GLOBAL CAPABILITY CENTER (Syllabus: GS Paper 3 – Economy)

News-CRUX-10     10th June 2024        

Context: Indian Global capability center have evolved from the 'captives' of the 1990s to recently becoming 'digital twins' of their global HQs, mirroring and enhancing their parent organisations' work.

Global Capability Center

  • About: GCCs are offshore establishments established by companies to provide various services to their parent entities, operating internally within the global corporate framework.
  • Capabilities: These centres offer specialized capabilities including IT services, research and development, customer support, and other vital business functions.
  • Role: GCCs play a crucial role in capitalizing on cost efficiencies by leveraging factors like lower labor costs and operational expenses in offshore locations.
  • Utilizing Talent Reservoirs: They tap into talent reservoirs, enabling companies to access skilled professionals and expertise from diverse geographical locations.
  • Collaboration: GCCs foster collaboration between parent enterprises and their offshore counterparts, facilitating seamless coordination and communication across global operations.
  • Advantages of Special Economic Zones: SEZs provide favourable conditions for GCCs to thrive, offering advantages such as tax breaks, simplified regulations, and streamlined bureaucracy.
  • Current Landscape in India: There are 1,580 established GCCs housing over 1.66 million professionals, indicating a significant presence and contribution to the economy.

oBengaluru and Hyderabad have solidified their presence in GCCs with 30% and 19%, respectively followed by Delhi 15%, Mumbai 12%, Pune 10%, and Chennai 9%.

  • Market Size and Growth: The market size of GCCs in India is $46 billion, witnessing a Compound Annual Growth Rate (CAGR) of 11.4%, showcasing substantial growth and opportunities in the sector.