Mint Primer: Why Karnataka is placing its bets on a GCC gold rush

What makes GCCs important?

GCCs are offshore units set up by multinational companies to take on key technology-driven tasks. GCCs include tech operation centres run by companies headquartered abroad, driven by India’s tech talent and cheap real estate. Nearly 66% of the GCCs in India are US-headquartered. Though present from the early 2000s, tackling business process outsourcing, from 2013 onwards GCCs moved to strategic, high-value activity through innovation centres. The rise in the number of GCCs helped create jobs at a time IT services firms, the largest recruiter of tech talent, are seeing a slowdown.

What does the state’s GCC policy say?

The Karnataka Global Capability Centre (GCC) Policy 2024-2029 aims to create an ecosystem that will help GCCs grow, and bring in new ones, through incentives. The state houses around 30% of the 1,700 GCCs in India. It aims to add 500 new GCCs, taking the total to 1,000 by 2029.

This will create 350,000 new jobs and generate $50 billion in economic output, the state believes. The state plans to set up three “innovation districts” with dedicated office parks for GCCs in Bengaluru, Mysuru, and Belagavi. A new vertical will be formed within the IT department with leaders from GCCs to steer the initiative.

Are GCCs expected to grow further?

India is one of the top tech talent markets globally, so it’s no surprise that the GCC count and related jobs will rise. The number of new GCCs could jump from 70 to 115 a year. A key driver would be the rise in software exports, with offshoring services seeing continued growth, consultancy EY said. Smaller cities such as Coimbatore, too, are in their sight.

Where will GCCs go beyond Bengaluru?

The reason 500-odd GCCs are bunched in Bengaluru is its tech and startup ecosystem, a wide talent base, and social infrastructure. Now the “Beyond Bengaluru” policy aims to provide GCCs rental reimbursements, property tax exemptions and utility subsidies in smaller cities.

Cheaper real estate is why GCCs may choose Mysuru or Dharwad. However, cost is not the deciding factor for GCCs, which are leasing expensive offices. Firms are eyeing vibrant markets—Hyderabad, Chennai, and Coimbatore.

How have GCCs impacted real estate?

GCCs came to the rescue of the commercial office sector, when leasing by IT firms, the largest occupiers of office space, dropped after covid. Prominent global firms leased 53 million sq. ft between 2022 and June 2024 for GCCs, with most planning to expand. GCCs account for around 50% of space requirements in the top cities. The real estate footprint of GCCs is around 190 million sq. ft, which is expected to touch 280 million sq. ft by 2030. Developers, too, are building office spaces to suit their needs.