GCC Location Strategy: 5 Factors That Decide Where to Build

Introduction

Where you set up your global capability center (GCC) will have an impact for many years to come. The city you decide to pick will determine your access to talent, your ability to scale the GCC quickly, the operating cost of your GCC, and relationships with customers, academic institutions, and technology companies.

If you are looking to set up your GCC in India, you have likely already researched some key cities. You may already know about Bengaluru, Hyderabad, Pune, Chennai, Mumbai, or Delhi NCR. Other cities like Ahmedabad, Jaipur, Coimbatore, and Kochi may also pop up during your research.

Deciding where to open your GCC will often depend on your research of cities that are the least expensive or have a large talent pool. However, this may not give you the full picture on why one city is better for your needs than another. Perhaps you’re trying to build a GCC for artificial intelligence services. You’ll need different skills available to you compared to someone opening a financial services GCC or a GCC that supports products. Even if your GCC is in the same city, skills can vary across the metro.

JLL notes that Indian cities today have various skills across sectors. The article highlights how India’s hubs have unique strengths and companies are beginning to look into tier-2 cities for their GCCs. Bengaluru has established itself as a technology hub. Hyderabad has gained traction in healthcare and biotech. Chennai is a great place for manufacturing and automotive industries, while Mumbai continues to attract companies wanting a finance center.

Each GCC location strategy should focus on the capability that you want your GCC to possess. Below are five things to consider when choosing your GCC’s location in India and how different metros compare.

Why GCC Location Selection Is a Strategic Decision

Your GCC’s location will affect how cheap your real estate is, your entry-level employee’s salary, and the type of talent available around you.

You may want to attract individuals who have expertise in certain skills, or leadership positions in a specialty that your business knows how to operate in, or even build out technology that could be beneficial to your company and employees. By picking the correct city for your GCC, you can improve your ability to attract the right talent, retain employees longer, build closer to your headquarters, and take on more advanced capabilities for your GCC.

Choosing a city that offers lower costs could allow your company to save on employees’ salaries, but you may struggle to fill positions and keep employees happy at your GCC. This can lead to greater hiring costs in the long term. Some cities have higher demand for certain skills, which can cost your business money.

When choosing a city for your GCC, think about what you’re trying to accomplish with the location. Over the next 3–5 years, what will your GCC be doing, and whom will you need to get there?

The Five Factors That Determine the Right GCC Location

1. Talent Availability and Specialization

Your talent needs will determine what skills you need to find in a city. Knowing what kind of GCC you want to build is key when deciding which city to settle in.

If you want to build a product engineering GCC, you’ll want to find developers, architects, AI experts, etc. A finance GCC will require skills that involve financial services, banking, risk management, analytics, or operations.

Knowing how many individuals graduate from college in each city is helpful, but knowing what skills they possess is more important. When picking your city, you want to know what you can gain from the talent that lives there.

Questions to ask when thinking about talent availability:

• Do they have skills that are needed for your GCC?
• Are there seniors who will be able to lead the team and match the GCC’s capabilities?
• Who else is competing for those skills in your area?
• How long will it take you to recruit, and what is the cost-to-company for each resource?
• Are there colleges in the area and ways to learn skills on the job at your GCC?
• Can you retain these individuals and recruit talent from nearby?

If you’re newly opening your GCC, finding senior positions will be hard no matter what city you pick. Having a team of juniors won’t help your GCC flourish if you don’t have senior talent to help build best practices and establish your presence.

2. Total Cost of Ownership, Not Just Salaries

Salaries shouldn’t be the sole criterion for comparing cities.

You might find that city A has lower salaries for developers than city B, but if your recruitment cycle will be longer, it may end up costing you more overall. Other costs to factor in include office space and incentives for your company.

Compare your costs based on:

• Salary/recruiting fees
• Office space
• Tech
• Leadership overhead
• Development
• Attrition and recruitment
• Travel
• Contingency

Governments are starting to offer incentives to attract businesses to certain areas. If your company is eligible, you may want to take advantage of it. Ensure you verify what incentives your state/city is offering and that they will allow you to use the money for your investment in talent/property, etc.

Depending on your numbers, you may also want to consider whether you will open more offices in that city. For example, if your plan is to recruit 100 people today and open another office down the road, your costs will change significantly.

Use your estimated cost to open a GCC in a city and project it over the next 3–5 years. Keep in mind recruiting and attrition numbers when calculating your cost per person.

3. Industry Ecosystem and Proximity to Innovation

When picking your GCC’s location, it’s always good to look around. If there are other companies in your desired field, they may have technology that you can leverage. Recruit employees that are already in your area and build off of the knowledge that these individuals can teach you and your team members.

There are pros and cons to having an established ecosystem in your city. In a city with an established ecosystem, there will be more competition for talent. So ensure your costs allow you to compete with other businesses for talent.

Make a list of companies you’d like to interact with in your chosen city. There may be certain positions that you can’t find if you’re in one metro vs another. Having other businesses around can help fill those gaps.

4. Infrastructure, Connectivity, and Operating Resilience

A well-connected city can make all the difference to your GCC. Consider how easily employees can commute to work, access office spaces, and rely on high-speed internet to stay productive. Also look at proximity to airports, public transport, and residential hubs when evaluating potential locations.

In addition to comparing cities, also compare what area in the city you’ll be operating out of and how it affects your business and employees.

5. Long-term Scalability and Strategic Fit

Think about the long-term vision for the GCC, based on the location(s)—would you want to expand your talent base or have an office that’s close to your current location?

Depending on the GCC you’re trying to build, you may want to open offices in multiple cities. If the GCC will focus heavily on development, you may want to look at cities with more college students interested in learning about it. Your city should be scalable enough that you can open additional offices as your business grows.

Think about the next 3–5 years. What do you want to accomplish with your GCC? Once you have that figured out, you can look at what locations you want to add or change.

Which Indian Cities Should You Look at When Building a GCC?

Each city will offer something different to your GCC. Here are some things to keep in mind when selecting your location:

• Bengaluru is known for technology. If you want to be surrounded by companies that are building products, this is the city to choose. You’ll have a strong talent pool, but you may have to pay a bit more to compete with others.
• If your company wants a tech or healthcare GCC, Hyderabad may be your next location. Check to see what types of skills are available to match your position.
• If you’re planning to set up an engineering-based GCC, Pune may be your answer. The city has many colleges and a talent pool with skills in engineering.
• Chennai is a great city for a manufacturing or automotive-based GCC. It will also have other skills available to you depending on your role.
• Want a finance GCC? Mumbai has experts in the finance space. You can evaluate its surrounding areas too and compare salaries/commuting prospects to work.
• There are many industries that can be found in the Delhi National Capital Region (NCR). Companies can choose any city connected by the metro rail and find talent that can meet their needs.

These are just some key points on why each city stands out. You can read more on what industries thrive in India’s metros here. Companies are also tapping into tier-2 cities and the talent they offer. You can learn more about India’s mid-market GCCs in Zinnov’s report here.

Building Your GCC Scorecard

Now that you know what to consider when evaluating cities for your GCC, it’s time to create a scorecard to compare your top choices. Each company should weigh the criteria based on its specific needs. Here’s an example:

Rate each location on a scale of 1–5 for each factor, then multiply the score by its corresponding weight. This will give you a weighted score to help compare locations and identify the best fit for your GCC. Remember that these scores can fluctuate depending on your business needs and changing market conditions.

As you compare scores, assess how your numbers fluctuate when you alter your recruitment/attrition percentages. Make sure your location of choice isn’t missing something that may hinder your company’s long-term success.

Now that you’ve narrowed down your cities, follow these steps to decide on the right location for your GCC:

1. Define what you want your GCC to accomplish.
2. Identify your non-negotiable location requirements. These could include specific skills, security requirements, or flight connectivity.
3. Research the talent pool and compare the costs of setting up a GCC in each city.
4. Calculate how much it would cost your business to recruit for the positions you need to fill.
5. Visit the shortlisted cities and compare how well each meets your GCC’s needs. Involve key members of your organization to help gather information on your shortlisted cities.
6. Pick a city that aligns with your company’s long-term goals and allows room for expansion.

Building a GCC takes more thought than just picking a low-cost city. You can enjoy many benefits once you pick the right GCC location. If you need help identifying what to look for when picking a city and assessing your business readiness, you can use our GCC readiness checklist here. We can also help you build out your GCC through our GCC 2.0 service line, launched after Hexaware joined forces with SMC Squared. Hexaware was also named a Leader in AIM Research’s GCC Enablement Service Providers PEMA Quadrant report. Read about it here.

Whether you’re setting up your first GCC or building on past success, finding the right city can make a difference to your organization’s success. Hexaware can help you pick the right city for your GCC in India. Contact us at marketing@hexaware.com.

Conclusion

Whether one city is better than another for setting up your GCC will depend on the type of GCC you’re trying to build and how the location aligns with your business goals. Think about these 5 categories when choosing your location: talent availability, the cost of living and working in that area, the presence of other companies that can help you recruit for hard-to-fill positions, proximity to airports and the presence of good infrastructure for your employees, and the city’s potential to grow alongside your business.

Learn more about how we can help you pick your city for your GCC by visiting our GCC services page.