Mid-Market Firms, Startups Kickstart Next Wave Of GCC Growth In India

India's global capability centre boom, initially driven by major conglomerates like JPMorgan and Target, is now entering the next leg of growth from smaller, lesser-known companies. Mid-market enterprises and startups from various regions are increasingly establishing GCCs in India, with more expected to follow. 

Companies with under $1 billion in revenue or having raised up to $500 million in funding are classified as small to mid-market enterprises. These include specialist, venture capital, and private equity-backed companies. 

These ventures, much like the larger ecosystem, are tapping India to build and innovate solutions with new-age tech capabilities. Access to talent, cost efficiency, and government policies have been some of the favourable factors, say industry players. 

A recent report by Nasscom stated that more mid-market enterprises and unicorns are setting up GCCs in India, with around 40 global unicorns having a GCC presence as of 2024. Uncharted ventures like Revolut, Bloomreach, Cerebras, Plume, Clari, Greenlight, ThoughtSpot, Outsystems, Reliaquest, Traveloka, and Graphcore, among others, are some examples, the industry body lists. 

GCC consulting services company ANSR notes that the mid-market enterprises and startups currently represent about 20–25% of the GCC market and about 10–15% of the workforce. Further, this number is expected to continue to grow to about 35–40% of the overall GCC market.

Currently, India hosts approximately 1,500 GCCs and is expected to increase to around 2,000–2,400 in the next 3–5 years, driven by both large enterprises and mid-market enterprises and unicorn startups establishing GCCs in India.

The companies have numerous advantages of setting up operations in India, beyond just cost-efficiency. Gaurav Vasu, founder and chief executive offer, market intelligence firm UnearthInsight, notes, “India operations are leveraged for innovation and R&D, as many GCCs are turning into innovation hubs where companies conduct R&D in emerging technologies such as AI, the Internet of Things, automation and digital transformation initiatives.” 

Additionally, easy access to a skilled talent pool is icing on the cake. The India arms also lead digital transformation for the global companies, as they are setting up GCCs with centres of excellence for digital technologies, business intelligence, and advanced analytics, Vasu explains. 

There are over 240 CoEs for digital, finance and HR transformation, and over 40% of GCCs have CoEs in cloud, AI, analytics and business innovation. 

Small-scale companies and large conglomerates exhibit distinct approaches in their operations and strategies. Vikram Ahuja, co-founder of ANSR and CEO of Talent500, said, “While large conglomerates typically begin with a wider spectrum of roles and larger teams, small-scale companies start with smaller teams and can scale up rapidly. Small-scale firms focus on specific, high-impact functions like product development or advanced analytics, whereas large ones cover a broader range of functions.” 

In terms of operational models, small-scale companies may adopt an “incubator” model, often without a legal entity initially, relying on employer-of-record or build-operate-transfer arrangements, while large conglomerates usually establish a legal entity from the outset. 

Small-scale companies also tend to be more agile in their operations and decision-making. In terms of resources, small-scale companies may have limited means, relying on innovative strategies, while large conglomerates have the capacity to invest significantly in infrastructure and talent development, he further explains. 

Companies often outsource operations to Indian firms rather than establishing their own facilities. However, the approach is now changing. Ramkumar Ramamoorthy, partner at Catalincs and former chairman and managing director of Cognizant India, said, “Up until the digital revolution started, technology was seen as an enabler to businesses. But with the digital revolution, technology is ‘the’ business. In many cases, the underlying business platform of an organisation today is its technology platform.” 

Given the structural shift, globally, companies want to ‘own’ this transformative capability rather than merely ‘lease’ it, which is the primary reason for companies to set up their own GCCs in India rather than entirely outsource to traditional IT companies, he adds. 

Mid-size companies such as Gojek, Aptiv, Valeo, Dover, Hella, Amgen, Medpace, Zebra Tech, Factset, Linode, Coupa Software, O9 Solutions, Kinaxis, and Celonis are driving core R&D, new product innovation, technology transformation, and business process outsourcing operations, according to UnearthInsight. Specifically, Gojek leverages India for building its app and payment solutions. 

Further, Vasu also notes that each of these mid-size enterprises forms 2–4% of revenue for larger tier I, tier II or boutique vendors. Hence, they believe a focused GCC with short- and long-term vision from India would help them better manage the tech transformation agenda from India and deteriorate focus from service providers. 

In addition to leveraging India for advanced operations, mid-market companies and startups are also looking at India as a market for their products and offerings.

“The $17–18 billion software product market in India makes it attractive for enterprise tech or software product firms to build a GCC plus run an India business to capture market share. Some of the upcoming mid-size enterprises want to leverage the GCC route to understand Indian markets across enterprise technology, ERP and cloud, low code platforms, customer data platforms, and cyber security segments,” Vasu said.