The Rise of Global Capability Centres (GCCs) in India

The COVID-19 pandemic, coupled with inflation and geopolitical tensions, provided a significant impetus to the GCC industry in India. Post-pandemic, the share of services exports in India’s GDP surged remarkably, with the most substantial growth observed in business services exports between FY20 and FY23.

The surge can be attributed to the rapid proliferation of GCCs in India. The Russia-Ukraine conflict and global inflationary pressures on wages compelled global enterprises to pivot towards India to establish their back-office operations and optimize their cost structures.

By 2023, GCCs have transcended their role as mere back-office support for multinationals, evolving into critical engines for crafting global solutions and generating new revenue streams. The following examples illustrate how GCCs are delivering strategic value to their parent organizations –

• A global corporation has redefined its India GCC to spearhead new digital capabilities. PwC India is facilitating this digital transformation by implementing best practices in automation and data governance and fostering new artificial intelligence and machine learning capabilities.
• An insurance company has established a GCC technology hub in India dedicated to developing innovative digital solutions tailored to the insurance markets it serves.

These instances highlight the importance of GCCs in driving innovation and business value for multinational enterprises.

Several key economic trends drive the rise of GCC service providers in India and beyond:

Adoption of Hybrid Work Models

Hybrid work is here to stay. Although remote work technology has existed for over a decade, its adoption was slow until the pandemic forced companies to adapt. GCCs led the way in ensuring work continuity by setting up the necessary technology, communication channels, network security, and database storage. They also established new management models for seamless collaboration.

Increased Investment in Technology

GCCs have become technological hubs for their parent companies, handling end-to-end, cost-effective product development. Many parent companies outsource tech-heavy tasks like app development to GCCs. A major strength of GCCs is their ability to scale digital strategies effectively.

During the pandemic, many Indian GCCs swiftly moved their ERP and legacy applications to the cloud and invested in advanced analytics, AI, and machine learning. Looking ahead, GCCs will continue to adopt the latest technologies, enhance their data mining infrastructure, and acquire new tools.

Strengthening the Talent Pool

The post-pandemic era has seen a surge in demand for talent with critical skills like ERP, AI, and advanced engineering tools. GCC leaders actively recruit in these domains, leveraging India’s abundant skilled and diverse talent to bridge the demand-supply gap.

Initiatives include proactive hiring practices, strong ties with educational institutions, continuous reskilling, and creating internal pools of experts. These efforts help GCCs attract top talent with competitive pay and work environments.

Commitment to Innovation

GCCs have moved beyond cost-saving centers to prioritize innovation. They serve as incubation centers where parent companies can experiment with new ideas without disrupting main operations. This allows for structured ideation, prototyping, and scaling up of innovations. Indian GCCs have delivered several groundbreaking innovations, such as modern citizen identity systems, financial inclusion initiatives, payment solutions, and educational guidance platforms.

Proactive Risk Management

Cyber-attacks are becoming more complex, with threats like phishing, spyware, ransomware, and intellectual property thefts. Cyber risks are higher with GCCs connected to parent companies via the internet. To mitigate these threats, GCCs invest in robust cybersecurity measures, including –

• Deploying Detection & Response tools to enhance Security Operations Control (SOC) capabilities.
• Ensuring ISO standards compliance for network stacks, such as ISO 27001 for vulnerability assessments.
• Conducting network audits to identify security gaps.
• Holding employees accountable for security.

The governance, risk control, and compliance practices of GCCs align with their parent companies’ policies, fostering a secure environment.

Listed below are the major strategies offered by Global Capability Centers that can help your company succeed –

• Research and Development (R&D) – Conducting innovative research to drive technological advancements and product differentiation.
• Engineering Services – Providing expertise in software development, product design, testing, and validation.
• Analytics and Data Management – Using data analytics and business intelligence to gain insights, improve decision-making, and boost business performance.
• IT Services – Offering a range of services like application development, infrastructure management, cybersecurity, and IT support.
• Finance and Accounting – Managing accounting, financial reporting, budgeting, forecasting, tax compliance, and treasury management.
• Customer Support – Delivering helpdesk support, technical support, customer relationship management (CRM), and contact center operations.
• Procurement and Supply Chain Management – Managing procurement processes, supplier relationships, contracts, inventory, and logistics to enhance supply chain efficiency.
• Business Process Outsourcing (BPO) – Outsourcing non-core business functions such as finance, HR, procurement, customer support, and back-office operations.
• Human Resources (HR) – Handling recruitment, talent management, training, employee relations, payroll, and benefits administration.
• Compliance and Risk Management – Ensuring regulatory compliance, managing risks, implementing governance frameworks, and maintaining data security and privacy.

By leveraging the diverse capabilities of GCCs, your company can streamline operations, foster innovation, and stay competitive in the global market.

In the 2010s, Global Capability Centers (GCCs) in India evolved from cost-saving centers to essential strategic hubs for global businesses outsourcing. This shift was driven by rapid technological progress, increasing business complexity, and the need for constant innovation.

A significant milestone was the rise of digital transformation led by Indian GCCs. These centers spearheaded advancements in AI, ML, big data analytics, cloud computing, and IoT. For instance, HSBC’s Pune center developed AI solutions for global banking, while GE’s Bangalore facility pioneered IoT research.

By 2020, as per NASSCOM, India will host over 1,400 GCCs, employing 1.3 million professionals and contributing $28.3 billion annually to the economy.

Key Benefits –

• Technological Innovation – Leading in AI, ML, and advanced technologies.
• Global Integration – Seamlessly integrating into global operations for enhanced efficiency.
• Economic Boost – Significant contributions to India’s economy through jobs and revenue.
• Innovation Centers – Fostering cutting-edge research and development.

Establishing GCCs in India will support global business strategies, drive innovation, and stimulate economic growth, making a substantial impact on the global stage.

• Transformation to Value Centers – Initially cost-focused, GCCs in India have evolved into crucial value centers, driving strategic business outcomes through innovation, digital transformation, and enhanced customer experience.
• Integration into Global Operations – GCCs are now integral to multinational corporations’ global strategies. They are involved in end-to-end product development, global supply chain management, and strategic decision-making processes.
• Emphasis on Innovation and R&D – There is a notable shift towards establishing GCCs as global hubs for research and development, focusing on pioneering new products, technologies, and solutions.
• Skill Development and Talent Enhancement – GCCs are critical in nurturing India’s workforce through specialized training programs, innovation labs, and academic partnerships, enhancing skills, and fostering talent development.
• Adoption of Emerging Technologies – The rapid adoption of Artificial Intelligence (AI), ML, big data analytics, cloud computing, and IoT has driven significant growth in GCC capabilities, enabling transformative business solutions and value creation.

Focus on Sustainability and CSR – Many GCCs actively engage in sustainability initiatives and corporate social responsibility projects, contributing to environmental conservation, community development, and social welfare efforts.

Looking ahead, India is set to strengthen its role as a global GCC hub, driven by transformative trends and strategic initiatives. The digital revolution will empower GCCs to innovate with AI, machine learning, and IoT technologies, enhancing efficiency and fostering growth across healthcare, renewable energy, and fintech. 

Focusing on sustainability, GCCs will lead environmental stewardship and social responsibility initiatives, while partnerships with startups and academia will spur collaborative innovation and talent development. India’s GCC landscape is poised for dynamic expansion, promising a future of innovation-driven excellence globally.

Conclusion

Over the past two decades, the evolution of Global Capability Centres in India highlights the nation’s rising significance in global business. Starting as cost-saving centers, GCCs have evolved into dynamic innovation hubs that propel digital transformation, drive business impact, and contribute significantly to economic expansion. 

The future growth trajectory of GCCs in India holds immense promise, marked by fresh opportunities, evolving challenges, and boundless potential. If you want to expand your services and consider outsourcing, contact our experts at Axtrics Australia today!