News Excerpt: 

Global capability centers (GCCs) are increasingly looking to tap into revenue opportunities from the Indian market, which is already a critical talent hub. While capturing the potential of the Indian market has been in the works over the past few years, it's only of late that companies are gaining momentum.

What is the Global capability center?

• Global Capability Centres (GCCs), also known as global in-house centers or captives (GICs), are offshore centers established by firms to provide various services to their parent organizations. 
• These centers operate as internal organizations within the global corporate structure, providing specialized capabilities such as IT services, research and development, customer support, and other business tasks. 
• GCCs and GICs are critical in leveraging cost efficiencies, accessing talent pools, and encouraging collaboration between parent businesses and their offshore affiliates.

Types of global capability centers:

What are the Benefits of Global Capability Center 

• Cost Efficiency: 
• Compared to typical in-house operations or outsourced services, GCCs offer more affordable solutions by utilizing specialized workforce pools in strategic locations.

• Access to Global Talent: 
• GCCs give businesses access to a variety of talent pools with specialized knowledge, language skills, and cultural awareness, allowing them to grow internationally and adapt to changing business needs.
• Creativity and Quickness: 
• GCCs encourage creativity, teamwork, and continuous improvement, which increases agility and makes it possible for businesses to quickly adjust to changes in the market and new technological advancements.
• Mitigation of Risk: 
• By guaranteeing adherence to international standards, data security procedures, and regulatory requirements across several regions, GCCs assist in reducing operational and regulatory risks.
• Alignment Strategically:
•  The strategic goals of their parent companies are aligned with GCCs, which facilitate growth initiatives, market expansion, and value creation through.

What are the Global Capability Centres’ Drawbacks

• Talent Retention and Retention

• • The talent competition is fierce in the global landscape. Retaining skilled professionals in GCCs can be a challenge, as employees may seek better opportunities elsewhere. 

• Logistical Difficulties

• • Transport, trade obstacles, customs laws, and differing legal frameworks can all present logistical challenges while conducting business across several GCC nations. 

• Time Zone Management

• In the GCC, coordinating and carefully arranging activities across several time zones is necessary. To maintain smooth collaboration and productivity, it could be necessary to implement flexible working hours, leverage technology-enabled communication tools, and employ efficient time management techniques.

Government Initiatives

• The Karnataka government's Spoke-Shore project intends to speed up the creation of GCCs across the state, to create a large talent pool outside of Bengaluru. 
• By focusing on the Mysuru, Hubli, and Mangaluru clusters, the goal is to produce one million direct and indirect job opportunities by 2026. 
• While Special Economic Zones (SEZs) to encourage the IT/ITeS industry have been established in Tier-2 cities, state governments are also rewarding enterprises that are establishing new centers or expanding existing ones into non-Tier-1 regions. 
• For example, under Tamil Nadu's ICT policy 2018, new or expanded IT/ITeS industries located in B&C districts will be eligible for an additional capital subsidy of 10% and 25%, respectively, over and above the eligible limit.

Union Budget 2022-23

• As part of Ease of Doing Business 2.0, a focus on trust-based governance, a decrease in duplicative compliance, and the establishment of C-PACE to promote the voluntary winding up of firms, among other things, are positive moves.
• The replacement of the Special Economic Zones Act with new legislation has been announced for states to become participants in the "Development of Enterprise and Service Hubs.".
• The establishment of world-class universities in GIFT City may help train the workforce in the financial services sector. 
• An international arbitration center may help to strengthen the GIFT IFSC's dispute resolution mechanism and make doing business easier.
• Increasing the emphasis on skill development while creating a powerful digital ecosystem. 
• Various skilling initiatives will be reoriented to provide continual skilling opportunities, sustainability, and employability. These actions will improve the skill accessibility for the GCC sector.
• Increased focus on R&D in emerging opportunities such as artificial intelligence, geospatial systems, and drones, among others, would improve GCC concentration in these sectors.

WAY FORWARD:

• GCC leaders need to leverage AI, analytics, and data to drive corporate decisions, innovate products and services, and reinvent business models for sustained success.
• Invest in skill development initiatives to ensure the workforce is equipped with the necessary expertise to thrive in an AI-driven environment.
• Continue expanding GCC operations across different locations in India to tap into diverse talent pools and cater to emerging market demands.
• Diversify service offerings and explore new areas of expertise to stay relevant and meet evolving client needs.
• Foster a culture of innovation within GCCs to encourage experimentation, creativity, and continuous improvement.
• With an increasing number of global leadership roles situated in India, GCCs should focus on enhancing leadership capabilities to drive digital transformation and value creation.