Global Competency Center Handling Data Analysis and R&D
From 700 in 2010 to 1,580 Last Year in India
In India, which is vying to take over the title of 'the world's factory' from China, global companies are establishing bases not only to hire blue-collar workers for factories but also to recruit white-collar office talent.
The British magazine The Economist recently reported that "global companies are hiring Indian workers in a different way than before," seeking office workers in India. To secure highly educated Indian talent with lower salaries compared to other countries, major global corporations are building Global Capability Centers (GCCs) in India, assigning tasks ranging from data analysis to research and development (R&D).
According to NASSCOM, an association of Indian software companies, the number of GCCs operating in India has more than doubled from 700 in 2010 to 1,580 last year. A new GCC is established every week. Forty percent of the GCCs in India are located near Bengaluru, an industrial city known as India's Silicon Valley. The estimated revenue generated by GCCs in India last year was $46 billion (approximately 62.9 trillion KRW).
GCCs mainly focus on tasks utilizing internet networks. Since there is no need to install separate machinery or build large-scale factories, global companies face little difficulty in setting up these centers. Especially, the increased use of remote work due to COVID-19 has made it relatively easier to establish GCCs in India.
Canadian sportswear company Lululemon has a GCC in India that analyzes sales data. For example, the Dubai branch finds that yellow, pink, and green clothes sell well, while in New York, black and gray clothes are popular. The Indian GCC issues instructions to stock more inventory accordingly. While the design itself is done in Canada, the Indian GCC is involved in everything from pricing to supply chain management.
Besides Lululemon, Wells Fargo has established GCCs in three Indian locations including Bengaluru, handling various tasks from loans to investment portfolio management. Semiconductor companies such as Intel and Nvidia have branches in Bengaluru responsible for design work. Big tech companies like Alphabet, Amazon, and Microsoft (MS), as well as Boeing, Walmart, and Mercedes-Benz, have set up R&D centers in India.
As the number of global companies establishing GCCs in India rapidly increases, the number of workers employed there has grown to 3.2 million. Wizmatic, a consulting firm based in Pune, India, forecasts that if this pace continues, the revenue generated by GCCs in India could double to $120 billion, accounting for 3.5% of India’s gross domestic product (GDP). While the starting salary for factory workers at global companies in India is less than $10,000 per year, workers at GCCs earn about three times that amount.
The Economist noted, "According to data from the U.S. Bureau of Economic Analysis (BEA), U.S. multinational companies' R&D investment in India increased from $1.7 billion in 2010 to $5.5 billion in 2021," adding, "As geopolitical tensions in the West rise, China, which has competed with India for the position of a low-cost R&D hub, is losing its appeal." It also added, "India has relatively fewer restrictions in terms of labor laws, which global companies consider sensitive."
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