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GCCs (Global Capability Centres), or Offshore Units, are wholly owned and opened by a Foreign Companies in India for the purpose of performing business functions. Through GCCs, companies can tap into a broad, cost-effective talent pool in India and leverage it to support their global operations.
GCCs operate as extensions of the parent company and follow the same processes, company culture and policies as the parent company and link directly to their parent companies, so that they can provide 24x7 business continuity across all time zones. Companies are able to control their operations directly through the GCCs and maintain their own quality, confidentiality, and strategic oversight which would not be possible in a traditional outsourcing arrangement.
Functions of a GCC
1. Cost Effectiveness and Operational Cost Savings
Due to the low cost of living in India, highly-skilled professional salaries are much lower than they are in other countries and provide significant savings to companies that use India for their GCC operations. Companies can also save on real estate infrastructure and on utilities cost.
2. Access to Highly Skilled Workforce:
India provides the world with an excellent educational system that produces millions of highly-skilled professionals every year who are ready to work in a variety of fields and the majority of them are those who comes from professions related to engineering, computer science, and business management.
3. Access to Innovation:
India’s Global Capability Centers (GCCs) have become strategic innovation hubs that support advanced research and development (R&D) in areas such as artificial intelligence (AI), machine learning (ML), data analytics, etc.
4. Government Incentives and Regulatory Support
India’s is actively working to attract foreign investments into India by permitting 100% foreign direct investment (FDI) in many sectors of the economy. Therefore, establishing GCCs in India has been made easier for MNCs. Many of India’s states, i.e., Karnataka, Maharashtra, Odisha, and Uttar Pradesh, have implemented GCC-specific policies that provide very attractive fiscal and non-fiscal incentives to MNCs that establish their GCC operations in India.
5. Scalable GCC Operations in India
India offers a business ecosystem that enables MNC to establish their Global Capability Centres (GCCs) with flexibility and scale them in line with evolving operational requirements Organizations can start with focused teams of few people or with limited functional scope and progressively expand as demand increases, supported by a deep talent pool and continuously developing infrastructure.
1. Assessing Your Business Needs
There should be a clear vision and mission of proposed GCC that matches with the parent company’s long-term goals, whether it’s operational efficiency, technological innovation, or global expansion, as the GCC is an extension of the parent company’s vision and mission.
2. Legal Structure
Choosing a right legal structure plays a critical role in set up of GCC, as one wrong decision can impact the whole business. Therefore, legal structure should be chosen, after considering the vision and mission of GCC.
3. Compliance Requirements
In India, there are many state and central level laws and we need to comply with all the applicable laws depending on the structure of GCC. Non- compliance with these laws may lead to additional fines, penalties and also harm reputation and growth of business.
4. Choosing the Right Location
India offers a wide range of cities i.e., Banglore, Mumbai, Delhi NCR, Gujrat with highly skilled talent, each hub specializing in specific industries. Companies must consider factors like proximity to suppliers and customers, employee accessibility, and operational costs before choosing the location for GCC set-up.
5.Challenges
Setting up a GCC involves challenges such as intense competition for top talent, complex compliance and regulatory requirements that need professional support, and the need for strong communication and management frameworks to ensure smooth integration with the parent company.
Stage 1: Planning & Feasibility Study
Before establishing a new Global Capability Centre (GCC), be sure to identify the reasons for its existence and what functions are going to be centralized.
Stage 2: Decide the Business Structure
Foreign entity can choose from the below mentioned structure for their GCC set up in India:
Read our article to have more clear understanding of options available for Business Structure
Choosing the Right Business structure in India: Options for Foreign Companies
Stage 3: Choose the Right Location
When you are selecting an appropriate GCC location, you should try and base your decision on your long-term business strategy and not only immediate cost considerations. In India, some cities are stronger in technology / innovation while others may be better suited for support functions, manufacturing-related services, or back-office operations. The location of your chosen GCC can improve operational efficiency, allow for future growth, and add value to your overall business/investment offering.
Read our article to have more clear understanding of incentives available for different states in India
Why Global MNCs are choosing India for Global Capability Centres (GCCs)
Stage 4: Registration and Compliance
For establishing a GCC in India, you’ll need to comply with the India’s legal and regulatory framework and need to obtain various registrations under Indian laws, as applicable depends on the structure of GCC:
Stage 5: Infrastructure Setup
Rent or acquire space in IT parks or SEZs that qualify for tax incentives and/or rent out shared workspace on a flexible basis, if you are a smaller organization or growing company.
Building a strong IT ecosystem will involve having a broad range of enterprise software applications, collaboration tools, communication systems, and formalized data protection procedures so that your organization can operate efficiently and securely.
Having high-speed internet access and cloud-based platforms that will allow seamless global connections and real-time collaboration between teams across the world.
Stage 6: Staffing and Operational Launch
Document Category
Details
Note 1: The above-mentioned documents are preliminary for setting up a GCC. Additional documents may be required depending on the proposed structure and nature of the GCC. Further, all requisite documents should be duly notarised and apostilled in accordance with the provisions of the Hague Convention, wherever applicable.
At CompaniesNext, we have a dedicated team of professionals for providing quality services with accuracy and within given timelines. We provide end-to-end support for companies looking to set up GCCs in India:
GCC is a wholly owned subsidiary that pursues strategic functions, whereas outsourcing means hiring third-party vendors.
This totally depends on scale, location and business function of GCC.
Bengaluru, Hyderabad, Pune, Gurugram, Chennai and Mumbai.
Information Technology, Finance, Research and Development, Finance and Accounting.
Yes, you can operate the GCC on remote basis, but it is mandatory to have personnel present at registered office address to ensure regulatory compliance and facilitate collaboration.
