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Global capability centres (GCCs) in India are likely to lease office space of around 60-62 million square feet between 2023-25, according to the findings of a report by CBRE South Asia, a real estate consulting firm.
Sectors such as technology, banking, financial services & insurance (BFSI), and engineering & manufacturing will lead the leasing activity, while sectors such as life sciences, automobiles, and aviation will also expand their GCC operations in India.
The report said that GCCs are now leasing larger offices with the potential to scale up in the future. North American firms continue to be the mainstay of GCCs in India. The availability and cost of talent, real estate, and supporting regulatory framework aid GCCs' expansion in India.
By 2025, it is estimated that there will be about 1,900 total operational GCCs in the country, up from the existing 1,580. During this period, GCC leasing activity is expected to account for 35-40 per cent of the overall office leasing. Globally, among the top emerging GCC hubs, including Brazil, Chile, China, the Czech Republic, Hungary, the Philippines, and Poland, India has the best cost and talent attractiveness score, making the country the most sought-after destination for GCCs, the report stated.
The report also states that from 2023-25, the top six cities, including Delhi, Bengaluru, Mumbai, Chennai, Pune and Hyderabad, are likely to witness a strong pipeline of new developments in emerging micro-markets, creating new hubs for activity. The upcoming developments would be geared towards quality investment-grade office supply, giving GCCs ample scope to upgrade and scale as they expand.
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“India has emerged as the most preferred destination for GCCs worldwide, and the growth of GCCs in India is a testament to the country's skilled talent, cost efficiency, favourable business environment, and government support. Post the pandemic, global firms were nudged to re-evaluate their business offerings to increase digitisation levels. In a bid to ensure business agility, improve efficiency and make their businesses resilient, a higher number of multinational corporations (MNCs) explored multi-functional GCCs in India. Gradually, mid and smaller-sized firms also started venturing into Indian shores to enhance their offerings,” said Anshuman Magazine, chairman and chief executive officer, South-East Asia, Middle East & Africa, CBRE India.
From January to June 2023, GCCs continued expansion and accounted for a 38 per cent share in overall office space in the six cities. Office leasing by GCCs during the period stood at 9.8 million square feet. Bengaluru, Chennai, and Hyderabad cumulatively accounted for over 77 per cent of the total GCC leasing during the given timeline.
Bengaluru continues to account for the largest share in leasing over the first half of 2023 while Chennai has witnessed about one-fourth share led by ready institutional supply that entered the market in 2023. For Bengaluru, GCC leasing during the first six months stood at 3.8 million sq ft.
During the first half of the calendar year, Chennai emerged as the second preferred GCC market after Bengaluru in India with 2.4 million sq ft of space take-up.
Hyderabad remains in the top three cities with leasing activity by GCCs at 1.4 million sq ft in the first half of this year. Pune is emerging as a GCC hub, with a 57 per cent increase in the stated period.
Interestingly, companies are also evaluating tier-II cities to set up their GCCs and expand their operations, encouraged by the availability of talent due to the reverse migration of talent and hybrid working models.
“While cost arbitrage in tier-II cities has always been an advantage towards emerging hubs, the recent thrust on infrastructure development in these cities has also added to the advantage of non-metro cities. Going forward, the country’s maturing startup industry, which has a symbiotic relationship with the GCC sector, is likely to see greater collaborations, fuelling the growth of the global centres’ innovation ecosystem,” Magazine added.
