Tamil Nadu ranks in the top two or three when it comes to most economic parameters, but as far as (the Global Capability Centre) GCC is concerned, the State is yet to arrive. The State has about 10 per cent of the GCCs. “However, as a city (Chennai), we are way behind Bengaluru, Mumbai, Hyderabad, NCR and Pune. Somewhere we lost out and we need to recognise that. Today, promoting GCCs is a priority area of the State government,” said Industries Secretary Arun Roy. Out of the 1,800 GCCs in India, nearly 300 are in Tamil Nadu, he added.

Tamil Nadu’s key advantage is talent, with the State producing the highest number of talent and good quality in this country. The infrastructure is good, and many cities are well-connected to the airports. The State’s economy is concentrated in Chennai, and cities like Coimbatore are ranked as the best Tier-2 cities for setting up GCCs. There is a plan to take GCCs to other small cities like Trichy and Madurai, he said at the GCC Next Summit24, jointly organised by Gundance Tamil Nadu and KreateWorks on Wednesday.

The availability of office space is good; the air quality is good, and the traffic congestion is less in cities than in other cities in other states. “We do recognise that these are initial advantages, and a lot more needs to be done on each front,” he said. For example, there is an airport (Chennai) but it is not as good as in other competitor cities,” he added.

“We understand there is a shortage of office space. Data suggests that the incremental absorption is much higher than the incremental supply. At some point we are going to face a bunch of office space. Again, this problem we have recognised. The State government is unlocking its own land bank. About 30 locations have been identified for office space development in participation with the private sector,” he said.

Coimbatore IT park development

Roy said efforts are being made to improve land rules so that more space can be built by the private sector. This is not restricted to Chennai but to other cities, including Coimbatore. There is feedback that companies want to move to Coimbatore, but there is not enough space there. An IT Park was just inaugurated recently, and before its inauguration, it was full. The State government has announced the construction of a new, much bigger park in Coimbatore on adjacent land and would like the private sector to invest there, he said.

Roy said Tamil Nadu has one of the most attractive subsidies and incentives for the GCCs. There is a straightforward policy for Fortune 500 companies or equivalent companies. For globally renowned companies to set up GCC, 30 per cent of the pay bill is reimbursed in the first year, 20 per cent in the second year and 10 per cent in the third. This was announced a few months back, and it has already seen a lot of traction thanks to this policy. The State government is open to tweaking the policy based on feedback from the companies, he said.

GCCs are one of the fastest-growing sectors of India’s economy. India has about 1,700 and 1,800 GCCs, but the potential is much higher. In the next 10 years, which is largely expected to be India’s decade because ours is one of the fastest-growing economies with a young population and producing one of the highest talent pools in the world, he said.

Knowledge arbitrage

In the next 10 years, we can expect many more global companies to move significant parts of their operations to India. This is not because of cost arbitrage, but because of knowledge arbitrage, he said.

Ramkumar Ramamoorthy, Partner, Catalincs, said the opportunity for GCC’s eventually, at some stage, to third party and start servicing customers outside of the parent. The US-based IT solutions company Cognizant is an example. It started servicing customers outside the D&D group, which three decades back established D&B RIC (Russia, India and China) with the Russian and Chinese experiments failing with the Indian experiment that was in Chennai took off and subsequently became. Cognizant, which went on to become a Fortune 200 company with roughly 255,000 employees in India, he said.

Every large GCC can turn to a third party, and you don’t need to be limited by the growth opportunity provided by the parent. There are some 20,000 plus companies that can be potentially serviced, he said. This is beginning to happen with a dozen GCCs that have joined the party in the last few years, he added.

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