manufacturing base. The city’s reputation as an educational hub for STEM fields further attracts GCC entrants. The innovative R&D Policy 2022 of Tamil Nadu offers attractive incentives to GCCs and R&D centers, encouraging investment in the city. Moreover, Chennai witnessed 17% of the total GCC office space leases between 2023 and H1 2024.
Pune, traditionally known for BFSI GCCs, is now experiencing increased interest from technology and engineering & manufacturing firms. The city’s competitive real estate costs, cosmopolitan talent pool, and proximity to the automotive and engineering hub make it an appealing choice for GCCs. In H1 2024, Pune accounted for the second-highest share in GCC leasing, driven by large deals inked during that period.
Conclusion
India’s GCC sector is rapidly evolving, fueled by its skilled workforce, cost advantage, and business-friendly climate. With continued investments in established GCC hubs like Bengaluru, executing progressive policies in Hyderabad and Chennai, and expanding opportunities in Pune, the future looks promising for GCCs in India. As India’s GCC ecosystem continues to mature, it will undoubtedly play a significant role in shaping the nation’s economy and creating diverse employment opportunities.
