Global Capability Centers (GCC) & Start-ups – A symbiotic relationship when established can generate mutual growth 

By Gaurav Gupta, Partner, Deloitte India and Keerthi Kumar, Partner, Deloitte India

We are all witnessing the start-up story unfold in India ¬– how India has emerged to be the 3rd largest start-up ecosystem in world, highest growth in deep tech start-ups that is particularly of interest across sectors given the slow but steady adoption rate and about 8000+ b2b start-ups, this number is growing as we speak.

A quick glance at the GCC landscape in India will tell us that we hold the lion’s share of over 50% of the centers located in India. About 40% of the 1400+ GCCs in India are R&D centers and about 50% of the new GCCs set up in the last five years are digital and R&D centers. GCCs have come a long way from being back-office centers and the engine room of an enterprise to becoming a microcosm of the parent organization. The GCC ecosystem is also going through a metamorphosis by adding strands of thinkers and influencers in their DNA which historically have been doers and optimizers.

Why are we specifically talking about these two players and what symbiotic relationship is possible between the two? What benefits can they reap and what does it mean to our country? The first reaction to these questions gets the authors reminded of the African philosophy Ubuntu – I’m because we are.

Potential areas of dovetailing

From the GCC’s lens:

GCCs aspire to go beyond their BAU responsibility and become frontline innovation partners for their global organisations, one of the primary levers towards this intent is adoption of emerging technology to re-define business models and build that utility in the center. Emerging and deep tech is simply our start-up ecosystem’s playfield that is raring to scale and grow. There appears a symbiotic relationship because each one’s vision can be achieved through mutual contribution.

GCCs are an integral part of behemoths that aspire to be agile and nimble, which is typically a start-up’s DNA. Start-ups seek sandboxes, data, domain and sectoral insights to make their products sharper and of course those big names that they can associate themselves with. Quite interestingly, these resources that the start-ups seek are usually available with GCCs.

Through the start-up’s lens: 

Let’s for a moment look at Israel – historically being mired with adversities, trade boycotts and relatively small domestic self-consuming market. Yet, the world knows about their flourishing start-up ecosystem which largely focuses on the global markets for demand. There are over 1400 GCCs from over 100 countries in India and when we get these players in the ecosystem to work together, what we get for our start-ups is the access to global markets by just being in India. We have seen instances of GCCs in India acting as a conduit for our start-up ecosystem to go global – for instance, a Pune based start-up cracked an HQ use case and through the process found Germany as an attractive market to enter.

When they work together, each one has something to offer that the other one wants and, in the process, some GCCs become start-up’s customers, some partners and some even strategic investors. Sky appears to be the limit when they put collaboration at the heart of the matter. This is no utopian concept anymore – about USD$1.5 billion were invested in start-ups by companies with GCC in India, and over 300 startups are engaged by GCCs each year in India as new age partners garnering revenue of about $15M, $8M funding has been provided through GCC accelerators. Most of this when only 8-10% of the GCCs are engaging with our start-up community. While this could mean just scratching the surface, there is huge economic untapped potential and as we see it, this phenomenon of open innovation at GCCs and our start-up ecosystem leveraging the GCCs to go global may go mainstream in the days to come.

With the pandemic hitting the globe, the physical boundaries for organizations to work and interact are blurring even more. Further, the new-age technologies have enabled seamless interaction and work environment for organizations to carry out business with one another across continents. This only holds promise of a brighter future for the GCC and start-ups collaborations in India in the coming years. Focusing on innovation and advanced technology is becoming a necessity for every business, thereby it’s becoming essential for GCCs to further explore and leverage the growing start-up ecosystem in India to be able to contribute to their parent company’s growth journey. Whereas, for start-ups, accessing global markets via GCCs, leveraging GCCs’ domain expertise and brand reputation, and accessing GCCs’ physical and virtual infrastructure, are among the many perks of such partnerships. All in all, the current environment with respect to start-ups, GCCs, government policies, talent and infrastructure, provides a thriving platform for organizations to accelerate their growth and cater to ever emerging needs of the new-age customers and global economy.