Increase of Global Competence Centers in the Asia-Pacific Region

In the dynamic world of business, India is making a significant mark as a preferred destination for Global Capability Centres (GCCs). With a pool of highly skilled professionals and supportive governmental policies, India is becoming a catalyst for growth and innovation for many companies.

One such example is ERGO, a major insurance group in Germany and Europe, which established a GCC in Mumbai in early 2022. ERGO's GCC in India serves as the captive technology hub, responsible for providing IT solutions in the insurance space for the entire ERGO Group. The centre currently employs 550 people and has ambitious growth plans over the next few years.

Deutsche Bank, a renowned global financial institution, is partnering with ERGO's GCC in India to provide bespoke solutions using cutting-edge banking technologies. The partnership is facilitating the automation of exports for ERGO's GCC in India, eliminating manual interference and providing real-time updates through Deutsche Bank's Trade Pay platform. The centre is also making use of Deutsche Bank's Autobahn Cash Manager for payment execution and deposit booking.

ERGO's GCC in India is not alone in this journey. Companies like HOERBIGER, a technology company headquartered in Zug, Switzerland, have also moved their entire global treasury function to Singapore during the pandemic, citing early reporting and consolidation as key benefits.

The growth of GCCs in India is not a recent phenomenon. From the late 1990s and early 2000s, large multinational companies started outsourcing back-office data functions and IT support to countries in Eastern Europe or Asia-Pacific (APAC) to benefit from their low-cost labor. The next evolution was to centralize and standardize tasks in IT, finance, and customer services in shared services centres (SSCs). Companies began taking this approach even further by concentrating their global activities in areas such as research and development (R&D), cloud computing, data analytics, robotic process automation (RPA) and artificial intelligence (AI) under the roof of what are now called "Global Capability Centres (GCCs)".

India accounts for more than 50% of the global GCC market with more than 1,600 GCCs up and running in the sub-continent. By 2030, ANSR expects the GCC market size in India to have more than doubled in value - to US$110bn from US$46bn in 2023. The number of GCCs in India is expected to reach more than 2,400 entities by 2030.

The cross-border nature of GCCs' business, however, presents challenges, particularly in terms of FX risks. ET&S, ERGO's GCC in India, faces these challenges daily. To mitigate these risks, ET&S must undergo a certification process mandated by the Reserve Bank of India (RBI) for software and related service exports ('Softex').

The government of India has put in place several initiatives to support the growth of GCCs, such as the India AI stack and special economic zones (SEZs) with tax and customs duty incentives. These measures aim to foster an environment that encourages the growth and innovation of GCCs in India.

Indian tech startups are also thriving, with the country raising US$4.1bn in H1 2024, making India the fourth-highest funded country globally in the tech startup landscape. Other popular GCC locations in APAC include Vietnam, Malaysia, Singapore, and the Philippines.

In conclusion, India's growing role as a hub for GCCs is a testament to its skilled workforce, supportive government policies, and thriving tech ecosystem. As more companies continue to establish GCCs in India, the country is poised to become a significant player in the global tech and business landscape.

Sources: - ET&S Faces Challenges in Daily Financial Operations - India a Top Destination for GCCs - Deutsche Bank Partners with ERGO's GCC in India - India's GCC Market to Double by 2030 - Government Initiatives Support Growth of GCCs in India - India's Tech Startup Funding Hits US$4.1bn in H1 2024 - Other Popular GCC Locations in APAC - The Evolution of Outsourcing and GCCs - Singapore Popular Among Corporates for RTCs - HOERBIGER Moves Treasury Function to Singapore - India's GCCs Account for More than 1% of GDP - Government Incentives Attract Global Companies to India - GCCs Drive Emerging Technologies and Transformation - Challenges Faced by HOERBIGER's Treasury Team - Deutsche Bank's Expert Regulatory Advisory Helps ERGO's GCC in India - Deutsche Bank's Virtual Account Solution for HOERBIGER - Several Global Companies Expand R&D Departments in India