Despite the global economic crisis due to tightening monetary policy cycle, slow GDP growth and increasing inflation, India has enough tailwinds with political stability, thriving domestic consumption-based economy and a strong financial regulatory system. 

Over the past few years, India has established its reputation as the powerhouse for innovation and R&D. Given its long history and proven record as an outsourcing/offshoring hub, particularly in the technology sector, more and more international companies are tapping into our local markets for better business growth. 

With the services sector evolving at a rapid pace and driving India to the forefront of tech-driven innovation, Global Capability Centres (GCCs) have emerged as key nodes for transformation and business strategies, allowing MNCs to remain flexible in a highly dynamic environment. 

Having said that, let’s understand the concept of GCC and know why they are becoming so popular in India. 

What Are Global Capability Centres? 

GCCs, also known as Global In-House Centers (GICs), are specialized units set up by global organisations in offshore locations to handle a wide range of business functions, such as IT services, finance, research and development, and customer support. These centres are essential to a company’s worldwide operations, providing cost-effective solutions while also maintaining the high standards of quality and innovation.

Back in the days, these units were primarily established to handle offshore back-office processes only. But things have changed significantly now. GCCs of today tackle more complex line items throughout the organization’s value chain. They have evolved into centers of operational excellence, product development, and innovation hubs.

What Makes India The Preferred Choice For GCC Setup?

Believe it or not, India is home to more than 1800 global capability centres, which employ around 1.3 million workforce. Several renowned global firms consider India a key destination and contributor in their next stage of growth. Therefore, they are increasingly investing in setting up incubators, accelerators, and multiple partner programs in the country. 

Foreign investors are now looking for collaboration with Indian startups to flourish their business. Top cities like Mumbai, Bangalore, Delhi NCR, Pune, Chennai and Hyderabad have become the most preferred areas, offering a conducive environment to set up global capability centres in India. 

Wondering what’s driving the growth of GCCs in the country? Here are some of the major factors: 

• Large Talent Pool

One of the remarkable advantages of setting up a global capability centre in India is the availability of highly skilled manpower. Every year, India produces millions of graduates, many of whom pursue careers in engineering, computer science, and business administration. These graduates are highly driven, have great technical skills, and a solid awareness of international business processes. Hence, MNCs in India are able to leverage this large talent pool to provide all sorts of services to their clients all around the world. 

• Cost-Effective Solutions

The cost of running a captive center in India is substantially lower than in developed countries such as the United States and the UK. This is owing to lower salaries, reduced real estate expenses, and more favorable exchange rates. Establishing a GCC in India allows global companies to drastically reduce their operating costs. Furthermore, major Indian cities offer occupiers relatively cheaper rentals for Grade A office spaces. Institutional landlords are also providing quality real estate assets, making them an attractive option for MNCs to establish their global in-house centres.

• Robust Infrastructure

The country has ample space for growth.  Easy access through roads, highways, airports in major cities like Delhi, Mumbai and Bangalore along with excellent infrastructure are of great help. Moreover, electricity and internet connectivity are no longer limited to metros only.

• Government Support 

The Indian government has been supportive of setting up these centres, taking multiple initiatives to attract foreign investment. Govt. has set up special economic zones (SEZs) where companies can establish their GCCs and avail various tax incentives. They have also implemented policies to promote innovation and research and development, which has helped captive centres to develop cutting-edge technologies.

How Can You Set Up GCC in India? 

Here is a step-by-step guide that will help you establish a successful global capability centre in India.

• Define Your Goals

Being a parent company, you may have various reasons to start a new global captive unit in India. But before taking the plunge, it’s important to clearly define your goals. Your GCC should share or be an extension of the parent company’s vision, and you must have a plan that supports that goal.

• Get the Paperwork Done

Your GCC may not be entirely parent-owned. It could be a joint venture, BOT (Build, Operate, Transfer), or a new business model. However, in order to get started, you must first submit a Memorandum of Understanding (MoA), Articles of Association, Directors ID (DIN), and other paperwork. What’s good about this? In India, you can manage this entire process digitally. 

• Accessibility is the Key 

For optimum business, your global capability centre should be located in both the appropriate city and in the right neighbourhood. Evaluate your place based on how easy it would be to implement your company plan, procure materials, and provide assistance. Also, make sure that your GCC’s employees have easy access to it.

• Hire With Flexibility

Whenever there is a higher demand for skilled professionals, India has a solution. But this solution comes with an increased attrition rate. For this, you need an inclusive work culture that recruits and retains the best employees. Furthermore, perks like remote working and specialised HR practices contribute to staff satisfaction and productivity.

• Standardize Your SOPs

Standardizing your procedures is important. Whether you are recruiting or retiring any employee, ensure a smooth transition for payments and procurement. Employees become accustomed to a certain manner of working culture, which fosters a transparent environment. 

Bottom Line

With access to a diverse talent pool, robust infrastructure and solid support from the government, your GCC in India can transform your company’s value across the world. As the Indian cities are providing so many growth opportunities, cost arbitration and investment options, captive centres in the country can easily make a global impact from regional levels.