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The answer is simple—India offers a massive pool of skilled talent, cost advantages, and a thriving IT and business ecosystem. This has made it a global hub for multinational companies looking to establish offshore centers.
But while the benefits are clear, setting up a GCC in India is not as easy as it sounds. Many companies struggle with regulatory roadblocks, talent retention, cultural gaps, and operational complexities. Without the right strategy, what seems like a cost-saving move can turn into a challenging ordeal.
In this article, we’ll break down the key hurdles businesses face when establishing a GCC in India. Whether you’re an organization planning to set up operations or already managing one, understanding these challenges will help you navigate them effectively.
Common Roadblocks in Establishing a GCC in India
Regulatory and Compliance Challenges
Setting up a GCC in India involves dealing with company registration, labor laws, data security, and taxation. Businesses must comply with employment laws like the Shops and Establishments Act, follow data protection regulations under the IT Act, and navigate corporate tax and transfer pricing rules.
For example, a global fintech company expanding to India faced delays due to compliance with the Reserve Bank of India’s (RBI) data localization norms, requiring all financial data to be stored within the country. This led to unexpected infrastructure costs and operational changes.
How to overcome:
- Hire local legal experts for compliance.
- Operate in Special Economic Zones (SEZs) for tax benefits.
- Stay updated on evolving laws, especially data protection and taxation policies.
Talent Acquisition and Retention Challenges (Summary)
While India has a large talent pool, hiring and retaining skilled professionals for a GCC is challenging due to high competition, rising salary expectations, and high attrition rates. Many companies struggle to find experienced candidates for niche roles, especially in IT, analytics, and finance.
For example, a multinational tech company setting up a GCC in Bangalore faced a 25% attrition rate within the first year as employees frequently switched jobs for better pay and career growth opportunities, impacting project stability.
How to overcome:
- Offer competitive salaries and career growth opportunities.
- Invest in employee training and development programs.
- Build a strong employer brand to attract and retain top talent.
Talent Acquisition and Retention Challenges
While India has a large talent pool, hiring and retaining skilled professionals for a GCC is challenging due to high competition, rising salary expectations, and high attrition rates. Many companies struggle to find experienced candidates for niche roles, especially in IT, analytics, and finance.
For example, a multinational tech company setting up a GCC in Bangalore faced a 25% attrition rate within the first year as employees frequently switched jobs for better pay and career growth opportunities, impacting project stability.
How to overcome:
- Offer competitive salaries and career growth opportunities.
- Invest in employee training and development programs.
- Build a strong employer brand to attract and retain top talent.
Cultural Integration and Work Ethos Differences
Merging the work culture of a multinational company with India’s local work environment can be challenging. Differences in communication styles, hierarchical structures, and decision-making approaches often lead to misunderstandings. Companies also face challenges in aligning global corporate values with local employee expectations.
If a US-based company sets up a GCC in India, it may initially struggle with India’s preference for structured hierarchies, which contrasts with a more flat, open work culture in Western organizations. This can slow down decision-making and affect collaboration.
How to overcome:
- Conduct cultural sensitivity training for both leadership and employees.
- Encourage open communication and adapt flexible management styles.
- Promote cross-country exchanges and leadership visits to bridge cultural gaps.
Operational and Governance Complexities
Managing a GCC in India involves handling large teams, aligning local processes with global standards, and ensuring smooth coordination across time zones. Companies often struggle with maintaining productivity, defining clear reporting structures, and setting up effective governance models.
Let’s say a European company expands its GCC in India but faces delays in project execution due to different time zones and a lack of standardized workflows. Without proper governance, inefficiencies increase, leading to missed deadlines and communication gaps with the headquarters.
How to overcome:
- Establish clear governance frameworks with well-defined roles and responsibilities.
- Implement standardized processes and workflow automation tools.
- Set up overlapping working hours for seamless collaboration with global teams.
Demonstrating Continuous Value to Headquarters
Beyond cost savings, a GCC must prove its strategic value to the parent company by driving innovation, improving processes, and contributing to business growth. Many GCCs struggle to move beyond operational support and gain recognition as key business enablers.
If a company sets up a GCC to handle routine IT support but fails to showcase its ability to drive automation and innovation, it may be viewed as just a cost center rather than a strategic asset. This can lead to budget cuts or even relocation of operations.
How to overcome:
- Focus on innovation and automation to add long-term value.
- Align GCC goals with the parent company’s business objectives.
- Regularly showcase success stories and measurable contributions to global leadership.
Infrastructure and Technology Challenges
While India has made significant improvements in infrastructure, some regions still face issues like power outages, inconsistent internet connectivity, and limited access to advanced technology hubs. These factors can disrupt operations and affect productivity.
For instance, a company setting up a GCC in a Tier-2 city may experience frequent network downtimes, impacting real-time collaboration with global teams. Without proper backup solutions, business continuity can suffer.
How to overcome:
- Choose locations with well-developed IT infrastructure and business parks.
- Invest in backup power solutions and high-speed internet redundancy.
- Leverage cloud-based tools for seamless global collaboration.
Financial and Cost Considerations
Setting up a GCC in India is often seen as a cost-saving move, but hidden expenses can impact the expected benefits. Companies must account for office setup, technology investments, compliance costs, and talent retention expenses.
Let’s say a company estimates a 40% cost reduction by shifting operations to India but later faces unexpected expenses like higher salaries for niche talent, infrastructure upgrades, and increased compliance costs. Without proper financial planning, the cost advantage can shrink.
How to overcome:
- Conduct a detailed cost-benefit analysis before setting up operations.
- Factor in long-term expenses, including salary inflation and technology upgrades.
- Optimize costs through automation and shared service models.
Strategies to Overcome These Challenges
Successfully setting up a GCC in India requires proactive planning and the right strategies to tackle operational, regulatory, and talent-related hurdles. Companies that invest in long-term solutions can maximize efficiency and ensure sustainable growth.
If an organization struggles with high attrition rates, simply offering higher salaries may not be enough. Instead, focusing on employee engagement, career growth opportunities, and a strong workplace culture can lead to better retention.
Key strategies for success:
- Build a strong leadership team with experience in managing offshore centers.
- Develop a robust compliance framework to handle regulatory challenges.
- Invest in technology and automation to streamline operations.
- Prioritize employee well-being and career development to reduce attrition.
- Align the GCC’s objectives with the parent company’s long-term business goals.
Conclusion
Setting up a GCC in India comes with significant advantages, but it also presents challenges that businesses must navigate carefully. Regulatory compliance, talent acquisition, cultural differences, operational complexities, and infrastructure gaps can create hurdles if not addressed proactively.
However, companies that invest in strong governance, technology, and employee engagement strategies can turn their GCCs into innovation hubs rather than just cost-saving units. With proper planning, compliance management, and a focus on long-term value creation, businesses can successfully establish and scale their operations in India.
Supersourcing handles every step of the process, from assessing your needs and designing a strategy to setting up infrastructure, sourcing talent, and ensuring compliance. Our end-to-end approach ensures a hassle-free experience for you.
India remains a top destination for GCCs, and organizations that approach it with the right strategy can unlock long-term growth and efficiency.
Frequently Asked Questions (FAQs)
1. What industries benefit the most from setting up a GCC in India?
Industries like IT, finance, healthcare, analytics, and engineering benefit the most. Companies in these sectors leverage India’s skilled workforce and cost advantages for software development, research, customer support, and operational services.
2. How long does it take to establish a GCC in India?
The timeline depends on factors like company registration, regulatory approvals, infrastructure setup, and talent acquisition. On average, it can take 6 to 12 months to fully establish operations.
3. What are the legal requirements for foreign companies setting up a GCC?
Foreign companies must register as a wholly owned subsidiary, joint venture, or liaison office under the Companies Act, comply with RBI guidelines, adhere to labor laws, and follow tax regulations like GST and transfer pricing norms.
4. How can GCCs in India manage high employee attrition?
To reduce attrition, companies should offer competitive salaries, provide career growth opportunities, invest in employee engagement programs, and create a strong workplace culture.
5. What is the future of GCCs in India?
The GCC model is evolving beyond cost-saving functions to focus on innovation, digital transformation, and strategic business contributions. With India’s strong talent pool and improving infrastructure, GCCs are expected to grow further, with more companies setting up high-value operations.
