GCCs are not a new phenomenon for India or Tamil Nadu. They have been around for more than 30 years and evolved. In fact, in the 1990s, Chennai was the GCC hub of India — a status it lost to Bengaluru and Hyderabad in the intervening years.
GCC WAVES THROUGH THE YEARS…
There are three distinct waves of GCCs that one can point to. The first was of financial services, semiconductor and communication companies that established their in-house technology centres in India. These include Texas Instruments and Motorola in Bengaluru, and Citibank, American Express and Dun & Bradstreet in Chennai. Most of these companies were from the U.S. and from the Fortune 200 bucket. In the second wave, manufacturing, automotive and retail companies joined the bandwagon. Most were from the U.S. and Europe, and from the Global 500 bucket. The third wave comprised companies in the Global 2000 bucket across all key industries such as financial services, manufacturing, retail, health sciences, communications, energy, utility, and media.
While in the first two waves, GCCs came to India for cost and talent availability, today they are coming for innovation and business transformation. They are launching new products, designing newer as-a-service platforms, and are the powerhouse of all digital technology solutions in areas of data and AI (artificial intelligence), IoT (Internet of Things), mixed reality, cloud, cyber security among others.
WHY IS THERE A SUDDEN EXPLOSION OF GCCS?
Up until the digital revolution started, technology was seen as an enabler of business. But with the digital revolution, technology is ‘the’ business. In many instances, the business model of a company today is driven by the underlying technology platform. Given this structural shift, companies want to own this core transformative capability rather than lease it.
No other country in the world, except India, has the talent and capabilities at scale. This has resulted in over 2,000 global companies establishing their GCCs in India and directly employing over two-million professionals. Interestingly, in the past 24 months, we have seen an acceleration of GCCs in India and two data points stand out. One, in calendar year 2023, GCCs created history in Indian IT by adding significantly more professionals relative to traditional IT companies, and this trend continued in 2024. And secondly, if one were to rank the Top 200 technology companies in India – including GCCs – more than two-thirds of them will be GCCs.
TAMIL NADU’S SUCCESS WITH GCCS
Given this larger context, Tamil Nadu has done quite well in garnering about 10-15 per cent of the market share of GCCs in India. But has it lived up to its potential, the answer is a resounding ‘no’. The biggest advantage for Tamil Nadu is the availability of high-quality talent at scale, in addition to a thriving ecosystem of manufacturing and services companies, service-oriented mindset, work ethic of its people, and industry-friendly government policies.
It is for these reasons that marquee names across industries have set up their GCCs in the state. The World Bank, Citigroup, Bank of America, Ford, Caterpillar, ZF, Comcast, Amazon, Walmart, Roche, Thryv, DHL, UPS, Hitachi. Many of these players have a large presence in the city, delivering innovative and transformative solutions supporting their global operations.
FOCUS ON ATTRACTING NEW AGE PLAYERS TO TAMIL NADU
Tamil Nadu has the potential to turbocharge its engine and gain an outsized pie of this high-quality, high-value opportunity. Chennai has a very conducive ecosystem for shaping into a global data analytics hub. It is already home to dozens of multi-service IT companies providing analytics and AI solutions at scale, pure-play analytics companies and GCCs with Centres of Excellence (CoEs) in analytics. The city also has a large number of higher educational institutions offering data science and business analytics programme. It is estimated that the state produces over 75,000 graduates every year with specialisation in data science and business analytics, many of them setting benchmarks for other institutions in India.
TAP INTO GCCS FROM OTHER PARTS
Another effort could be to focus on attracting GCCs from regions like Bengaluru, Hyderabad, Pune and NCR who are keen on broad-basing talent, managing business continuity, propensity for expansion and diversifying risk.
Similarly, GCCs run by leaders who have previously headed organisations based out of Tamil Nadu (like Chubb Insurance and United Healthcare, which are today led by leaders who have earlier incubated GCCs of Bank of New York Mellon and Barclays in Chennai) could be focused.
INCENTIVISE TO MOVE TO TIER-2 AND TIER-3 CITIES.
As the most urbanised state in the country, many cities in Tamil Nadu have huge potential to grow. Traditional IT companies such as Cognizant, Omega Healthcare, Honeywell and HCL have anywhere between 3,000 and 20,000 employees in cities such as Coimbatore, Trichy and Madurai, and there is no reason why GCCs cannot grow to scale in such cities.
The state should look at incentivising GCCs in Chennai to move to tier-2 and tier-3 cities for more inclusive and distributed growth. The payroll subsidy incentive provided for new GCCs coming to the state can be expanded to existing ones for their new centres beyond the state capital.
Given that the GCCs have the potential to create high-quality, high-value jobs at an unimaginable pace and scale, it is a no-brainer that Tamil Nadu should do what it takes to reclaim the position it lost 30 years ago. And by doing so, the state can also ensure that it does not continue to be the largest exporter of high-quality talent to other states in the country.