Lease transactions by global capability centres in calendar year 2023 has already crossed 88 per cent of that achieved in the whole of last year and is set for record volumes by the end of December as they increase their presence in India.
In the first three quarters of this year, leasing by GCCs has been at nearly 17 million sq ft, compared to 19.1 msf in the whole of 2022, according to data from property consultant firms CBRE and Knight Frank.
In the first half of the year, around 41 new GCCs were set up in India, including 18 that were new entrants.
In March, Software firm BlackBerry had set up its IoT centre in Hyderabad, the second largest centre after Canada. Lloyds Banking Group has also set up a technology centre in Hyderabad. Other new entrants include Berry, Truecaller, Greenlight, Vonage, Brenntag Wayfair among others.
Many of the existing GCCs have expanded, including names such as Bristol Myers, Deloitte and Pernod Ricard. According to consultant EY, “GCCs are expected to play an even greater role for their parent organisation than in the past,” as they transition from being capability centres to value creators. There are around 1,600 GCCs in India now.
Large asset owners are experiencing unprecedented demand from GCCs this year, a stark contrast to the second half of last year when demand from GCCs was half of that seen in the first half.
Embassy Office Parks REIT admitted that its leasing demand in the September quarter was primarily driven by GCCs, who contributed over 70 per cent of its total leasing. It said that of its 2.5 msf leasing pipeline, the demand is largely GCCs .
Mindspace Business Parks REIT gets about 50 per cent of its lease rent from GCCs who occupy about 40 per cent of its total area. It said that it was seeing a lot of interest from GCCs, which are expected to have a larger share of its portfolio in the future.
While earlier GCCs were driven by the cost arbitrage, there has been a vast change in the demand drivers and in the reasons for preferring India as a location for their research and development and innovation hubs.
Market watchers said that global corporations are now looking at GCCs as ‘profit centres’ as opposed to ‘cost centres’ earlier, with the ability to generate additional streams of revenue. Apart from the areas of artificial intelligence, cloud computing, engineering, data analytics, and cybersecurity, GCCs are also expanding their functions into legal, marketing, and procurement with increased investments.
EY has estimated the GCC market size in India at $43-47 billion by the end of this year and to cross $100 billion by 2030-end.