GCCs taking to ‘hub plus one' plan to cut concentration risks

Time of India

3 days ago

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At least a fifth of fresh investments into new global capability centres (GCC) over the next one to two years would follow the "hub plus one" strategy, where companies expand from their metro base to add a centre in tier-II cities , showed the data from a major industry facilitator.'Having a second delivery center mitigates risks tied to over-concentration in one city,' said Vikram Ahuja, cofounder, ANSR, which helps clients set up GCCs across the country. 'Improvements in physical and digital infrastructure are making these cities viable for global delivery.'The model is picking up pace, driven by considerations of talent diversification, cost efficiencies, and business continuity and risk diversification, experts said. GCCs have lately been at the forefront of adding technology talent, even as locally listed pureplay outsourcing companies either shed jobs or run a tight ship amid growth challenges globally.GCCs in the metros are seen as the nerve centres anchoring complex R&D, high-value functions, and global process ownership, while the 'plus one' centres typically handle standardised or volume-based transactional processes and support functions and may have specialised skill pods.Further, emerging cities offer specialised, high-quality talent pools, especially in areas like analytics, cybersecurity , and digital engineering , Ahuja said, adding that these locations are also evolving into self-sufficient innovation hubs.'The Hubs Plus One model is a strong indicator of a larger trend towards a more dispersed and distributed GCC model,' said Alouk Kumar, CEO, Inductus.This indicates strategic evolution, he said, where core functions and high-value strategic work will remain concentrated in the established metro hubs while scalable, repeatable, and specialised functions will increasingly be pushed out to multiple "plus one" or even "plus X" locations.While national and state governments are taking steps to ease GCC setups, Kumar stressed the need for an expedited and pragmatic approach addressing gaps for timely execution and on-ground action.'The approach combines the advantages of tier-I cities with the scalability of tier-II hubs, allowing companies to hedge location risks while optimising costs,' said Kapil Joshi, CEO Quess IT staffing. 'These cities are estimated to contribute 15-18% of net new GCC hiring by 2026, as the 'Hubs Plus One' strategy transitions from pilot to mainstream adoption.'Tier-II and III locations are increasingly tapped for shared services, mid-office operations, digital engineering, and cloud support.Hiring by GCCs in tier-II and III cities has been growing faster than that in the tier-I hubs. Quess data showed that in Q1 FY26, hiring grew in Coimbatore by 34% sequentially, in Kochi by 28%, and Ahmedabad by 25%, outpacing the six metros where hiring grew between 3-10%. On average, tier-II hiring by GCCs is growing at nearly 20% QoQ.There are challenges, however.Tier-2 cities are still struggling to meet the depth requirements of advanced digital roles, such as full-stack DevOps, GenAI engineering, and L3+ cybersecurity. About 50% of complex mandates are being re-routed back to tier-1 locations, where talent density, peer networks, and marquee projects remain key magnets for senior professionals, as per Quess.As of the end of June, among GCCs of Fortune Global 500 companies in India, over 20 companies have GCCs in emerging hubs acting as 'plus one' centre, ANSR data showed.For instance, Uber which has centres in Hyderabad, Bengaluru has its 'plus one' in Vizag. Allianz has a metro centre in Pune and a satellite in Trivandrum. Ford has set up in Coimbatore alongside its centres in Bengaluru, NCR, and Chennai.Despite progress, some tier-2/3 cities still lag in Grade-A office spaces, power reliability, internet bandwidth, and urban mobility, Ahuja said.