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Global Capability Centers: Tier-II & III City Expansion.



  Sep 25, 2023

Global Capability Centers: The Shift to Tier-II and Tier-III Cities



What are GCCs (Global Capability Centers)?

GCCs, also known as global in-house centers or captives, are offshore units of large multinational companies that perform designated technology operations. They serve as centers for driving innovation and delivering world-class technology solutions from countries like India.

How many GCCs and employees are in India as of 2022-23?

As of 2022-23, India had 1,580 GCCs with 1.66 million employees.

Which cities in India are preferred for setting up GCCs?

Tier-I cities like Mumbai, Pune, and Bengaluru have traditionally been preferred for setting up GCCs.
However, in recent times, existing GCCs have been expanding into Tier-II and -III cities to derisk their portfolios and take advantage of lower costs and talent availability.

Which Tier-II and -III cities have emerged as key hubs for GCC expansion?

Cities such as Ahmedabad, Mysuru, Vadodara, Nashik, Tirunelveli, and Coimbatore have emerged as key hubs for the expansion of established GCCs.

Why are GCCs expanding into Tier-II and -III cities?

There are several reasons for this expansion:
Derisking portfolios in case of natural disasters.
Lower operational costs.
Access to a larger talent pool with lower attrition rates.
Better compensation and work profiles for employees.
Lower chances of no-shows or offer declines.
Easier availability of talent.

How do GCCs typically operate in Tier-II and -III cities?

GCCs already established in Tier-I cities identify strong leaders who are willing to shift to Tier-II and -III locations to build and expand their centers.
These centers often understand their internal demographics well and can operate remotely.

What is the impact of this expansion on employment in Tier-II cities?

There has been a 30-40 percent increase in demand for the workforce across sectors in Tier-II cities, according to GCC consulting firm ANSR.
This expansion offers good employment options and contributes to the economic development of these cities.


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