India's demand for office space from Global Capability Centres (GCCs) is set to rise significantly, with projections reaching 26 million square feet by 2027, up from 19.69 million square feet in 2023. Knight Frank's report highlights a 16% increase in office leasing deals over five years, with GCCs completing 6,667 transactions. The IT/ITeS sector leads in space absorption, with Mumbai and Bengaluru as key hubs. The growth is driven by evolving hybrid work models and increased GCC activity, particularly in manufacturing. India's competitive advantages in talent and costs make it a prime destination for multinational expansion.
India is set to experience a substantial rise in office space demand from Global Capability Centres (GCCs) over the next few years. According to Knight Frank's latest report, office absorption by GCCs is projected to reach 26 million square feet by 2027, up from 19.69 million square feet in 2023. This increase reflects a broader trend of heightened transaction activities, with GCCs completing 6,667 office leasing deals across eight major cities between 2018 and 2023. This represents a 16% rise from 16.99 million square feet in 2018.
The growth of GCCs in India highlights the country's potential to enhance processes and drive business innovation. The report emphasizes the urgent need for leaders in Data, AI, and Analytics within GCCs to collaborate more effectively. This collaboration is essential for creating a competitive advantage and identifying new growth opportunities. The use of Generative AI and a realignment of business strategies are crucial for driving innovation and meeting the demands of a rapidly evolving market.
In terms of sector-specific activity, the IT/ITeS sector leads the chart, followed by BFSI and Consulting GCCs. Mumbai holds the highest percentage of GCCs in the BFSI sector, while Bengaluru leads in the IT/ITeS sector. Between 2018 and 2023, around 5,349 office deals focused on GCCs were finalized for spaces under 50,000 square feet across the eight cities. Additionally, 790 deals were in the 50,000 to 100,000 square feet range, and approximately 528 deals involved spaces above 100,000 square feet, marking them as the largest deals signed during this period.
Rahil Gibran, National Director of Occupier Strategy and Solutions at Knight Frank India, commented that India's GCC market is expected to grow unabated over the next few years and has already witnessed significant momentum, with the number of GCCs currently standing at around 1,600. The development of new GCCs, particularly in the manufacturing sector, has increased year on year. Additionally, the talent landscape in the technology sector has evolved to meet the growing demand of new GCCs, further supporting the sector's expansion in India.
The global operating model for GCCs is shifting towards a hybrid approach. This new model balances centralized work-from-home strategies with traditional office setups to minimize costs while maintaining effectiveness and risk management. The hybrid model is proving to be the most beneficial for GCCs in India, offering a blend of cost savings and operational efficiency.
India remains a key hub for GCCs, competing with other regions such as the US, Latin America, China, Europe, and the APAC region. The country's appeal is reinforced by its ease of hiring talent and lower operational costs compared to global averages. Multinational corporations are increasingly viewing India as a preferred destination for establishing or expanding their operations, with US companies leading this trend.
In summary, India's GCC market is set for growth, driven by increased office space absorption and sector-specific activity. The shift towards hybrid operating models and the country's competitive advantages in talent and cost efficiency make it a prime location for multinational corporations looking to expand their global footprint.
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