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Global Capability Centers (GCCs) in India have played an important role in reshaping the country’s economic landscape. Originally known for their cost-effective support functions with an aim of labor arbitrage, these centers have undergone a remarkable transformation today. They are emerging as vital contributors to the Indian economy, not only offering financial advantages but also serving as hubs for innovation and talent development. This article explores the shifting equation of GCCs in India, highlighting the factors driving this evolution and how this evolution has been different for finance and non–finance captives. What started as “Global Call Centers”, then transformed into “Global Capability Centers”, are known as “Global Creativity Centers” today due to their versatile nature of helping the parent companies with various functions. Since India is seen as a place for world-class thought leadership, it attracts many MNCs to set up GCCs in the country.
Indian GCCs have evolved into innovation hubs. They provide efficient solutions to complex problems, play a critical role in developing intellectual property, conduct research and development, and drive innovation within their parent company. This transformation has been possible because the GCCs tapped into India’s vast pool of highly skilled professionals. India’s skilled talent pool not only enhanced operational efficiency but also spearheaded strategic initiatives, providing significant value to the GCC and the parent company.
Several GCCs have expanded their scope to cater to local and regional markets. The products and services offered are adapted to meet specific market demands, contributing to India’s economic growth. GCCs are increasingly seen as strategic partners by their parent companies, enabling them to work closely with headquarters on strategic decision-making, market expansion, and long-term planning. This synergy benefits both parties. Finance captives primarily focus on financial and accounting functions, ensuring financial compliance, accuracy, and efficiency; whereas non-finance captives encompass a wide range of functions beyond finance, such as IT, research and development (R&D), customer service, and supply chain management. They are involved in innovation, product development, and operational excellence.
The primary transformation that finance captives have undergone includes incorporating advanced technologies like robotic process automation (RPA) and artificial intelligence (AI) to automate routine financial tasks, reducing costs. They have also expanded their services to include financial analysis, risk management, and strategic financial planning. Interestingly, non-finance captives have shifted from being cost arbitrage centers to becoming innovation and R&D hubs. This shift has been possible due to the GCCs tapping into India’s vast talent base and empowering employees to innovate. These GCC teams drive product development, digital transformation, and adopt emerging technologies. They foster an innovation ecosystem in India by collaborating with local startups, universities, and research institutions, tapping into the excellent thought leadership ecosystem that India offers.
Leading Financial and Non-Financial Captives in India:
The evolution of both financial and non-financial captives has been significantly influenced by digital technologies. GCCs are at the forefront of digital transformation efforts, developing and implementing technologies like AI, machine learning, and blockchain. These centers now act as global hubs, supporting their parent companies’ operations in various markets. This globalization enhances India’s standing as an important business partner globally. The Indian government, with policies and regulatory frameworks, has encouraged GCC growth, including R&D incentives, ease of doing business, and favorable tax policies. Streamlined customs and import-export procedures, along with digital platforms like ICEGATE, have simplified cross-border transactions. Financial/tax benefits from Special Economic Zones (SEZs) and Software Technology Parks (STPs) make India an attractive destination for MNCs.
In conclusion, India’s Global Capability Centers have evolved beyond their initial roles, becoming essential components of the nation’s economic growth. They have transitioned from cost centers to innovation hubs, playing pivotal roles in strategic partnerships, market expansion, thought leadership, and digital transformation. With government support and a focus on talent development, GCCs will continue their transformative journey, strengthening their status in India and shaping the global business landscape. The future promises exciting developments in this domain.
Written By Manan Mittal
Edited By Christina Wei
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Absolutely amazing. Rightly said Manan