One thing today in tech – the next wave of global capability centres in India
In today’s episode we take a quick look at the rise of global capability centres, as they are called, but first a few headlines. Headlines Apple’s iPhone 15 event, the Wonderlust, is to be held later today, where we might get to see the company’s first smartphone with the standard USB-C charging port. It’s at 10:30 p.m. India time and you can watch the event on Apple’s website. Tata Consultancy Services is the second Indian IT services company, after Infosys, to join Dassault Systèmes’ Living Heart Project that brings together industry, academia, hospitals and regulators to build ever more accurate digital models of the heart, which will help develop more accurate treatment of heart diseases. Perfios, which provides a real-time credit-decision platform and data aggregation APIs to financial companies, has raised $229 million in series-D funding from Kedaara Capital, the Bengaluru SaaS company said in a press release yesterday. The new investment is a combination of a primary fund raise and a secondary sale. One thing today Global capability centres, as they are now marketed, are offshore centres in India providing work for large multinational parent corporations, mostly in the US, Britain and Western Europe, but also from countries like Korea and Australia. Many of you interested in India’s tech sector will of course be familiar with some of the history of how Texas Instruments came to Bengaluru, one of the earliest GCCs here – of course the term GCC didn’t even exist back then. Or take the expansion of Robert Bosch’s software and engineering teams in India. The world’s best-known companies across sectors have such centres in India – from JPMorgan Chase and Goldman Sachs to GE Aerospace and GE HealthCare and Mercedes Benz to Salesforce and Atlassian. There are close to 1600 GCCs in India, employing about 1.66 million people and accounting for $46 billion in business at the end of FY23, having grown at a CAGR of 11.4 percent from 2015 to 2023, or the year ended March 31, 2023, according to the consultancy Zinnov. Many of these companies have multiple centres in India – typically in Bengaluru, Chennai, Hyderabad, Pune and the NCR. Zinnov calls these individual centres GCC Units, and there were more than 2,740 GCC Units at the end of FY23. In the first six months of 2023, 18 new GCCs were added in India including companies like BlackBerry, Truecaller and the Lloyds Banking Group. And several existing GCCs were expanded. More recently, earlier this month, Zinnov provided a deep dive into two important sectors – Aerospace and Defence, and Automotive. In Aerospace and Defence, companies that expanded their GCC operations in recent times include Boeing and Bombardier. Other top companies in the sector that have significant presence in India include Lockheed Martin, Rolls Royce, Thales, Collins Aerospace and Airbus. Their GCCs and workforce are concentrated in Bengaluru, Hyderabad and NCR, which account for 80 percent of their installed talent as Zinnov calls it. Half of these companies are from the US, and 62 percent of their work involves engineering R&D, according to Zinnov. In the Automotive sector, Daimler Truck, Fisker and Eminox are among the new entrants, and companies with existing GCCs include Ford, BMW, Stellantis, Hyundai and Mercedes Benz. About half of all the auto sector GCCs in India have parent companies coming from the US and Germany. Pune and Bengaluru have the most GCCs at 52 percent of the units in India. Pune, Bengaluru and Chennai account for 85 percent of the installed GCC talent in the auto sector. And again, engineering R&D accounts for two-thirds of the work being done at these centres.