Chennai: A hotbed of GCCs in India

CHENNAI: India is emerging as a hotspot for global capability centres (GCCs), and Tamil Nadu can take pride in housing Banca Sella (a family bank of Italy) dating back to 1995-96.

The debut of one of the first GCCs, then referred to as GIC or global in-house centre, in Elnet city of Chennai laid the foundation for India now accounting for 60 per cent of the GCCs. Out of this 65 per cent originate from the US while 25 per cent from EMEA and the balance 10 per cent from APAC, notes MS Bala, a leader, armed with two decades of experience in setting up GCCs. The CEO of Stratinfinity, and Chairman, Board of Governors, Ministry of Education, Govt of India, also held the position of Chairman, GCC (Nasscom entity), TN-KL (Honorary position as industry leader).

Till 2010 it was the cost arbitrage predominantly that drove the growth of GCCs with efficiency and efficacy contributing in the early and late 2000s. “There was no control over IP rights, thereby making GCCs reluctant to invest and as a result, outsourcing to service companies proved to be beneficial from a cost perspective,” he said. But all that changed with the entry of marquee names such as BNY and World Bank setting up GICs. In fact, the World Bank’s largest external hub is located in Chennai. Thus, these financial biggies paved the way for R&D, technology, BPO, KPO, call centres and back offices. As the tug of war began in 2012-13, establishing GCCs were 30 per cent cheaper than outsourcing to service companies.

A recent report of JLL-CRE Matrix reveals the growth trajectory of GCCs which have crossed 202 million sqft in January 2023, as office stock occupiers (34 per cent of all occupied Grade A stock), across the top six cities (Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune), from 65.7 million sqft in 2012.

GCCs with a 44 per cent share of active space requirements remain the biggest industry segment in terms of potential growth, the report said, adding that the number of GCCs would breach 2,300 mark over the next three years from 1790+ as of 2022, with the corresponding occupancy footprint anticipated to grow to over 270 million sq ft.

Reasons for offloading work, translating into the stupendous growth of GCCs include intensity of work capabilities, considerable amount of IT services being outsourced, time zone advantages, value creation. “It is a proven and time-tested model,” says Bala, as he goes on to add that it was in 2015-16, that the conversation veered around innovation, where value became the focal point, ultimately contributing to growth and revenues. In 2017, the GIC metamorphosed into GCCs, with innovation being the key driver.

The rationale of setting up GCCs in India can be summed up as follows. A developer in the US having an earning potential of $1 lakh could be replaced by six resources in India but in 2018-19, it came down to four resources, and post-COVID-19, only two to three resources in this country could be swapped for a single resource.

The demand still exists as the template for GCCs have been changed. Cost is no longer the key factor for them. The ‘Great Indian’ talent, which was not marketed went through the reskill, upskill rigour cycle. Train and hire changed to value hiring, as the focus was on talent, skill and scalability.

Besides, the GCCs are now being managed from India with the leadership team being able to outline the plans from this country itself. India has seen the evolution of over 1,700 plus GCCs over the past 30 years, and the number is expected to touch 4,000 by 2025-26. The focus has shifted, and the question is no longer what India can deliver, but rather what can’t it.

PB_HeaderAdvantage Chennai

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PointBoxCitibank’s first data centre here has over 6,000 people.

PointBoxThe World Bank too has 2,000 plus people.

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PointBoxCaterpillar’s biggest facility outside the US is in the city.

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