 "Share of GCCs in office transactions rose to 35% in 2023: Knight Frank")
India has been witnessing a steady rise in investments towards setting up Global Capability Centres (GCCs) in the country, and their share in the total office real estate transactions rose to 35 per cent in 2023 from 25 per cent in 2022, real estate consultancy Knight Frank said in a report on Wednesday.
According to the "India Real Estate: Residential and Office (July - December 2023)" report, GCCs recorded an increase of 58 per cent in transaction volume during the year from 13.2 million square feet (msf) in 2022 to 20.8 msf. The total office market saw transactions worth 59.6 MSF in 2023, the highest ever.
GCCs provide services to an offshore company. The offshore company has complete ownership of the entity that buys the space.
The primary catalyst, the report said, was the evolving attitude of global corporations, which now lean towards owning their resources while expressing a favourable inclination towards India for establishing such setups. It also cited the country's strong economy for the shift.
"India boasts exceptional quality in real estate, competitive rental rates, an extraordinary talent pool, and a consistently growing economy, making it a robust end-user market for numerous companies," it said.
Chennai witnessed the highest GCC-focused transactions at 6 msf, followed by Hyderabad at 4.1 msf and Bengaluru at 3.8 msf.
Notably, the GCC category was the only one to grow in terms of market share among the four end-use categories. The other categories are India Facing, Third-party IT services and Flex Space.
More From This Section
India Facing business continued to anchor the office market with 21.9 msf of office market transactions in 2023. Flex Space saw transactions of 10.4 msf.
Third-party IT services recorded transactions of 6.5 msf in 2023.
According to consulting firm Boston Consultancy Group (BCG), three key factors driving the growth for GCCs in India are - hub for skilled and scalable talent, boost from start-up ecosystem, and the growth of IT-ITeS industry.
“The Indian IT-ITeS industry has experienced a remarkable 19 per cent growth over the past 24 years. The presence of global outsourcing service delivery providers in major Indian cities has played a crucial role in supporting the growth of GCCs, contributing significantly to the GCC landscape in India,” said Snehil Gambhir, partner and director at BCG.
Talent solution provider NLB Services said that GCCs gravitate to geographies that primarily offer labor arbitrage and low business costs, which India has proved to be one of.
“India has become a favorite GCC destination due to these very reasons, coupled with ease of doing business powered by business-friendly policies and regulations,” said Sachin Alug, chief executive officer at NLB Services.
Experts suggest that investments towards GCC are likely to go up in India in 2024.
"We anticipate a range of captive centers to kickstart operations within the country in 2024, ramping up talent acquisition and keeping the hiring market full of action,” Alug added.
ANSR, an end-to-end GCC consultant, said that GCCs are increasingly being viewed as innovation hubs, and research and development powerhouses.
"The surging expansion of India’s GCC sector is poised for an impressive 50 per cent surge in the next three years, with projections soaring from the current 1,600 to over 2,400,” said Vikram Ahuja, Co-Founder ANSR adding that this is likely to create 3-3.5 million jobs.
BCG said the Indian GCC market is expected to reach $117 billion by 2027, at a growth rate of 16 per cent.
Credit rating agency Crisil said outlook for GCCs in India continues to remain buoyant for 2024, given the sheer scale of English-speaking talent available and increasing demand in data analytics, Al, cloud, engineering and cybersecurity across industries.
“GCCs in global financial services and technology sectors are increasingly going up the value chain and that is evident like work offshored and skill demand,” said Priti Arora, global head of capabilities centres at Crisil.
Shishir Baijal, chairman and managing director at Knight Frank India, said that the Indian office space market is likely to see a new peak in 2024.
"The forthcoming year is poised for steady expansion, and 2024 promises to be a standout year for the office market, driven by India-facing businesses and GCCs," he said.