Knight Frank India, the countries leading real estate consultancy, has highlighted in its latest report, GCC: Driving India’s Real Estate Growth Story, that global capability centres (GCCs) have emerged as the primary occupiers of flex spaces across the country. According to the data analysis from Knight Frank Research, GCC-occupied flex seats across eight key markets increased from 17,380 in 2023 to 22,881 in the first nine months of 2024.
A year-on-year (y-o-y) analysis of GCC flex seat occupancy shows a decline in usage from 2021 to 2023, as companies transitioned back to traditional office spaces, with the easing of the Covid-19 pandemic, informs Knight Frank India. However, 2024 saw a shift in the pattern, with flex seat occupancy by GCCs increasing once again. This resurgence is linked to slower economic growth in the US, prompting companies to leverage India’s cost advantages and talent pool, boosting demand for flexible workspaces. This change also highlights India’s cost-efficiency and skilled workforce as key drivers in workspace decisions for global firms.
Bengaluru dominates, GCC-focussed flex space occupancy across eight markets in India (41 per cent), underscoring its status as a key tech and corporate innovation hub. In contrast, Kolkata holds just 1 per cent of the flex space share, indicating a limited presence of such centres there. This distribution reflects regional preferences, with Bengaluru standing out as the leading market for flex space adoption among GCCs.
GCCs occupy about 202.6 million sq ft of Grade A office space across India’s top six cities, with Bengaluru and Hyderabad contributing three-fourths of this leased space.
From 2018 to Q3 2024, the IT/ ITeS sector has continued to dominate the GCC landscape, followed by the BFSI and Consulting sectors. GCCs still lead the chart followed by BFSI and Consulting GCCs. Mumbai leads with the highest percentage of GCCs under the BFSI sector, while Bengaluru has the highest percentage of GCCs in the IT/ ITeS sector.
The Americas dominate
Of the 1,900 GCCs in India, about 66 per cent originate from the Americas (1,250: from the US and 30 from Canada), showcasing the region’s major influence. Another 27 per cent of India’s GCCs originate from the EMEA (Europe, the Middle East and Africa) region, reflecting interest shown by both established and emerging economies. The APAC region, though smaller, contributes 7 per cent, with 44 GCCs from Japan, 25 from Singapore and 15 from Australia.
“India’s GDP growth continues to be the fastest among major economies in the world, attracting attention through its rapidly developing infrastructure and the steady influx of top-tier talent and corporate entities,” affirms Shishir Baijal, chairman & managing director, Knight Frank India. “This, combined with favourable factors, such as a stable political climate, a large consumption-driven economy and a strong regulatory framework in the financial sector, have increasingly positioned India as a preferred destination for multinational corporations. The cost-efficient nature of flexible workspaces has further driven a notable increase in occupancy rates among GCCs in 2024. With a thriving talent pool and competitively priced commercial assets in key markets, GCCs are well-positioned for sustained growth in the coming years.”
The growth drivers for GCCs in India extend beyond just the BFSI and technology sectors. They now encompass a variety of industries, including manufacturing. With the government of India investing about 3.5 per cent of GDP in infrastructure, significant growth in the manufacturing sector is anticipated.
There are several ways to enhance the operation and expansion of GCCs in India. As there is need for innovative financing strategies, GCCs in India should consider innovative financing options to maximise tax efficiency and minimise expenses. One such effective method is the lease renting model, which allows GCCs to lease essential items, such as furniture and IT equipment, from third-party providers, thereby benefiting from dividend tax savings.
GCCs in India should look for new micro locations within cities that offer improved connectivity to metro lines The Americas dominate for effective operation of the GCC ecosystem.
Moreover, GCCs should also prioritise flexibility in their office space, enabling them to make necessary modifications adjustments in response to the rapidly changing business landscape. State governments in India should develop their own GCC policies, similar to the one introduced by Karnataka, as this would provide a clear roadmap for establishing new GCCs across various states in the country.