Global Capability Center (GCCs) in India explained.

What is a Global Capability Center (GCC)?

Global Capability Centers (GCCs) are fully owned hubs of global companies generally located in cost-effective global locations with an abundant supply of quality talent, and access to technology and infrastructure to bring efficiency in Global operations for multinational parent companies. 

They are usually structured as 100% subsidiaries of a global multinational. The global MNCs set up one or more such globally distributed hubs in nearshore or offshore geography. 

The GCCs are going beyond non-core and moving core and critical functions into GCCs. These centres integrate multiple business processes and functions into a single location to streamline global operations, reduce costs, and improve efficiency.

India Talent Pool

GCC Powerup Growth and Value

Global Capability Centers (GCCs) Or Captive Offshore Centers in India empower businesses to transform by accessing globally distributed resources not just for operational efficiency and reducing costs but also to up the value chain gains, drive innovation and achieve sustainability goals, across industries, delivering higher value to the stakeholders in many ways such as:

  • Digital transformation across global operations
  • High Tech Product Development
  • Infuse Innovation
  • Boosting efficiency and quality of operations 
  • Access to newer markets and opportunities

GCC Terminology

Traditionally, Global Capability Centers were known by several terms based on their focus, structure, and function. These terminologies emphasize their structure.

Common terms

Global In-House Centers

Often synonymous with GCCs but tends to focus more on in-house (Insourcing) consolidation of offshoring.

Shared Services Centers

A common term for a centralised hub housing shared business functions across geographically spread global business units.

Captive Offshore Centers

Another term for GCCs refers to the fully owned nature or proprietary operations of the global business set up in a low-cost location.

Offshore Development Centers

Focused on Software Development, Software Engineering and IT Services set up in offshore locations as an extended arm.

India is the top destination for GCC

India has emerged as a key destination for setting up Global Capability Centers, driven by its advantages in quality talent, cost, and world-class infrastructure. India today has over 50% of the GCC of the entire world. Several factors contribute to India’s attractiveness:

World-Class Talent

India produces over 1.5 million engineers and 500 K management graduates annually, providing a deep and diverse talent pool, equipped to meet global business demands across various sectors, i.e. general IT services and business functions to Artificial Intelligence (AI), data analytics, research and development (R&D) in niche areas like electronics, design, telecom, quantum computing and more.

Cost Efficiency

India offers significant cost savings for businesses. Establishing a GCC in India can save up to 50% in operational expenses compared to onshore in the USA or Europe.

Government Support and Incentives

The government of India is working on a policy to be unveiled for GCC. In the past, Software Technology Parks of India (STPI) provided a ground for GCCs to flourish. Special economic zones (SEZs) are useful for GCC setups. SEZs are also the biggest GCC clusters today.    

Further Policies like “Make in India” and Production Linked Incentives make setting up GCC in India more meaningful to set up GCC along with the production facilities in India.  

Other factors

The strong public sector in many areas, English as a common medium of education, time zone and a large market are many other reasons for India to provide power to a favourable GCC location.

GCC functions on a scale of value

The GCCs have evolved by scaling on the value chain. The following scale depicts various stages of GCC:

  1. SW Development
  2. Backoffice operations
  3. Shared Services
  4. Outsourced Product development
  5. Engineering service
  6. Product Design
  7. R&D Centers
  8. Marketing and Sales drives
  9. Manufacturing centers
GCC funcions on a scale of value

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