The Role of global capability centres in India in digital innovation

Initially considered as offshore cost arbitrage centers for large corporations, Global Capability Centers (GCCs) have now been transformed into strategic partners to drive innovation and scale business in India.  This transformation has been driven by technological advancements and the growing demand for digital skills. Global corporations increasingly entrust their Indian GCCs with end-to-end responsibility for critical functions, products, and services. This shift is driven by high-level executive sponsors who ensure strategic coherence and cooperation between GCCs and their parent organizations. In the last few decades, India has established its credentials as the go-to destination for GCCs. India is home to more than 1,600 GCCs, which is expected to reach 1,900 by 2025.

According to a recent report by NASSCOM, the Compound Annual Growth Rate (CAGR) for GCCs in India increased by 11.4% compared to 11% in the previous year. The report further highlights that 18 GCCs were established in the first 2 quarters of calendar year 2023. Additionally, around 20% of the top Forbes 2000 companies already have their GCCs in India. The figure is anticipated to increase to 55% by 2030.

Strategic Partners, Not Just Service Providers

The evolution of GCCs from service providers to strategic partners and enablers is the most significant shift in recent years. High-level executive sponsorship has elevated the role of GCCs, ensuring they are not only aligned with corporate strategy but are also actively shaping it. This C-suite engagement has empowered GCCs to take bold steps in driving innovation with the support of parent organizations. GCCs in India are playing a much more inclusive and crucial role in facilitating and driving the digital transformation of their global organizations. They are responsible not just for services, but for end-to-end ownership of critical business processes and product development. This responsibility goes beyond execution; it encompasses ideation, development, and continuous improvement. By nurturing a culture of innovation and agile methodologies, GCCs in India deliver products and solutions that meet current needs and deal intuitively with future challenges.  In the last few decades, India has not just established itself as a leader in the Global Business Services (GBS) sector but has also boosted leadership roles from GCCs in India. Currently, Indian GCCs host over 5000 global roles of which 18% are led by women. The number is poised to increase to more than 20,000 by 2030. 

Talent and Technology: The Key Drivers for GCCs

India has the second-largest digital talent pool in the world. GCCs are tapping into vast pools of skilled professionals to drive global business growth with advancing technologies.  Investment in talent development has become a hallmark of forward-thinking GCCs. Through upskilling initiatives, partnerships with educational institutions, and promoting a culture of continuous learning, these centres are nurturing a workforce that can tackle the complexities of digital transformation. GCC employees in India are at the forefront of technological adoption and innovation, from artificial intelligence (AI) and machine learning (ML) to blockchain and the Internet of Things (IoT). 

GCCs enable tracking real-time information from connected devices through IoT platforms, increasing operational efficiency and improving customer experience. With the use of AI and ML, GCCs can automate processes and make data-driven decisions across various domains, from insurance and financial services to manufacturing and supply chain management. Additionally, they enable their parent organizations to adopt cloud computing, allowing access to advanced technologies like AI, ML, and IoT while scaling down operations and reducing costs. GCCs utilize blockchain technology to streamline processes in areas such as supply chain management and financial transactions while ensuring data protection.

India’s engineering capabilities form the cornerstone of the increasing number of GCCs in the country. Of more than 1580 GCCs, over 1440 are focused on Engineering R&D, and it employs approximately 695,000 of the 1.66 million professionals in this sector.

The Future Outlook

GCCs in India are increasingly becoming hubs within larger innovation ecosystems of their parent organizations, collaborating here with startups, academia, and service providers. These associations allow rapid exchange of ideas, access to cutting-edge research, and the ability to pilot new technologies in real-world settings. Whether it's co-creating with a local startup to develop a new fintech solution or partnering with a university to advance research in quantum computing, GCCs are breaking down silos and working for an environment where ideas can flourish and transform into real-world solutions.

The role of GCCs in India in driving digital innovation and transformation cannot be overstated. These centres have evolved from cost-saving tactics to strategic imperatives in the global tech landscape. According to a recent article, GCCs in India are anticipated to contribute 2% of India's GDP by 2030. Today, India accounts for around 50% of the world's GCCs, and the sector increased by 11% between 2015 and 2023, topping the 7% growth of the Indian IT services sector in the same period. The data points to an extremely exciting and bright future for GCCs in India.

Written By - Tanay Kediyal, MD at Allstate India