Indian States Race to Attract MNCs with New GCCs: What Are Global Capability Centres?

Indian states, including Madhya Pradesh, Uttar Pradesh, Tamil Nadu and Andhra Pradesh, are racing to attract multinational companies to establish global capability centres (GCCs). According to an HSBC report, India is set to host 2,550 GCCs worth $110 billion by 2030 and contribute to the creation of nearly 2.5 million jobs. The strategy by the states includes the formation of policies that are pro-GCCs that highlight their location, young workforce and infrastructure. 

The states are also trying to project themselves as an alternative to traditional attractions of multinational companies like Mumbai, Bengaluru and Delhi-NCR. 

Speaking at the GCC Next Summit 2024 held in Chennai last month, Tamil Nadu industries secretary Arun Roy said the state has ranked in the top three positions on economic parameters; however, it lags when it comes to GCCs.  

“However, as a city (Chennai), we are way behind Bengaluru, Mumbai, Hyderabad, NCR and Pune. Somewhere we lost out and we need to recognise that. Today, promoting GCCs is a priority area of the state government,” said Arun Roy. 

Uttar Pradesh too is positioning itself as an attractive destination for MNCs with high-value GCCs. The state has even come up with a GCC draft policy 2024 primarily focusing on leveraging its talent, infrastructure and business-friendly environment. 

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The Karnataka government in September 2024 launched its GCC policy to establish 500 new centres by 2029. 

Earlier in August, Madhya Pradesh chief minister Mohan Yadav met nearly 30 industrialists in Bengaluru to highlight its strategic location to investors and make it a key state in India’s growth story. Additionally, he held roundtable discussions with representatives from the space technology sector, Nasscom, Infosys, Cognizant and TCS. 

“To increase skilled workforce, Google Cloud has proposed setting up a StartUp hub and centre of excellence in MP...With the positive response we have got, I am hopeful we will see many IT companies setting up campuses in the state,” said MP CM. 

What are Global Capability Centres? 

GCCs, also known as global in-house centres, are offshore offices set up by a multinational or a parent company to manage business processes and services. It is mainly done to benefit from specialised talent, particularly in the IT sector and is also a cost-effective way to support the parent company's operations. Developing countries with cheap labour have been a lucrative option for MNCs to set up GCCs. 

They are crucial for the smooth functioning of the integral unit of MNCs and help in handling business processes, IT services, research and development centres, innovation hubs and customer service centres. 

Earlier, parent companies used to outsource work from Indian companies like Tata Consultancy Services, but the recent trends have shifted towards the MNCs setting up their own GCCs. GCCs in India are mainly situated in metro and bigger cities including Bengaluru, Mumbai, Delhi-NCR, etc. The initiatives that the states are undertaking are to attract MNCs to set up the GCCs. 

Originally, they were known as captive centres. Currently, Amazon, Microsoft, Google, Goldman Sachs, Deloitte, JP Morgan, Citi and HSBC are some of the global companies that have GCC operations in India. According to a report by KPMG and NASSCOM, GCCs in India employ around 1.66 million people. 

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“There are few places globally where you can find techno-functional talent at such a scale. While obviously the narrative has changed from cost to value addition, India continues to provide talent at better cost structure compared with most of the other countries,” Gaurav Gupta earlier told Outlook Business. Gupta is a GCC leader at consultants Deloitte.