By 2030, GCCs will bring $121 bn in revenue, driving 3.5% of India’s GDP: Economic Survey

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The Economic Survey 2024 revealed that expansion and investments into setting up Global Capability Centers or GCCs by multinational companies are set to contribute roughly 3.5 percent of India’s GDP by 2030, generating an estimated revenue of $121 billion by then.

GCCs in the past couple of years have seen an historic uptick in India, providing bespoke services in operation, product development and innovation. More than 150 MNCs have set up their GCCs in the country, increasing the number from 760 GCCs present in 2012, to over 1,600 GCCs as of March 2023.

These investments are coming not just from the US and Europe-based MNCs, but also international players from the Asia Pacific region, especially Japan and South Korea, have begun setting up their R&D/ innovation centres in India over the past few years. “Today, GCCs operate across all IT, BPO, engineering, and software product development service lines, delivering complex work that requires a significant understanding of business context and imperatives,” the survey noted.

The survey quoted a PwC report, saying by 2028, the country is poised to have 2,100 GCCs, with the market size of the centres touching $90 billion.

In a study by Wizmatic, it was estimated that GCCs presently employ 32 lakh people, primarily engineers and scientists. “They generated a combined revenue of $46 billion in 2023 and are estimated to generate a total revenue of $121 billion by 2030, roughly 3.5 per cent of India’s GDP. Out of this, $102 billion will represent export earnings.”

State-driven efforts capture demand

The governments and states are banking on creating right ecosystem and regulatory environment to capture these investments, which would in turn bring jobs for people.

GCCs are also increasingly evaluating tier-II towns to expand their operations, influenced by the reverse migration seen during the pandemic and the cost arbitrage offered by such relatively under-penetrated markets, the survey said. As per a CBRE research report, during H1 of 2023, about 22 percent of GCC centres were set up in tier-II cities, driven by the availability of existing and fresh talent.

From a policy perspective, at a national level, the government has started initiatives like Digital India and other policies to ease business, and streamlining online approvals and licensing processes of GCCs.

At a state level, Governments of Karnataka, Telangana and Tamil Nadu have launched research and development (R&D) policies to expand the GCC landscape in sectors such as auto and electric vehicles, electronics, pharma and life sciences in the states.

“The Karnataka Digital Economy Mission (KDEM) aims to increase the State’s contribution to India’s digital economy to $300 billion by 2026 by enabling holistic growth of the tech sectors and start-ups by deepening partnerships with industry players and developing tech clusters beyond the State’s capital to achieve higher contribution,” the economic survey highlighted.

It added that leading technology companies have already started operations in Mysuru, Mangalore and Hubballi clusters, generating employment for more than 5,000 people.