GCC Industry Poised for Growth Amid Global Uncertainty
Global economic volatility is unlikely to harm India's Global Capability Centre (GCC) industry, as multinational corporations are expected to expand operations in the country during both economic upturns and downturns, according to Rohan Lobo, Partner at Deloitte and Industry and Channel Leader for GCCs. Lobo made the remarks on the sidelines of the CII's GCC Business Summit.
Lobo explained that during periods of economic difficulty, the cost arbitrage of around 2x offered by India becomes a key driver for companies to shift work from high-cost regions to India, thereby boosting the GCC sector. Conversely, when the global economy is booming, companies have more funds to invest in technology, research, and development, which also fuels GCC growth. "This industry is facing a win-win situation. In either of the cases, the industry will boom," Lobo stated.
Geopolitical Tensions No Deterrent
Addressing concerns about renewed geopolitical tensions, such as the US-Iran conflict, Lobo emphasized that India's competitive advantage allows the sector to thrive under different global conditions. During economic expansion, companies increase investments in technology, artificial intelligence (AI), engineering research and development (ER&D), and digital transformation, creating more opportunities for GCCs. In times of uncertainty, the focus shifts to cost optimization, with work moving to India to leverage its large talent pool and cost savings.
Evolution of GCCs into Strategic Hubs
Lobo noted that GCCs have evolved from traditional back-office operations into strategic centres handling AI, data engineering, enterprise technology, and innovation. They now integrate front-office, middle-office, and back-office functions for global enterprises. AI is expected to automate about 15-20 per cent of operational work currently done by GCCs, but it will also help identify technical debt, broken customer journeys, and technology issues, generating additional engineering and transformation work likely to come to India.
Future Growth Driven by ER&D and Robotics
The next phase of growth for GCCs will be driven by engineering research and development, physical AI, robotics, and automation. This will require greater collaboration among companies and a stronger technology ecosystem. Lobo estimated that GCCs could contribute USD 155-199 billion in direct gross value added (GVA) over the next three to four years. Including indirect contributions from service providers and supply chains, as well as induced economic activity in sectors like real estate, healthcare, and education, the overall economic impact could reach USD 450-600 billion.
Digital Skills Gap Remains Key Challenge
Lobo identified the widening digital skills gap as the biggest headwind for the sector. While India attracts talent at scale, about 29-30 per cent of the workforce lacks the digital skills required by GCCs. "If the entire skilling ecosystem doesn't keep pace, then we will have a lot of talent, but they won't be ready to be picked up by the GCC," he warned. The government is aware of this challenge and is taking steps to strengthen the skilling ecosystem. Lobo stressed that the next wave of growth in ER&D, AI, and physical AI will require industry, academia, and government to work together to build a stronger ecosystem.
