India (Common Wealth) _ Bengaluru, also known as the Silicon Valley of India, has a complex with three cube-like glass buildings. Each building is ten stories tall, with gleaming façade in the hot South Asian sun. These are the offices of Goldman Sachs Group, which employs approximately 8,000 people and is the bank’s largest location outside of New York.
When Goldman first arrived in town in 2004, it employed approximately 300 individuals, primarily in information technology and other support roles. Its employees are now quants and software engineers who create systems for everything from trading to risk management.
Across India, the offices established by multinational corporations to provide low-cost operational assistance are becoming more sophisticated.
While the change has been happening for years, recent economic data shows a significant expansion of the service sector, which many credit to the offices known as global capability centres (GCCs).
These GCC countries currently contribute for more than 1% of India’s gross domestic product. However, the rise brings with it new issues for both businesses and the cities that house them.
Finding skilled staff is getting more difficult, driving up wages, and outsourcing may become politically contentious again in the US presidential election.
“While China specialized in becoming the world’s factory over the last 30 years, India specialized in becoming the world’s back office,” said Mr. Duvvuri Subbarao, a former governor of the Reserve Bank of India.
Luxury store Saks Fifth Avenue, aircraft engine manufacturer Rolls-Royce Holdings, US bank Wells Fargo, and Japanese e-commerce giant Rakuten Group all have offices in Bangalore.
In 2022, 66 major corporations will establish its first GCC in India. Even the lingerie company Victoria’s Secret has a GCC in Bengaluru. In the fiscal year ended March, the offices generated over US$46 billion (S$62 billion) in combined revenue, which was greater than Nepal’s output.
When airlines, technology corporations, and firms such as American Express and General Electric established centers in India in the 1990s, the country took off as an outsourcing powerhouse.
The facilities take over company functions such as accounting, payroll, and customer service, helping corporations to decrease expenditures due to decreasing labor expenses.
Luxury store Saks Fifth Avenue, aircraft engine manufacturer Rolls-Royce Holdings, US bank Wells Fargo, and Japanese e-commerce giant Rakuten Group all have offices in Bangalore.
In 2022, 66 major corporations will establish its first GCC in India. Even the lingerie company Victoria’s Secret has a GCC in Bengaluru. In the fiscal year ended March, the offices generated over US$46 billion (S$62 billion) in combined revenue, which was greater than Nepal’s output.
One of the most appealing aspects of India is its labor supply. It surpassed China as the world’s most populated country in April. It presently houses about a fifth of the world’s population, and more than half of its population is under 30, with a median age of 28. This compares to 38 in both the United States and China.
According to Unesco Institute for Statistics data, 34% of students study science, technology, engineering, or mathematics at university, the highest rate among major economies.
These days, India’s flourishing start-up sector is also a windfall for companies looking to hire in the GCCs. India has over 90,000 start-ups, the third-highest number in the world. According to estimates, India has roughly 416,000 AI workers, well short of the more than one million required by 2026, as per Nasscom.
The expansion is also creating new issues for India’s cities, particularly Bengaluru. India’s tech center is continuously packed, as it is home to over 30% of the country’s GCCs.
