Global Capability Centers on the Go

Global Capability Centers

Global Capability Centres (GCCs) have significantly stepped up their India operations in recent years, propelled by a skilled workforce, cost-efficiency and a conducive business climate. Bengaluru has strengthened its leadership position, commanding a major share in India’s GCC leasing market.  The GCC growth trajectory is anticipated to be concentrated in India’s top 6 metropolitan areas.  

A recent CBRE=  Zyoin joint report highlights that GCCs(Global Capability Centers) are affirming their long-term commitment to India by securing larger office spaces.

Nearly 53 mn. sq. ft. of office space was leased by GCCs between CY 2022 and the first half of 2024 across Bengaluru, Hyderabad, Chennai, Pune, Delhi-NCR and Mumbai. During Jan-Jun ‘24, GCC leasing activity across these 6 cities increased by 8 percent Y-o-Y. In the first half of 2024, GCCs accounted for approximately 37 percent of the total office leasing activity in India. During H1 CY 2024, the share of Banking, Financial Services, and Insurance (BFSI) GCCs rose to 22 percent, driven by significant leases from global banking and insurance firms in Mumbai, Bangalore, and Pune.

Further, over the last two-and-half years (2022-H1 2024) technology companies have leased about 15 mn.sq.ft. of office space. Technology and BFSI corporates have historically been the primary GCC office space occupiers. However, niche firms, including hedge funds and private equity firms, are expanding, recognising the strength of India’s talent. Engineering and manufacturing (E&M) companies are expanding their footprint in India, likely influenced by supply chain diversification strategies.

Life sciences GCCs, too, have exhibited an increased appetite for expansion in the country, driven by the need to digitalise services and foster product development.

Spread of GCC deals across key cities (2022 – H1 2024)

CBRE and  Zyoin examined the key skill sets currently in demand. Within the technology sector, knowledge of skill sets such as Java and SQL are in higher demand. Additionally, fundamental skills, including software development/coding, engineering, C, C++, and Python are also coveted. Within the BFSI sector, knowledge of skill sets around banking, investing, insurance, mortgages, securities, ability to build financial models or financial statements, financial analysis, risk assessment, and financial planning among others are in demand. Within the Engineering & Manufacturing sector, knowledge of skill sets around manufacturing, software development, a background in mechanical engineering is much preferred.

As per the report, the global landscape, human capital and real estate are the foundational pillars of GCC prosperity in India. Approximately 1.66 million professionals are currently employed in GCCs across India.  This vast and growing talent pool makes India an attractive destination for GCCs, especially as setting up a GCC in India is significantly more cost-competitive, allowing these centers to thrive on the large and affordable tech workforce.

As the Global Capability Centers ecosystem matures, Indian tech talent is moving beyond traditional service roles and increasingly taking on product ownership.  A pivotal factor in this shift has been the creation of global leadership roles within GCCs in India. This nurtures homegrown talent equipped with the vision, skills, and experience to lead global teams and initiatives.

GCC city-wise trends 

Bengaluru has cemented its status as the leader for global capability centres (GCCs), commanding a 40 percent share in India’s GCC leasing market (from CY 2022 to Jun’24).  It holds the largest share of GCC talent, accounting for 34 percent in Jan-Jun’24 with a mature technology ecosystem and a thriving start-up landscape.  The city boasts of a 2 million-strong technology workforce, the largest in India. While technology and BFSI sectors remain the primary demand drivers, retail, aerospace, semiconductor, and life sciences companies are establishing niche GCCs. Karnataka’s upcoming GCC policy is expected to catalyze GCC setups and job creation in the city.

Hyderabad has ascended to Global Capability Centers prominence due to the government’s proactive policy framework and efficient urban infrastructure. The city attracts talent from across the nation, offering a compelling proposition for GCCs. An enhanced lifestyle and lower costs further incentivize company setups.

Chennai has emerged as a major GCC hub, underpinned by a vibrant technology sector and robust manufacturing base. The city’s educational prowess in STEM fields attracts new GCC entrants. Tamil Nadu’s R&D Policy 2022 offers attractive incentives to GCCs and R&D centers. The city witnessed 6 million sq. ft. of GCC office space leases over 2023 – H1 2024, constituting 17 percent of total GCC leasing during this period. Beyond technology and engineering & manufacturing, global banking giants are active in the city.

Pune, historically a BFSI GCC stronghold, is experiencing renewed interest from engineering & manufacturing and technology firms. Competitive real estate costs, a cosmopolitan talent pool, and proximity to an automotive and engineering hub make Pune attractive to GCC occupiers. Led by large deals, Pune accounted for the second-highest share in GCC leasing during H1 2024.

Emerging sectors in the GCC space

Semiconductor firms are experiencing significant growth with a convergence of AI and automation across industries driving heightened demand for advanced semiconductors, particularly within technology, automotive, consumer electronics and data centre domains. Global life sciences companies are also expanding their Indian Global Capability Centers footprints, propelled by medical advancements, enhanced care quality and evolving compliance and regulatory frameworks. Life sciences and pharmaceutical GCCs are doing pioneer work in the field of development of medical devices, clinical trial data analysis and insights and product innovation including medical imaging R&D. Indian automotive GCCs have made a strong foundation with trustworthy cost and delivery commitments. These GCCs are focusing on product design and development, innovation through usage of smart sustainable materials and supply chain optimization and procurement.

According to Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE India, GCCs are now driving digital transformation and product excellence, becoming an essential part to any forward-thinking global firm. A burgeoning array of industries is recognizing the potential of Indian talent, establishing their GCC footprint.  The future promises further diversification as the life sciences, automobiles, and aerospace sectors expand their Indian GCC presence. With a strategic roadmap for 2024 GCC development, India is poised to spearhead the next wave of globalization.

Adds Ram Chandnani, Managing Director, Advisory & transactions Services, CBRE India “The evolution of Global Capability Centers from operational back offices to technology and innovation hubs necessitates a profound workforce skill transformation. A surge in demand for digital and machine learning proficiencies, including AI, applied machine learning, data analytics, cybersecurity, blockchain, augmented reality app design, engineering, and UI/UX design, is evident. By cultivating a highly skilled workforce and adopting innovative learning methods, GCCs In India can establish themselves as Global Centers of Excellence.