India in Pole Position as the Automotive GCC Engine of the World

The automotive industry is undergoing a transformative shift, driven by advancements in software, connectivity, and autonomous driving. To stay ahead of the curve, leading carmakers are establishing Global Capability Centers (GCCs) to access specialised talent and accelerate innovation. India, with its robust talent pool, cost advantages, digital infrastructure, and thriving technological ecosystem, is rapidly emerging as the GCC hub for automotive engineering R&D (research & development), embedded software design and development, and AI/ML (artificial intelligence & machine learning).

The Undisputed GCC Market Leader

India has established itself as the unrivaled champion of GCCs, housing over 1,580 centres and employing a staggering 1.6 million individuals. This translates to one-fourth of the direct jobs currently provided by the IT services industry in the country. At least 125 of the Fortune 500 companies have chosen India as their preferred GCC destination, with a significant portion (70%) originating from the U.S. and Canada. The next wave of growth is expected to come from Asia-Pacific corporations increasingly looking at India, signifying a potential shift in the geographical makeup of GCCs in India.

GCCs of multinationals such as Ford, Thales, Continental, Nissan, Mercedes-Benz, Daimler Truck, Bosch, Micron, ZF Group, Hitachi, Schneider Electric, ABB, Harman, HSBC, Wells Fargo, Citi, Barclays, Standard Chartered, Mastercard, Deutsche Bank, Aviva, AIG, BNY Mellon, Swiss Re, UBS, Saks, Walmart, Tesco, Unilever, Lowe’s, AstraZeneca, UnitedHealth Group, Elevance Health, Merck Group, Novartis, Highmark Health, Medtronic, GSK, Novo Nordisk, Siemens Healthineers, Sandoz, Johnson & Johnson, Pfizer, Roche, AMD, Intel, Nvidia, Qualcomm, Rakuten, Samsung, LG, Philips, and T-Systems call India their home.

Automotive businesses are also increasingly looking at India for engineering R&D, IT, and BPM (business process management). Over the last two decades, India has witnessed the setting up of over 60 GCC units employing over 1,10,000 professionals. About 20% of these units deliver automotive technologies for in-vehicle infotainment, vehicle telematics & V2X, and e-mobility.

Beyond Cost Savings: A Focus on Innovation and Collaboration

The initial rationale for establishing GCCs was primarily driven by cost-effective offshoring. However, the paradigm has shifted towards a more strategic approach. Today, GCCs in India prioritize access to highly skilled and specialized talent and drive a strategic agenda encompassing R&D and NPD (new product development) using advanced technologies like AI, ML, NLP, IoT, cloud, big data & analytics, and mobility. India boasts a rich talent pool of over 2.3 million STEM (science, technology, engineering, mathematics) graduates annually, including 1.5 million engineers. This pool, coupled with India's rapidly evolving startup ecosystem, world-class academic & research institutions, and scalable digital infrastructure, fosters a collaborative environment where GCCs can leverage cutting-edge ideas and approaches for automotive software design and development.

• Leadership Hunting Ground: In the last decade, the number of professionals of Indian origin taking up global leadership roles at multi-national corporations (MNCs) has skyrocketed. Increasingly, local leadership roles in India-based GCCs of MNCs have expanded to include regional and global mandates. Over 5000 leadership roles in India-based GCCs today are global; a number that will breach 30,000 by 2030.
• Talent Powerhouse: India offers unparalleled access to a vast pool of highly qualified engineers with expertise in automotive software development, testing, and maintenance. This translates to a readily available workforce capable of tackling complex design and development challenges.
• Cost-Effective Development: Establishing a GCC in India offers significant cost advantages compared to in-house development efforts. India’s tier I cities offer the lowest rental even among Asian cities like Singapore or Hong Kong. This allows automotive brands to optimize their resources and allocate funds toward other strategic areas. Today, more than 45% of Grade A commercial real estate in tier-I Indian cities is leased out by GCCs.
• Faster Time to Market: India's agile development expertise ensures projects are completed expeditiously. This enables automotive brands to quickly respond to market trends and introduce innovative software solutions with minimal delays.
• Innovation Hub: GCCs in India serve as catalysts for innovation. They foster collaboration between talented engineers and encourage an environment conducive to exploring new ideas and developing cutting-edge automotive software solutions.
• Security Expertise: India has a growing pool of professionals with expertise in automotive functional safety (FuSa) regulations like ISO 26262 and cybersecurity protocols. GCCs can leverage this talent to ensure their software solutions are risk-free and secure.
• Scalability & Flexibility: GCCs offer a high degree of scalability. Automotive brands can easily adapt the size and capabilities of their centers based on project requirements, ensuring optimal resource allocation and cost efficiency.
• Intellectual Property (IP) Protection: India has in place a strong legal framework and independent institutions to administer justice. Decades of experience delivering software products and services in an onshore-offshore model has matured the IP landscape.
• Regulatory Compliance: The Indian software industry is exposed to global standards and compliance measures be it privacy, confidentiality, IP, or financial reporting and India has a vast pool of trained and well-experienced talent to ensure compliance.
• Cultural Melting Pot: Cultural diversity is part of the Indian DNA. Today, that has translated into a wholehearted willingness to embrace diversity in thought, ideas, experiences, and approaches.
• World-class Digital Infrastructure: India’s advanced digital infrastructure has come in for praise from leaders around the world. A 5G network is already in place to support IoT, and readiness to embrace 6G and 7G is underway.

Automotive GCC Success Stories

• Ford Motor Company: Ford established a GCC in Chennai in 1998. The India team’s expertise in software engineering, analytics, data sciences, AI/ML, product engineering, and FinTech drives technological evolution and helps propel Ford forward on its transformation journey.
• Nissan: Nissan's GCC at Technopark Thiruvananthapuram uses advanced technologies like IoT, AI, and VR/MR (virtual reality & mixed reality) to transform design, production, and customer experience.
• Mercedes-Benz: Mercedes-Benz has established a GCC in Bengaluru dedicated to research and development for connected cars and autonomous driving technologies. This centre allows Mercedes-Benz to have complete ownership of ADAS products and platforms, including intelligent drive systems at Level 2 autonomy and park assist systems.
• Volvo: The largest R&D centre of Volvo outside Sweden is in Bengaluru, focusing on enhancing trucks produced by Volvo, Renault, and MAC using the latest technologies.

The Future Landscape

The Indian GCC market is projected to reach a staggering $110 billion by 2030. The automotive sector is a key driver of this growth, as carmakers increasingly rely on software-driven functionalities. While tier-I cities like Bengaluru, Pune, Chennai, Hyderabad, Mumbai, and the National Capital Region host many GCCs, tier-II cities like Mysuru, Vadodara, Coimbatore, Thiruvananthapuram, Kochi, Vishakapatnam, and Goa too are emerging as attractive locations for new investments. These cities offer cost-effective infrastructure, favourable government policies, and a growing talent pool, making them viable alternatives to established metro cities.

Another evolution certainly gaining momentum is in the BOT (Build. Operate. Transfer) engagement model. That many BOT projects have not succeeded could be a major reason for this rethink. Increasingly BCC (Build. Co-locate. Co-innovate) seems to be the new way forward for GCCs. Here, the offshore technology partner helps the automotive principal set up the business in India, hire and skill talent, establish security and governance frameworks, and ensure seamless project delivery. The biggest advantage of BCC over BOT is that there is no fear of an imminent revenue cliff or loss of key employees seconded to the principal by the partner. This win-win partnership allows both parties to nurture a long-term relationship leading to cross-fertilization of ideas and paving the way for cutting-edge innovation.

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Jijimon Chandran | Chairman, CII Thiruvananthapuram Zone