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Assessing GCC locations

December 12, 2018 12 min read

Assessing GCC locations

Choosing a location is of prime importance to establishing a GCC. However, making this decision can be complex. As companies look to the GCC model as a means to enhance growth and increase profitability, they need to determine which location will provide the most value for them. “Each firm, depending on their strategic objectives, must assess possible locations against a set of criteria to determine what works best for them” says Shail Maniar, SVP & Managing Director, ANSR. “The chosen location should support the GCC in achieving the objectives and targets for the GCC initiative.”
“The chosen location should support the GCC in achieving the objectives and targets for the GCC initiative.”

In India, most companies have chosen to set up GCCs in Tier 1 cities such as Bengaluru, Chennai, Hyderabad and Pune, with Bengaluru having the largest share. NASSCOM reports that the city is home to over 40% of GCCs, with over 500,000 FTEs. A few Tier 2 and Tier 3 cities such as Coimbatore and Vizag are also emerging as locations of interest.

The most important factors in determining the best location amongst Indian cities are a) the talent landscape, b) access to a mature ecosystem and c) socio-economic considerations. These will be looked at in detail in the following sections.

The talent landscape

“Most of the companies that come to India with the intent of setting up a GCC do so to tap into the country’s wealth of high caliber talent.” “Most of the companies that come to India with the intent of setting up a GCC do so to tap into the country’s wealth of high caliber talent ”, Maniar comments. Evaluating whether a qualified talent pool, across domains such as technology, analytics, digital and business functions, is available at scale is therefore crucial. The type and scale of available skill sets should be aligned to the overall objectives of the GCC being set up.

Bangalore, for instance, has the largest tech talent pool compared to other cities, and employs around 1 million professionals. This has attracted global corporations such as industrial giant GE which opened a new centre in Bangalore last year, housing 2,500 technology professionals. Standard Chartered Bank has also recently announced its intention to attract the best tech talent to its 43,000m2 global business hub in Bangalore in order to harness the latest technology for its global business services.

Hyderabad, on the other hand, iis the hub for GCCs in the pharmaceutical and financial services industries. The flourishing startup ecosystem in Bangalore and Hyderabad is an important source of talent with expertise in new-age skills like advanced analytics, mobile, AI and machine learning.

Companies should also consider the universities and the size of the annual graduate pool. A mature education system creates a conducive environment for the GCC to scale while keeping a check on overall talent costs. Although GCCs might be looking at only experienced hires in the initial years of inception, university recruitment augments the lateral hiring process 2-3 years down the line. Hyderabad has the largest annual pool of IT graduates in India, followed by Bangalore, making both cities attractive choices on this front.

Alternatively, if a location does not have the required talent, it should have an attractive proposition to attract the required talent from other parts of the country. This is especially pertinent in India as the talent pool is spread across 5 major Tier 1 cities and beyond in Tier 2 and Tier 3 cities. Some key factors that can encourage such talent to relocate are the infrastructure, cost of living and a rich community of corporates and startups. “I used to live in Hyderabad but I was more than happy to move to Bangalore”, comments Suruchi Mittal, 25, who works as a data analyst for a GCC in Bangalore. “It’s an exciting place to live and work.”

Mature ecosystem

The Economist Intelligence Unit’s (EIU) recent report Connecting Commerce: Business confidence in the digital environment reveals that 48% of global businesses are willing to relocate for a better ecosystem that will support their digital transformation. A GCC requires a physical infrastructure that facilitates connectivity and scalability. The location should have a well-developed infrastructure that enables travel both within the city and out of it. “This is especially important as there is typically a lot of international and domestic travel by the executive sponsors, leadership and initial joiners during the first two years,” points out Maniar. He further opines that “Good connectivity and accessibility will help attract talent from anywhere in India, the rest of Asia and even other parts of the world.”
“Good connectivity and accessibility will help attract talent from anywhere in India, the rest of Asia and even other parts of the world.”

Coming to workspaces, the real estate market should be mature with adequate options to choose the right office that fits the organization’s global standards and culture. The office spaces should also support the GCC’s future expansion and consolidation possibilities. Locations should be evaluated on existing real estate stock, vacancy and new supply in the short-term to meet the space requirement for GCC operations. High-end tech parks provide such real estate options for companies that have a need for Grade-A workspaces. Bangalore is home to several world-class tech parks such as Manyata, EGL, Bagmane etc., that provide the ideal office spaces for GCCs.

Proximity to service providers is important, as it makes collaboration with such technology and knowledge partners more seamless. A location with a mature startup ecosystem enables the GCCs to easily engage with startups to run corporate innovation and accelerator programs, as is being done by several leading GCCs, such as Lowe’s, L Brands, Target, etc. Indeed, EIU report points to the convergence of startups and corporates in Bangalore as one of the main reasons the city has been ranked out of 45 global cities as as the number one location for businesses to transform digitally. The report points out that the city houses both a large number of the more than 140 incubators and accelerators in India, as well as a host of global technology giants such as Amazon, Google and Cisco.

Socio-economic factors

One of the most important reasons for people to live and work in a particular location is the quality of life. Locations are more attractive for professionals if they offer a low cost of living, have a cosmopolitan population, are expat-friendly and have a dynamic local culture. A location with these attributes is advantageous for a GCC, as they will able to draw and retain a highly skilled workforce. Bangalore is well-positioned in this regard. It is a high-energy city, with plentiful dining, shopping and entertainment options. “It’s a great city to live in,” comments Pradeep Gopal, 30, who works for a financial company in Bangalore. “There are so many parks, bars, coffee shops, heritage sites, restaurants and malls,” he says. “The people are friendly and the weather is always wonderful.”

Conclusion

The correct location will define many aspects of a business’ ability to get a firm footing in a foreign setting, where there are already plenty of new policies and intricacies to consider. Wherever a GCC decides to get started, the location must be recognized as the most important aspect of the setup process, as it is this key decision that will have the greatest impact on whether it’s a success or not.

A company’s choice of location for their GCC must be made in alignment with the competitive priorities of their overall enterprise. It must be able to provide the company with the desired benefits, whether this is availability of highly skilled tech talent or proximity to a network of innovative startups.
“The city has a distinct competitive edge as it ranks highly on talent, infrastructure and socio-economic factors,”

As stated earlier, Bangalore is the leading choice for global companies to set up their GCCs. “The city has a distinct competitive edge as it ranks highly on talent, infrastructure and socio-economic factors,” Maniar explains. “It has the largest tech pool for instance, and leadership talent. And it is strengthened by its quality infrastructure, vibrant ecosystem of corporates and startups, and its cosmopolitan culture. ”
 

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