India’s Global Capability Centers (GCCs) are on a hot streak. An evaluation from consulting firm EY goes even further, projecting that the economic impact—if perfectly sized—will be more than $100 billion by 2030. That’s especially true as the GCC sector undergoes a green revolution with a compounded annual growth rate of 14%. This increase is a testimony to the explosive demand for skilled labor and advanced technological services in the area. Last year, the new number of multinational corporations registered in Gulf Cooperation Councils (GCCs) surged. It exploded from 700 in 2010 to more than 1,700!
With economic empowerment a shared value of the GCCs, they now employ just under two million individuals and produce $65 billion in annual revenues. These joint-use centers serve as valuable multi-tasking community hubs. They’re doing it all from vendor due diligence, performing data analytics, and forecasting customer behaviors. Tesco and other companies are making the most of this expansion. Tesco’s Bengaluru campus has grown tremendously in size and scale during the past two decades. Naturally, the retailer is seeking to aggressively expand its presence in India.
Just this week Tesco mentioned a new inner city distribution center of their own that will produce close to 15,000 jobs. This decision deepens the company’s long-term commitment to tapping India’s talented tech workforce. Now, India is fast emerging as the global capital for artificial intelligence talent. At the heart of this expansion are more engineers, designers and digitally skilled workers.
“You could hire these people in the US. But the availability of talent in one location made Bengaluru very attractive for us and we could build a big footprint quickly.” – Dan Schiappa
Yet Bengaluru’s allure continues to attract the world’s tech heavyweights. Last year, Arctic Wolf opened the doors to its first Global Capability Center in both Bengaluru and Noida. The city’s wealth of talent fuels a rapid expansion for firms throughout India. It increases their bottom line operational efficiency as they power up a larger, more meaningful presence.
As the fastest-growing sector of the global economy, the GCC sector represents an exciting opportunity. Yet, increasing trade barriers and disruptive nationalist forces present a deep threat. Mr. Ahuja highlighted that “disruptive nationalist trends could come in the way” of future development. He noted that “that can be a threatening story to some in the current environment,” indicating potential challenges that may hinder the sector’s progress.
Supportive government policies are boosting the growth of the GCCs’ greater metropolitan counterparts. Incentives at national and state levels are pushing their creation in tier-II towns, going beyond metros. This change provides opportunities for businesses to access lower labor costs and real estate expenses while connecting them directly to local talent pools. This move into new areas is part of a broader effort to maintain the company’s impressive growth as the market continues to shift and change.
To accomplish this, global businesses are increasingly counting on GCCs for the provision of specialized services. Consequently, the future demand for skilled labor will be relatively high. Keeping this momentum going will take commitment, especially when roadblocks are threatened by political winds and fiscal austerity reforms policy change.