Economics of a GCC

To understand the Economics of a GCC, one must understand the lifecycle stages of a GCC. GCCs have rapidly grown and proved to be of more ‘value’ to the enterprise than what was envisioned. The evolved and tenured GCCs are now centers of excellence (CoEs) and have progressed from being former cost-arbitrage centers overseeing support functions to becoming automation and innovation hubs. Moving beyond excellence to experimentation, these centers are starting to become impactful components of success for the enterprise—expanding their services with a focus on leadership, innovation and knowledge-based capabilities. Some of the key constituents that contribute to the economics of a GCC include – the operating cost, talent cost, currency advantage, economies of scale, operational efficiencies, process improvements and excellence equate to value generation in dollar terms, innovation and others.  GCCs play a pivotal role in shaping the economic landscape of nations, particularly in the context of India. Deloitte and NASSCOM’s joint report sheds light on the profound impact of GCCs on the Indian economy, illuminating a narrative of robust growth, employment generation, and fiscal contribution. Direct Economic Impact Gross Output and Value Addition: The GCC sector catalyzes economic growth with a substantial gross output of US$33–34 billion, equivalent to INR 2,50,000 crore, surpassing the GDPs of 13 Indian states and union territories. Furthermore, the sector adds a gross value of US$23–24 billion, translating to INR 1,75,000 crore, bolstering India’s economic resilience. Employment Generation: With a direct employment generation of 1.2–1.3 million jobs, GCCs account for nearly 30 percent of the employment within the IT/ITes industry, empowering individuals and communities across the nation. Corporate Tax Contribution: GCCs exhibit fiscal responsibility by contributing US$1.1–1.2 billion in corporate taxes, a substantial investment that could fund monumental infrastructure projects multiple times over. FOREX Earnings: As a vital source of foreign exchange earnings, GCCs bolster India’s forex reserves with US$33–34 billion, reinforcing the nation’s economic stability and global standing. Indirect Economic Impact Ancillary Industries Development: Beyond their primary operations, GCCs foster the growth of ancillary industries, nurturing a diverse ecosystem that fuels economic prosperity. Indirect Gross Output and Value Addition: Through their symbiotic relationship with vendors, GCCs generate an additional US$32–33 billion in gross output and US$17–18 billion in value addition, amplifying the ripple effect of their economic influence. Employment Multiplier Effect: Indirectly, GCCs stimulate the creation of 3.1–3.2 million jobs, catalyzing growth across sectors such as real estate, IT, telecom, and professional services, among others. Income Tax Contribution: In addition to corporate taxes, GCC employees contribute significantly to India’s fiscal coffers, with a cumulative income tax contribution of US$4.0–4.1 billion, underscoring their role as responsible corporate citizens. Business Travel Expenditure: Parent organizations of GCCs inject vitality into India’s hospitality and travel sectors, with an annual expenditure of approximately US$1 billion on business travel, further invigorating the economy. In essence, the Economics of a GCC is a testament to the symbiotic relationship between innovation, enterprise, and economic prosperity.

    Operating Model Impact

    Operating model encompasses multiple aspects including the organization structure, activity placement and handoff, the ability to deliver end-to-end processes and the sourcing strategy.

    Important Statistics on Cost
    Important Statistics on Cost
    Local Statutory Topics

    Establishing legal entities, obtaining necessary permits, and complying with local laws and regulations are critical for any GCC set up

    Consult with Gloplax

    Gloplax offers full life cycle consulting services for GCCs. We have 300+ years of combined experience in building and running GCCs. Gloplax brings proprietary frameworks and tools to provide you a custom solution.