80% of Top Global Retail Firms to Set Up GCCs in India by 2022

Eighty percent of top 100 global large retail and consumer packaged goods (CPG) enterprises, as companies will set up global capability centres (GCCs) in India by 2022, forecasts Nasscom.

Global capability centres are dedicated facilities that concentrate workers and infrastructure to handle a range of back-end and IT support operations and are critical to drive innovation and productivity in organizations.

In its recent report published with consulting firm ANSR, Nasscom said, India is evolving into a hub for their GCCs, as more global organizations are driving their digital transformation initiatives.

The trend is showing prominence in large retail and consumer packaged goods (CPG) enterprises, as companies in these segments are increasingly relying on their GCCs to successfully navigating complex nuances of their transformation journey, are said the report.

Tapping onto the talent pool

The report further estimated that over 25 new GCC in Retail/CPG industry are looking at establishing GCCs in 2021 tapping onto the matured ecosystem of talent and global operating models.

As per the report, there has been an accelerated growth in the number of GCCs set-up over the last five years, including big Retail and CPG GCC brands globally and a majority of the investments are in the digital and innovation space. Interestingly, India hosts about 25% of global Retail/CPG companies and employs over 50,000 in headcount.

These companies are increasingly driving innovation from their GCCs by establishing labs and leveraging the start-up ecosystem. Most of these GCCs are located in Bengaluru, as the city hosts over 70% of Retail/CPG GCCs, the report said.

With the ability to hire top-talent, GCCs are supporting efforts of global Retail / CPG companies to build a robust pool of enterprise talent. Companies are leveraging GCC to build digital and technology capabilities among other functions including core business and corporate support functions.

Investment in digital technologies

“The global Retail/CPG industry is in the cusp of a profound transformation leading to increased adoption of disruptive platforms including digital, data/AI, automation, and cloud. Over the coming years, we expect an upward, multi-dimensional trend of increasing number of Retail/CPG GCCs ‘twinning’ the enterprise, building a pool of future global leaders, developing capabilities at scale to accelerate business transformation and driving innovation in India,” Lalit Ahuja, Founder & CEO, ANSR said.

According to the report, matured GCCs are focusing on disruptive technologies and innovation, while, newer GCCs are in the foundational stages and are focused on excelling in the current scope and helping their parent companies successfully navigate through the current pandemic.

“It is phenomenal to see the Retail/CPG segment as one of the fastest-growing GCC segments in India. Several India-based Retail/CPG GCCs have now evolved to become the second headquarters for the host companies with functional responsibilities to own and drive critical business growth outcomes,” Debjani Ghosh, President, Nasscom said.

Driving innovation, business transformation

“In the next couple of years, we will witness a fundamental growth in this sector as top 100 global Retail/CPG companies will consider establishing a GCC in India to drive innovation and business transformation,” she added.

According to an estimate from Nexdigm, an international professional services firm, India is home to over 1,750 Global Capability Centers, which amounts to a massive 50% of all such centers globally. Domestically, GCCs employ over one million employees, generating a total economic value of around $28.3 billion.

With an increasing focus on digital, over 75% of India-based GCCs are investing across analytics, cloud migration, and robotic process automation, and over 50% in artificial intelligence, machine learning,

The recent onset of the COVID-19 pandemic has taken this disruption to the next level and is forcing companies to re-think their businesses and business model. With retail GCCs booming in the country, business leaders in this sector are expected to push the frontiers of technology and build stakeholder trust to rapidly scale their GCCs in the immediate future.

Another recent analysis by McKinsey & Company suggests that the Covid-19 pandemic and resultant ‘new normal’ is forcing companies to tweak their GCC operating models. “Executives should take concerted action to build on the lessons they have learned during Covid-19 and reinvent their GCC,” wrote partners Indraneel Banerjee and Akash Lal in the report.