GCCs on a Drum-roll in India: Hence, Zimmer

What’s music to a movie? In Hollywood, at least, it has only been a footnote. Like an appendix. Forgettable at best. Disposable at worst.

Really? If that’s how it plays out then what explains the magic of Rocky, The Godfather, Casablanca, Gone With The Wind, Star Wars, Psycho, Pirates of the Caribbean, Harry Potter, Fast and Furious, A Fistful of Dollars, The Departed, Game of Thrones, Money Heist, The Lion King and Dune? Can we imagine our Balboas, Bonds, Ethan Hunts, John Wicks, Jack Sparrows, Harrys, Torettos and Batmans without the background scores that make them come alive and live forever?

GCC, by definition, has to be large to be cost-effective while having the ability to scale up very quickly in any required skill. India was the only place that could meet that criteria. - Veer Sagar

What’s IT to a business? Just some invisible background score—for many decades—maybe. But not today. It is a character in itself. Central to the plot. Inseparable from the story. Something that exactly explains why global corporations are looking for, and finding, their Max Steiners, John Barrys, Thomas Newmans, Miles Davises, Ennio Morricones, John Williamses and Bernard Herrmanns in Bengaluru, Hyderabad, Chennai and Mumbai now. Something that proves why GCCs are not following-the-sun but rising like it.

All that Jazz. Or more?

GCCs. What we, at leisure, spell out as Global Capability Centres. They are strategic and special clusters of talent, resources and anchors that get established by multinational corporations outside their original nucleus. They not only serve to manage critical business functions such as IT, R&D, HR, finance, and more; but also take the flags of driving innovation, R&D, operational efficiency, and market-proximate edge for many areas.

So what’s big and new about GCCs now? Specially for India? Who better to chronicle India’s shift from software-back-burners to strategic front-burners than Veer Sagar – a serial entrepreneur who is counted as an iconic pioneer of back-office revolution in India and who is also the author of Failure is Not an Option that chronicles India’s IT industry’s path in many ways. GCC, as this IT industry veteran captures, is actually a very old concept refined as the customer got more experienced and confident about outsourcing.

“All this has to do with H1B Visa. For years, IT companies have tried to work around H1B. In the late nineties, the numbers got restricted and the process was very cumbersome and uncertain—and we in Selectronic came up with ‘Back office’. Since people could not go to the jobs we decided to bring jobs to the person. That is how, in 1997, the first third-party ‘Back office’ Selectronic was set up.” He traces the evolution back to the days when IT companies had dedicated centres which were set up for customers. “Each dedicated centre was stand-alone-secluded and secure with access control, with its own systems reflecting the rules of the customer company: Set up, train, operate and handover – that was the model. This was because the numbers were modest and the customer was not confident of handling the administration of the Indian entity.”

With the rapid change in technology adaption, and with the massive democratisation of data and usage, and with IT spreading across industry—the design-development, roll-out and support took a totally new dimension. India was the only country where customer could get the vast range of skills in the large numbers required and in a very quick time, Sagar underlines. “Scaling up was not an issue anymore. GCC, by definition, has to be large to be cost-effective while having the ability to scale up very quickly in any required skill across the spectrum of design, domain, development, roll-out, maintenance and support. India was the only place that could meet that criteria.”

Over the next few years, the growth of GCCs in India is expected to accelerate significantly, with their numbers set to exceed 2,500 by the end of the decade. - Monish Singhal, Group VP, Publicis Sapient

So gone are the days when Indian offices of global giants were only IT backyards. Today, with the emergence of GCCs, Indian shores are beckoning huge investments and strategic attention—and for reasons beyond India’s surge as a huge market.

As Nitesh Bansal, CEO & MD, R Systems points out—while earlier, GCCs were associated with routine, run-of-the-mill work; they have evolved significantly with strategic decisions now being made in India; unlike traditional outsourcing models where decisions are driven from the headquarters.

What sets GCC strategies in India apart from their global counterparts is the ability to harness a vast, diverse, and highly skilled workforce, a tech-first mindset, and a vibrant ecosystem that drives innovation, explains Monish Singhal, Group Vice President, Publicis Sapient. “Their expansion underscores India’s transition from being a cost-effective operational hub to a critical driver of value creation and strategic outcomes for global enterprises.”

Sheenam Ohrie, Managing Director, Broadridge India explains more. “The educational focus on STEM and the large number of engineering graduates make India an attractive destination for setting up GCCs. The diverse skillset available, from IT and software development to finance and analytics, supports various functions. In addition, the Indian Government actively supports the establishment and growth of GCCs through favorable policies, such as tax incentives, ease of doing business initiatives, and investment in infrastructure.”

We cannot forget what the pandemic did – how it made companies adapt to new models and how it transformed their strategies. During Covid19 every company that was apprehensive of remote work realised that work can happen remotely without significant loss of productivity or momentum, Bansal explains. “This has given rise to a new form of co-option, where service providers and GCCs have adapted to collaborative ways of working to deliver work of high value and in core R&D and product development. This collaborative approach has shifted the needle, enabling GCCs to take advantage of years of maturity of service providers in establishing talent innovation and service maturity, while taking care of IP retention and other strategic objectives of the enterprise. A recent study shows that majority of GCCs that have successfully scaled leverage 25-40 per cent of participation from service providers.”

India’s edge is cost-plus everything else. Setting up and operating GCCs in India can reduce costs by 40-70 per cent compared to other developed nations. Note how the average cost of human resources for top-tier talent in India remains more competitive than in developed markets. It’s about 40 to 60 per cent more competitive than any other developed market, shares an Inductus report.

There is also a market angle at play here. A GCC in India helps MNCs get insights into

Unlike other regions where GCCs focus primarily on cost arbitrage or operational efficiencies, India’s GCCs have evolved into strategic innovation centres. - Anand Sahay, Global CEO of Xebia

one of the world’s fastest-growing consumer markets. There is a lot of head-start in localisation of products – as GCCs can drive product innovations tailored to the Indian and neighbouring markets. A significant emphasis is placed on AI/ML, with 80 per cent of new GCCs prioritising these capabilities to drive innovation and organizational efficiency, as seen in the Inductus report.

Not Playing Second Fiddle

India’s role and contribution to GCCs is heavily strategic and forward footed. Translation: Core Research and some real strategic McCoys.

Singhal points out that GCCs in India are leading the way in adopting and innovating with emerging technologies like AI, data analytics, and cloud computing, crafting solutions tailored to both global and local market needs. Also, there is a lot of R&D, core, work and new product development, plus IP, work happening in these orchestras. Singhal affirms. “India is now central to global product pipelines, contributing not just to incremental improvements, but to the creation of new products and IP that shape future markets.”

Global CEO of Xebia, Anand Sahay also reminds here how financial services GCCs are pioneering next-generation AI platforms to enhance global compliance, while healthcare GCCs focus on clinical data analytics and advanced R&D. “This high-end innovation is complemented by India’s expanding network of Tier 2 cities like Vizag, Jaipur, and Coimbatore, which offer cost-effective talent pools and decentralised innovation capabilities.”

Nearshore and Emerging centers like Vietnam, Eastern Europe, South America are proving attractive amidst improving talent pool and time-zone advantages. - Jason Chandralal, VP, Happiest Minds Technologies

Engineering, Research, and Development (ER&D) GCCs in India are experiencing exponential growth, expanding at 1.3 times the rate of overall GCC expansion, observes Alouk Kumar, Founder and CEO, Inductus. Here are some numbers to drive home the point. A contribution of US$36.4 billion in revenue, this sector signifies a strategic pivot from back-office operations to cutting-edge, high-value activities. India hosts over 1,400 ER&D GCCs, employing 3 million engineers, making it one of the largest hubs for technical expertise globally. Also, patent filings in India have seen six consecutive years of growth, with a 25 per cent increase in recent years, the fastest surge since 2005, Kumar argues.

Here are some more examples to look at.

Singhal illustrates. “At Publicis Sapient, several groundbreaking innovations have been conceptualised in India. For instance, PS Bodhi, an AI-powered talent and skills development platform; the RHS Chatbotanist, created in collaboration with the Royal Horticultural Society ETC. Another example is our collaboration with Marriott, where we developed a data-driven, personalised guest experience platform that enhances customer engagement and loyalty.”

India’s pharmaceutical GCCs are interesting cases-in-point here. “For instance, a top pharma’s Hyderabad center leverages AI and ML to optimise drug discovery and clinical trials, significantly reducing timelines. Similarly, another pharmaceutical giant’s Bengaluru hub employs advanced analytics for precision medicine, enhancing patient outcomes. Yet another pharma company has pioneered digital twin technology to streamline manufacturing processes and ensure quality compliance,” cites Bikram Dasgupta - Life Sciences & Health - Consulting Leader, EY Global Delivery Services.

In terms of core work, around 45-50 per cent of GCCs in India are actively engaged in R&D and engineering services like embedded, software development, hardware design, and cutting-edge technology research, chimes in Jason Chandralal, Vice President, Happiest Minds Technologies. “On the IP development side, Indian GCCs contribute to a significant share of patents filed by multinational corporations. For example, technology companies like Microsoft, Google, Intel, Samsung have filed thousands of patents through their Indian R&D centers.”

While Poland offers strong technical expertise, it struggles with scalability and labor costs. Vietnam and Brazil, despite their cost advantages, face challenges in talent depth and infrastructure development. - Alouk Kumar, Founder and CEO, Inductus

Partha Sengupta, Managing Director, Nielsen India adds that a significant portion of Nielsen’s most impactful product innovations, technological breakthroughs, and scalable solutions are conceptualised, developed, and executed right here at its India GCC.

Many such examples show India’s new ascending rungs in the global trust ladder. There is German Carl Zeiss AG – which opened its first GCC in Bengaluru to focus on cloud computing, cybersecurity, and software for medical technology. Workforce expansion from 2,500 to 5,000 by 2026 signals India’s growing role in its global strategy. Also, Delta Electronics that established its largest R&D center in Bengaluru, with plans to nearly double its workforce to 6,500 employees over five years, driving advancements in electronics and energy systems. Kumar also adds to this list the name of Taiwan’s Sanofi. “Committing €400 million to its Hyderabad GCC, Sanofi is expanding from 1,000 to 2,600 employees by 2026, focusing on AI-driven drug discovery and digital healthcare solutions. Global firms operating in India spend 2.9 times more of their profits on R&D than their domestic counterparts.”

Ohrie also tells how a significant portion of Broadridge’s technological innovation and operational excellence is driven by its India centers in Hyderabad, Bangalore, and Mumbai. “These centers play a key role in implementing Broadridge’s ABCD innovation framework (AI, Blockchain, Cloud, and Digital) – strengthened by our 5,400+ associates in the country, who make up over 40 per cent of global workforce. Some standout examples of innovation led from India, which are transforming financial operations and client engagement globally are 5 data products, the Digital Ledger Repo (DLR) and GenAI based products like OpsGPT and DistributionGPT.”

Very recently o9 unravelled its third office in the country, after Coimbatore and Bangalore and this Hyderabad office, as o9 highlights, will support o9’s growing global workforce and client base. The o9 team in India also carries out research and development, product management, software implementation, and customer support.

The Real Violins Appear Now

This is not some passing jingle. It’s an earworm that’s going to stay and grow stronger ahead. Provided, we pay heed to some challenges and opportunities that cannot be allowed to pile up as neglected noise.

GCCs can unlock greater potential by collaborating with consulting entities, Singhal advises. “The criteria for a successful partnership extend beyond experience, credentials, and technological prowess – elements that are now considered table-stakes. A truly transformative consulting partner is one that asks the hard questions, reimagines enterprise processes, and creates a new paradigm. Incremental improvements in efficiency are valuable, but the real differentiator is enabling businesses to explore new horizon.”

By functioning as strategic extensions of their global counterparts, these centers play a pivotal role in driving innovation and transformation across industries. This evolution marks a fundamental shift, establishing India as a global powerhouse for innovation and strategic growth.

As to opportunities, there is India’s vast talent pool to drive the top of the value chain involving R&D, clinical trials, commercialisation, manufacturing with AI-infused analytics, and digital and data engineering capabilities, along with cost efficiencies that make it a global hub for pharma operations- the way Dasgupta sees it. “However, challenges persist in scaling specialised talent, managing data security, and navigating complex regulatory landscapes.”

Sengupta adds that, beyond talent, we also navigate the complexities of infrastructure bottlenecks, evolving data privacy regulations, and the diverse and sometimes fragmented regional market dynamics. Chandralal also weighs in infrastructure and connectivity challenges -especially how the Tier 2 and 3 cities (potential growth centers), often, lack infrastructure similar to Tier 1 cities. “Another challenge area would be—Regulatory and compliance as Indian government brings in India specific policy for data protection and frequent changes in tax laws, thereby, increasing costs.”

Cybersecurity compliance further requires adherence to frameworks like ISO 27001 and the establishment of Security Operations Centers to counter evolving threats, Kumar stresses. “Meanwhile, navigating taxation frameworks like OECD’s BEPS and regulations in emerging technologies, such as AI and IoT, calls for proactive strategies, ethical alignment, and collaboration with regulators.”

On That Note

With all these instruments well-strung, the future could surely look more and more melodious. It’s because India’s GCCs are not just following global strategies—they are actively shaping them, as Singhal argues. “By functioning as strategic extensions of their global counterparts, these centers play a pivotal role in driving innovation and transformation across industries. This evolution marks a fundamental shift, establishing India as a global powerhouse for innovation and strategic growth.”

Speaking of which, it still remains a mystery to many that why Indian movies cannot do without their songs. It’s a chicken-and-egg question here – what comes first, the song or the background score. Business that runs on technology or Technology that makes a business run. There’s a reason that the lines, often, blur between these two chords. As India’s own IP and innovation tunes get stronger, and as our AI notes get more pronounced, with choirs from Government’s AI and Quantum push, startup revolution and Digital Stacks to accentuate the magic at the right places—it will be even harder to differentiate where the (business) song ends and the (technology) score begins—or vice versa. In India, that’s not lazy or accidental. It’s deliberate. Like something playing on AR Rahman’s keyboard. It’s clever. It echoes inside and outside. And gives you goosebumps. The good ones.

By Pratima H

pratimah@cybermedia.co.in