Business Standard Round Table: GCCs can help TN become $1 trn economy

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Global capability centres (GCCs) can play a role in Tamil Nadu’s race to become a $1 trillion economy by 2030 because these organisations focus more on high-value technology, product innovation, and research and development (R&D) aided by the state government’s policies.

 

This was the upshot of the discussion on the theme “Reimagining Tamil Nadu: Path to Knowledge Economy”, which was part of the Business Standard Round Table, organised in association with the Tamil Nadu government and Guidance Tamil Nadu.

 

Jaikumar Subramanian, partner at Deloitte India, said as the state aimed to treble the size of its economy in five years, it should focus on a closer collaboration of industry, academia, and startups.

 

“Policy will play an important role in this growth and so is the knowledge of global enterprises in GCCs.”

 

According to a recent report by information-technology body Nasscom, India has about 1,800 GCCs, spread over various verticals.

 

Those centres are expected to contribute about $112 billion in IT (information technology) export revenue this financial year.

 

Gangapriya Chakraverti, managing director, Ford Business Solutions, said it was a fallacy to label these centres rebranded business process outsourcing (BPO) firms. The differentia lay in the cutting-edge technology work they performed.

 

“There has been a transformation in what GCCs can deliver. From basic processes and SLAs (service-level agreements), we had joint ownerships with the headquarters to deliver on important projects. We take ownership, drive a project, and engage in product development, using high-end analytics to make the right decisions,” Chakraverti said at a panel discussion.

 

Ford Business Solutions has about 12,000 employees in the state.

 

While the bulk of the centres, as arms of multinationals, are based in Bengaluru and Hyderabad, Chennai is not far behind. The city is looking to grab a larger slice of the growing pie and establish itself as a viable option as multinationals look beyond the two other cities. It has such centres set up by automaker Ford, drugmaker AstraZeneca, carmaker Renault, shoemaker Adidas, pharmaceutical firm Pfizer, bank Standard Chartered, and the World Bank.

 

Siva Padmanabhan, managing director, AstraZeneca India, said setting up more GCCs in Tamil Nadu would boost the knowledge economy of the state by creating high-quality jobs and attracting talent from other states.

 

The drugmaker has about 3,500 people since setting up an office in Chennai a decade ago.

 

“The mission of GCCs should be to build world-class products and platforms, which means a lot of focus on R&D. However, that should not be confined to laboratories and scientists. We are talking about the digital avatar of R&D. We can have a digital twin of a human being or a machine and apply AI to it.”

 

Padmanabhan said companies had a fear of missing out if they did not have a presence in India to access the talent pool. They, he added, need to have a second presence too and for that Chennai is the ideal place.

 

Indian states are coming up with their own GCC policies.

 

According to the panelists, the state’s engineering talent makes Tamil Nadu an attractive destination for GCCs.

 

Kewyn George, global director of information services at Expeditors, said 20 per cent of STEM (science, technology, engineering and mathematics) graduates in India were from Tamil Nadu and 25 per cent of the hiring was from the state — the highest.

 

“Product-management knowledge is important along with R&D. While 90 per cent of the centres are in Chennai, there are also other viable places such as Coimbatore, Trichi, Salem, and Madurai because those cities are close to many engineering colleges,” added George.