How Global Capability Centres are transforming India’s Tier-II cities into new hubs of innovation and talent
Global Capability Centres (GCCs), also known as Global In-house Centres (GICs), are entities set up by multinational corporations in India to perform various functions such as research and development, engineering, analytics, digital transformation, and business process management.
GCCs have been a key driver of India’s economic growth, employment generation, and technological advancement for over two decades. According to a report by NASSCOM, India hosts more than 1,900 GCCs across various sectors, employing over 10 lakh people and contributing over $28 billion to the economy.
The shift to Tier-II cities
While most of the GCCs are concentrated in Tier-I cities such as Bengaluru, Hyderabad, Delhi NCR, Mumbai, Pune, and Chennai, there is a growing trend of GCCs expanding or relocating to Tier-II cities such as Jaipur, Kochi, Coimbatore, Indore, Bhubaneswar, and Chandigarh.
The main reasons for this shift are the lower cost of operations, availability of talent, improved infrastructure, and favourable policies of state governments. According to a report by EY, compared to Tier-I cities, Tier-II cities have lower talent and infrastructure costs, which is helping optimize the Total Cost of Operations. State governments are incentivizing organizations to locate their GCCs in Tier-II cities through favourable policies and schemes.
Some of the prominent GCCs that have established or expanded their presence in Tier-II cities include Bosch in Coimbatore, GE in Jaipur, Mastercard in Vadodara, Dell in Mohali, and Accenture in Visakhapatnam.
The benefits for GCCs and Tier-II cities
The shift to Tier-II cities has multiple benefits for both GCCs and the local ecosystems. For GCCs, it helps them access a large pool of skilled and diverse talent, reduce operational costs, enhance business continuity, and leverage the local innovation potential.
For Tier-II cities, it helps them attract more investments, create more employment opportunities, boost the local economy, improve the quality of life, and foster a culture of entrepreneurship and innovation.
According to a report by Cushman & Wakefield, some Tier-II cities are also expected to witness traction from GCCs in the near future as these cities exhibit potential on important metrics such as talent availability, international connectivity, ease of doing business etc.
The future outlook
The future outlook for GCCs in India is positive, as more multinational corporations are looking to leverage India’s talent pool and innovation capabilities to drive their global growth and transformation agendas.
GCCs are also evolving from being cost centres to value centres, focusing on high-end functions such as artificial intelligence, machine learning, cloud computing, cybersecurity, blockchain, and the Internet of Things.
As per NASSCOM’s report, GCCs are expected to grow at a compound annual growth rate (CAGR) of 8-10 per cent over the next five years and create 3-4 lakh new jobs by 2025.
Tier-II cities are likely to play a significant role in this growth story, as they offer a win-win proposition for both GCCs and the local communities.
This post How Global Capability Centres are transforming India’s Tier-II cities into new hubs of innovation and talent was originally published at Finance Crave
Comments
Post a Comment