Bengaluru currently has the highest concentration of Global Capability Centres (GCCs), housing over 875 GCC units and serving as a vital hub for global business operations. As the city continues to be the hub for new GCCs, the Karnataka government is aiming to replicate the efficiency and success of Bengaluru in other parts of the state.
GCCs employ over 2.2 million people in India, with major hubs in Bengaluru, Hyderabad, and Mumbai, as revealed by AIM Research. Bengaluru holds the largest share of 34%, which highlights its position as India’s top hub for GCCs. This is supported by the city’s strong IT industry connection, skilled workforce, and good infrastructure.
To hold a competitive edge, cities across different states have been vying to attract GCCs. Among them, Hyderabad has emerged as one of the prominent contenders.
In November, the Karnataka government introduced its GCC policy 2024, with plans to create 3.5 lakh new jobs by 2029. The policy is designed to attract 500 new GCCs to the state, bringing the total to 1,000 and generating an economic output of $50 billion. With this, the state government is targeting 330 Forbes 2,000 companies to establish their GCCs in the state by 2030.
This month, the Telangana government signed a memorandum of understanding (MoU) with the US Chamber of Commerce’s US-India Business Council (USIBC), aiming to focus on collaboration in IT, AI, electronics and GCCs.
Commenting on the competition among various states aiming to attract GCCs to their cities, Mohandas Pai, founder of Aarin Capital and former CFO of Infosys, told AIM while all states will try to attract companies, the incentive of concession on land and power alone is not enough to lure GCCs away from Bengaluru.
The real differentiator will always be youth capital. “All these concessions make no difference,” Pai said.
Talent is the Key and Will Always Be
Pai highlighted that companies prefer employees who are ready to join immediately, as setting up GCCs shouldn’t require much time. “Does the state have a large pool of good engineers where they can come and hire 1,000-2,000 [employees] and start immediately?”
This, along with labour policies, affects the decisions of MNCs when setting up GCCs. “Does the state have good labour policies where inspectors will not harass them? Do they have good infrastructure and reasonable quality of life for all the people they hire?” wondered Pai. He pointed out that the state should also have a good schooling policy for the children of the senior employees they hire.
This also aligns with the Karnataka government’s goal of making other districts as attractive as Bengaluru for companies to set up offices. Cities and areas like Mangaluru, Mysuru, the Hubballi-Dharwad-Belagavi cluster, Kalaburagi, Shivamogga, and Tumakuru are all part of this initiative.
Moreover, many MNCs are taking the help of the bigger GCCs already established in Bengaluru to expand their presence in smaller towns. These are known as Nano GCCs. These districts provide smaller and specialised services for larger GCCs, paving the way for Bengaluru to attract more GCCs in the upcoming years.
Not So Much Hyderabad
Pai, who earlier said Bengaluru is closer to San Francisco than Delhi, believes the only places where favourable government policies and strong infrastructure will be abundant would be Bengaluru, Pune, and possibly Gurgaon. Hyderabad, on the other hand, would not focus on sophisticated work for setting up GCCs, which would operate on providing resources.
Following the policy announcement earlier this month, Duddilla Sridhar Babu, Telangana’s IT minister, called the state a “global leader in innovation” and said, “This MoU is a major milestone in deepening our partnership with the US.”
He added that the Telangana government’s participation in the industry roundtable on AI and GCCs further solidifies Telangana and Hyderabad’s position as a global technology hub. Karnataka, however, has the first-mover advantage. Even though Hyderabad has seen a surge of office expansions over the last few years to attract GCCs, there is still a long road ahead.
GCCs in India are focusing on talent retention, niche resource partnerships, expansion to more centres in different cities, and tier-II city interests. This is ideal for cities around Bengaluru, if not in Bengaluru itself.
This sentiment was also reflected by Saurabh Saxena, regional vice president at OpenText India, in an exclusive interaction with AIM. “If you’ve got 5,000-6,000 engineers working purely on product development, engineering and professional services, then there’s a strong innovation hub.”
The team even joked about Bengaluru’s weather being an incentive behind the expansion plans.
Indian IT companies, most of which have headquarters in Bengaluru, also help GCCs set foot in the city by providing workforce, infrastructure, and, in certain cases, even real estate for the offices. The talent pool within the city also allows GCCs to view it differently than other cities.
Furthermore, even if an MNC wants to move beyond Bengaluru because of the higher rent and other costs, cities like Chennai, Mumbai, Delhi, or Pune are still not favourable for them. This is because there is not enough difference in rent for them to move away from the biggest IT hub in the country.
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