Gift City may witness a jobs boom. Hint: GCCs.

The matter was discussed at a 23 January meeting between Union finance minister Nirmala Sitharaman and representatives of several foreign firms including a US-headquartered bank, Scotland-based banking and insurance major NatWest Group, and German carmaker Mercedes-Benz’s research and development division, besides others.

A spokesperson for industry body, Nasscom, confirmed that it was also a part of the meeting.

 

“The government wants to understand more regarding the role of GCCs and to know from industry leaders whether they can set up GCCs in the Gift City," said the one of the three people cited above.

The second person said the meeting was an outcome of initial discussions held during the Vibrant Gujarat Summit in January.

The third person also confirmed that the meeting with the government was meant to discuss ideas for setting up GCCs in the Gift City.

Queries sent to a spokesperson for the finance ministry and NatWest remained unanswered. Mercedes-Benz declined to comment.

A senior industry official, who was part of the discussions, said there was no directive issued by the Centre, but the meeting was more to understand what would be needed by industries to incentivize such facilities.

“The first meeting was more in line to figure out what the industry experience has been, and what can be done to grow our fintech and tech-fin ecosystems," the official said. “The International Financial Services Centre (IFSC) in Gift City already offers tax holidays and benefits, which makes sense for companies setting up new facilities here."

The government’s interest underlines the brisk pace of growth of GCCs in India and their employment potential.

A June 2023 report by IT industry body Nasscom and management consulting firm Zinnov said as of 2022-23, there were more than 1,580 GCCs in the country, employing over 1.66 million people.

The global GCC market, according to consulting firm Boston Consulting Group (BCG), was valued between $465-510 billion in 2023, and expected to touch $715 billion by 2027, at a compound annual growth rate of 9-10%.

“In India, this growth will be at 15-16%, with the domestic market valued at $117 billion by 2027," said Snehil Gambhir, partner and director, BCG, adding that by 2027, India should see 4.5 million people employed across 2,500 GCCs.

A majority of the GCCs are based in hubs such as Pune, Bengaluru, Hyderabad and Chennai. Gift City would need to surmount the challenge of competing with this concentration of GCC hubs.

“Most established cities that have the bulk of GCCs in India are already established ecosystems. The GCCs are looking at GIFT City for new growth, which can help it compete with global centres. Ways to attract senior talent to GIFT City were also discussed, along with direct connectivity routes to Europe and the US," the industry official cited above said.

BCG’s Gambhir said it’s not just about tax holidays, but GCCs will also look for top-tier educational institutions and lifestyle opportunities outside of office. “Not just Gujarat—many more states will vie for setting up such centres. This will add value by creating a complete overall ecosystem that can uplift a place. Direct flight connectivity, cost of living and natural disaster profiles are also a part of these factors," Gambhir added.

While GCCs initially grew as cost-effective alternatives to India’s IT services firms, many MNCs now view their India GCCs with increasing seriousness. For instance, on 11 July last year, Mint reported that NatWest’s India facilities house one-third of all its global employees. Punit Sood, head of international hubs at NatWest, said at the time that one of the key reasons for the growth of such hubs was due to rising concerns around confidentiality of data, as well as increasing competitiveness in artificial intelligence (AI) and related products.

Most of these capability centres in India—initially seen as favourable for the cost arbitrage—are now being used for developing innovations. They are, thus, working on advanced technologies like AI and machine learning (ML), and employing a significant number of people.

Experts said GCCs cultivate a breeding ground for next-gen tech skills. “This upsurge in employment is marked by quality and sustainability, fostering a robust infrastructure for lifelong learning and career progression," said Jaspreet Singh, partner, Grant Thornton Bharat. “The cross-pollination of ideas between GCCs and local talent is creating a unique innovation ecosystem, positioning India as a global hub for strategic business initiatives."

Meanwhile, GCCs have become significant enough to find a mention in the latest Reserve Bank of India’s (RBI’s) article on the state of the economy. The central bank pointed out that the share of GCCs in the total office real estate transactions rose to 35% in 2023 and, as per estimates, India will have 1,900 GCCs with a market size of $60 billion by 2025.

Gireesh Chandra Prasad in New Delhi contributed to this story.