Global Capability Centers And India: A Win-Win Proposition For Multinational Corporations By 2030

The goals of global capability centres have changed in recent years from back-office activities to projects driven by technology and innovation

GCCs will be able to utilise cutting-edge tools and platforms owing to continuous investments in advanced technological infrastructure and digital capabilities.

Source : Getty

By Aditya Joshi

India has established itself as a leader in innovation and R&D over the last few years. More and more international businesses are thinking about leveraging India to propel the next phase of their business growth, given its long history and well-established reputation as an outsourcing/offshoring hub, particularly in the technology industry. With the services industry quickly expanding and propelling the country to the forefront of technology-driven innovation, global capability centres have emerged as critical nodes for transformation, business strategies, and new technologies, assisting firms in remaining flexible in a highly dynamic environment.

Global capability centres, or GCCs or GICs, are offshore divisions of multinational firms with operations all over the world. These centers serve as nerve centers for the management of non-core business functions and are strategically situated in regions that offer a compelling combination of favourable cost structures and a highly skilled workforce. In addition, these centres are in charge of offering their parent organisations a range of support services, including IT, finance, human resources, and analytics. In earlier times, such divisions were mostly created to offshore back-office operations, but that is no longer the case. Today's GCCs manage more complicated items throughout the value chain of the firm. They have evolved into hubs for product creation, operational excellence, and innovation. According to a report by NASSCOM, by 2022, 80 per cent of the top 100 global retail/CPG corporations will establish GCCs in India, making it a popular location for GCC hubs.

The Role of GCCs in Global Corporations

The goals of GCCs have changed in recent years from back-office activities to projects driven by technology and innovation. These centers will need to make changes to their business plans as organisations strive to align with the new developing business paradigms. The GCC continued to develop and change before the Covid-19 era, although organically, to offer a value proposition that indulged a combination of cost, capability, and capacity arbitrage. GCCs that were well run and integrated consistently produced more in terms of cost, output, and talent (quality, retention) metrics. Within months of the pandemic, the conventional value proposition, however, was swiftly rendered outdated.

Additionally, many GCCs were able to demonstrate the power of GCC-enabled workforce change as organisations made the transition from centralised to globally distributed teams by demonstrating unwavering business continuity, continuous availability, and, in some cases, crucial effects on efficiency and business results. As GCCs flourish in the nation today, company executives are anticipated to push the boundaries of technology and cultivate a relationship of trust with the parent organisations in order to quickly grow GCCs shortly. GCCs are expected to play even larger roles in the context of large global corporations by 2030. These functions include process standardisation, core business support, risk reduction, and innovation, all of which contribute to increased competitiveness and efficiency.

Here's a look at how India is well-positioned to accommodate the expanding GCC trend and how this helps both global firms and the Indian ecosystem.

India's Competitive Advantage in Hosting GCCs in 2030

Skilled Workforce: India's pool of highly talented workers in cutting-edge fields like artificial intelligence, cybersecurity, data science, and more is expected to considerably increase by 2030. This growing skill pool perfectly complements the constantly changing needs of multinational organisations, providing them with a rich resource to draw on for innovation, effectiveness, and strategic expansion. This strong labour supply makes India an even more appealing location for Global Capability Centres.

Cost Efficiency: By 2030, it is expected that India's ongoing cost advantage will continue to serve as a strong incentive for multinational firms wanting to create or grow their Global Capability Centres there. India continues to offer a cost-effective operational environment with a competitive cost structure, enabling these businesses to maximise spending while upholding operational quality.

Technological Advancements: GCCs throughout the nation will be able to utilise cutting-edge tools and platforms owing to continuous investments in advanced technological infrastructure and digital capabilities. By enabling cutting-edge research, development, and operational excellence that is consistent with the changing needs of multinational firms, this technological proficiency guarantees that GCCs stay at the forefront of innovation.

Sustainability Initiatives: India's persistent dedication towards environmentally beneficial practices will come into balance with international firms' sincere efforts to reduce their carbon footprint in a world that is more concerned with environmental sustainability. India's dedication to sustainability extends to the use of renewable energy, the reduction of garbage, and green building projects, providing the GCCs with a setting where they may easily incorporate environmentally friendly practices into their operations.

Benefits for India and Global Corporations

Access to Cutting-Edge Talent: India's talent pool will soon have undergone a significant evolution, adding professionals skilled in cutting-edge technologies. Global enterprises will gain a clear competitive advantage due to this valuable resource, enabling them to take advantage of the newest developments and maintain the lead in their respective markets. According to a report by NASSCOM, over 50,000 people are employed by GCCs in India, which is home to about 25 per cent of all global retail and CPG companies. GCCs assist global retail and CPG companies in their quest to develop a sizable talent pool that will enable them to attract top people.

Resilience and Risk Mitigation: GCCs operating in India will have strengthened their resilience through thorough business continuity strategies by the year 2030. These plans will be carefully developed to reduce risks and ensure minimal delays during unanticipated events, assuring an ongoing supply of crucial services for multinational organisations.

Economic Growth: India's economic development will have been greatly aided by the presence and expansion of GCCs by the year 2030. This would be evident by the enticement of sizable foreign direct investment (FDI) and the significant increase in service exports, increasing India's economic status on a global level.

Skill Development and Upskilling: The ongoing collaboration between GCCs and the Indian workforce will have significantly influenced programmes for skill upskilling and development. This focused effort will foster creativity, enabling people to succeed in a changing labour market and contribute to novel solutions, in addition to improving employability.

All Things Considered

Global capability centres will continue to remain crucial parts of major international corporations in 2030. India will be the favoured location for hosting these centres because of its strengths in talent, cost-efficiency, and technological innovation. In addition to lowering costs and giving access to specialised capabilities for multinational firms, this mutually advantageous connection would help accelerate the economic growth, job creation, and skill development of India. Hence, India's status as a major international corporate hub will increase as the GCC trend develops, making it a key role in the global economy in 2030 and beyond.

The writer is the CEO of OpalForce.

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