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1. Introduction
Global Capability Centres (GCCs) represent a strategic initiative by multinational corporations to centralize various business functions such as IT services, finance, human resources, and research and development. These centres serve as operational hubs, driving efficiency, fostering innovation, and creating a competitive edge by leveraging global talent and resources.
Establishing a GCC hinges on the availability of robust infrastructure, which is critical for ensuring seamless business operations, enhancing productivity, and attracting skilled professionals. The importance of infrastructure in the successful establishment of GCCs cannot be overstated. Reliable transportation networks, consistent power supply, advanced office spaces, and superior technological connectivity are fundamental components that support the effective functioning of these centres.
2. Infrastructure Overview: Current State of Physical Infrastructure in India
India has made significant progress in developing its physical infrastructure, crucial for supporting the operations of Global Capability Centres. The country's transportation networks, power supply, and office spaces have seen substantial improvements, contributing to a favourable business environment.
Office Spaces
Major Indian cities offer world-class office spaces, often located in dedicated business districts and IT parks. According to JLL India, the total stock of Grade A office space in major cities like Bangalore, Hyderabad, and Pune stood at approximately 600 million square feet as of 2023. These cities provide a conducive environment for GCCs, with state-of-the-art facilities, advanced technological connectivity, and ample space for expansion.
Transportation Networks
India boasts an extensive network of international and domestic airports, with major hubs in cities such as Delhi, Mumbai, Bangalore, and Hyderabad. According to the Airports Authority of India, as of 2023, India has 137 operational airports, including 34 international airports , facilitating easy global connectivity. The presence of major seaports in cities like Mumbai, Chennai, and Kochi plays a crucial role in international trade and logistics, ensuring the smooth flow of goods and services. India’s coastline is home to 12 major and 200 non-major ports, handling 95% of the country's trading by volume.
Furthermore, India’s road and rail networks connect urban and rural areas, enhancing accessibility and mobility. The National Highways Authority of India (NHAI) manages over 140,000 km of national highways, which constitute about 2% of the total road network but carry 40% of the total traffic. The Indian Railways network, one of the largest in the world, spans over 68,000 km, carrying 8.1 billion passengers and 1.2 billion tons of freight annually.
Power Supply
The power supply infrastructure in India has seen notable improvements, with increased power generation and distribution capabilities. The Ministry of Power reports that India’s total installed power capacity stood at 404.13 GW as of December 2023, with renewable energy sources contributing 156.6 GW, representing 38.7% of the total capacity. This progress is critical for the uninterrupted operations of GCCs, which rely heavily on a consistent and reliable power supply.
3. Development Initiatives and Future Plans
The Indian government has launched several initiatives aimed at further enhancing infrastructure to support business operations, including those of GCCs. These initiatives are designed to address current challenges and lay the groundwork for sustained economic growth.
Smart Cities Mission
This initiative aims to develop 100 smart cities across India, incorporating advanced infrastructure and technology to improve the quality of urban life. As of 2023, 60 smart cities have been developed, with projects worth USD 25 Billion underway. Smart cities are equipped with modern amenities, efficient public services, and robust connectivity, making them attractive locations for GCCs.
Bharatmala and Sagarmala Projects
These projects focus on enhancing road and port connectivity, respectively. The Bharatmala project aims to develop a comprehensive road network with an investment of USD 100 Billion, improving the connectivity of rural and urban areas and facilitating faster movement of goods and services. The Sagarmala project seeks to modernize port infrastructure and promote coastal economic development with a planned investment of USD 123 Billion, enhancing the efficiency of maritime logistics.
Dedicated Freight Corridors
These corridors are being developed to boost logistics efficiency by providing dedicated rail lines for freight movement. The Western and Eastern Dedicated Freight Corridors, spanning 3360 km, are expected to be operational by 2024, reducing transit times and logistics costs by 40%.
4. Focal centres for GCC adoption
Several Indian cities offer unique advantages for establishing GCCs, based on factors such as connectivity, business environment, and availability of a skilled talent pool. The following cities stand out as prime locations for GCCs:
Bangalore
Known as the Silicon Valley of India, Bangalore is a leading destination for GCCs, particularly in the technology sector. Bangalore’s business environment is highly favourable, with a supportive regulatory framework and a rich talent pool of IT engineers and tech professionals. The city is home to over 10,000 tech startups and numerous multinational corporations, creating a vibrant ecosystem for innovation and business growth.
Hyderabad
Hyderabad has emerged as a rapidly growing IT and business hub, offering several advantages for GCCs. Hyderabad’s business environment is characterized by ease of doing business, favourable regulations, and government support. The city has a strong presence of IT and biotech professionals, with over 1500 IT companies and numerous biotech firms operating in the region.
Pune
These corridors are being developed to boost logistics efficiency by providing dedicated rail lines for freight movement. The Western and Eastern Dedicated Freight Corridors, spanning 3360 km, are expected to be operational by 2024, reducing transit times and logistics costs by 40%.
Chennai
Chennai is an established business centre with a strong industrial base, particularly in the automotive and IT sectors. Chennai’s business environment is characterized by a robust regulatory framework, government support, and the availability of a skilled workforce in IT and automotive sectors. The city’s infrastructure and talent pool make it an ideal location for GCCs.
Delhi NCR
The National Capital Region (NCR) around Delhi is a prime location for GCCs, offering a robust regulatory framework and abundant talent in finance,IT, and business services . Delhi NCR’s business environment is highly favourable, with numerous multinational corporations, government agencies, and research institutions headquartered in the region. The availability of skilled professionals and world-class infrastructure make Delhi NCR an attractive destination for GCCs.
Ahmedabad
Ahmedabad is home to several reputed educational institutions, providing a steady supply of skilled and educated professionals. The city has modern facilities and infrastructure and is in close proximity with Gujarat International Fin-tech City (GIFT City) offering a conducive environment for global corporations to explore.
5. Cost Arbitrage
Establishing a GCC in India aids with an extraordinary cost arbitrage compared to other regions. The cos per square foot of office rental space in India is substantially lower than in developed countries, providing considerable savings for multinational corporations.
A comparative chart of the cost per square foot of office space in top cities in India with respect to other geographies is depicted below:
Country |
Cost per square foot of office space |
India |
$0.4 - $2 |
Australia |
$40 - $60 |
New Zealand |
$30 - $50 |
Europe |
$50 - $100 |
United Kingdom |
$70 - $150 |
United States |
$80 |
Philippines |
$30 |
6. Qualitative Factors
Beyond cost, several qualitative factors influence the decision to establish GCCs in India. Cultural compatibility and time zone alignment with Europe, the UK, and the US facilitate seamless communication and operational synchronization. India’s workforce is known for its strong work ethic, proficiency in English, and technical expertise, making it ideal for GCC roles. Additionally, government policies and incentives, such as tax breaks and ease of doing business reforms also acts as a catalyst force in helping companies establish their GCCs and work smoothly.
India presents a compelling proposition for the establishment of Global Capability Centres, given its improving infrastructure, rich talent pool, and significant cost benefits. The country’s transportation networks, power supply, and modern office spaces create a conducive environment for business operations. Major cities like Bangalore, Hyderabad, Pune, Chennai, Delhi NCR and Ahmedabad driven by GIFT City offer unique advantages, including excellent connectivity, favourable business environments, and abundant skilled professionals. The cost advantages further enhance India’s appeal, making it a strategic choice for GCC investment.
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