Context
While traditional IT firms face a hiring slowdown, GCCs logged a 5-7% sequential growth in the Oct-Dec quarter (FY26).
About Global Capability Center :-
- Definition: GCCs are offshore subsidiaries set up by Multinational Corporations (MNCs) to handle their own internal operations.
- Distinction: Unlike third-party IT outsourcing vendors (who serve multiple clients), GCCs are captive units serving only their parent organization.
- Evolution: They have transitioned from being cost-saving “back-office” support centers to strategic hubs for R&D, innovation, product development, and ‘Enterprise AI’.
Economic Footprint :-
- Current Status: India hosts approximately 1,850 GCCs employing nearly 2 million professionals.
- GDP Contribution: The sector contributes $68 billion in Gross Value Addition (GVA), accounting for approx 1.6% of India’s GDP.
- Future Outlook (2030): Projected to reach a market size of $125 billion with a workforce of over 3 million.
Emerging Structural Trends:-
- Decoupling from IT Slowdown: While traditional IT services face hiring freezes, GCCs recorded a 5-7% sequential growth (Q3 FY26) and a high 7.7% growth in leadership talent.
- Tier-II Expansion: Growth is decentralizing beyond metros to cities like Nagpur, Indore, Coimbatore, and Kochi (recording 8-9% quarterly growth).
- High-Value Pivot: The focus has shifted from “cost arbitrage” to “capability arbitrage,” driving demand for specialized roles in AI and data science.
What Factors are Driving this Growth?
- Talent Advantage: India produces ~2.1 million STEM graduates annually; the GCC workforce has ~35% female participation.
- Cost Efficiency: Operational costs in India are 30-50% lower compared to the US or UK.
- Policy Support:
- Upcoming National Framework for GCCs by the Central Government.
- Ease of Doing Business and Digital India initiatives.
Q. With respect to the operational model of Global Capability Centers (GCCs), consider the following statements:
1. GCCs function as independent third-party outsourcing vendors that provide IT and business services to multiple external clients.
2. Unlike traditional cost-arbitrage models, the current expansion of GCCs is increasingly driven by high-value functions such as R&D and Enterprise AI.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: B
Explanation:
Statement 1 is incorrect: GCCs are captive subsidiaries established by Multinational Corporations (MNCs) to handle their own internal operations. They are distinct from third-party outsourcing firms that serve multiple clients.
Statement 2 is correct: The sector is witnessing a "second wave of capability," shifting focus from simple support tasks to strategic, high-value work like product development, engineering, and Artificial Intelligence.
