Can Bangalore be India’s global captive center capital?

The IT capital of India, Bangalore, is heading towards a boom in the sphere of global in-house centres (GIC) or captive centers. Global players are on their way to the city to enhance their presence in the expanding Indian market.

From one of the most famous lingerie brands to the world’s largest beer makers, the stars of the global industry circuit are making a beeline to have their own facility set up in the techno city of the country.

Vidhana Soudha in Bangalore

Vidhana Soudha in Bangalore. Image source Muhammad Mahdi Karim/Augustus Binu

The GIC or Captive Center plunge

Bangalore is set to host the first ever GIC of Limited Brands, the makers of Victoria’s Secret lingerie. The company has approached the Foreign Investment Promotion Board in this regard. The city is on the planning radar of US food giant Cargill to be the base for its GIC in India.

Lowe’s, the US major in home improvement and hardware chain is on the threshold of having its own captive centre. Even renowned healthcare companies like Baxter International are showing keen interest of having their own facilities in Bangalore.

The interesting matter is that multinational companies (MNCs) that were eager to sell off or shut down their captive units in India are having a serious rethink about their decision. Some are even planning to expand or enhance their existing units in the country.

GICs are a major revenue generator for India in general and the IT-BPO industry in particular. Sensing the right time to woo the MNCs, the Karnataka Government and the IT industry body, Nasscom have speed to work on the Bangalore’s 50K Plan and develop the city as the GIC capital of India.

Sources said that Nasscom has already had some meetings with the senior management teams of several MNCs and are encouraged by their keen interest in setting up their own facility in the city.

The result of this impending explosion of captive centres in India can be traced to several factors that include stringent scrutiny by regulators in the US and Europe and the need for better command over sensitive data. Such issues are prompting MNCs to think in favour of having their own GICs in the country.

Moreover, India provides MNCs with cost advantage. Even management control is easier in GICs that gives MNCs less tension and more time to think and concentrate on enhancing their business worldwide.

India’s GIC circle

India enjoys a strong position in the global GIC circle. Out of the 1600 GICs spread across the world more than 750 of them can be found in the country. During 2002-2003 India witnessed a lot of activities in the form of 32 GICs.

But with the global economic meltdown in the last few years the numbers dropped to as low as 5 GICs in 2008-09. But now with the entry of more global leaders the position of India is once again slated to rise as a profitable base for GICs.

GICs usually perform strategic work and with the availability of sizable talent pool in the country at cost-effective rates the situation seems just perfect for the MNCs to step into India with their own facilities.

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