With almost every global company setting up a centre in India, the world recognises the technical prowess of the software industry in this country. Can the same be said for electronics product development here?
Global capability centre — a very fancy term for an engineering captive design house. With the short form GCC, this term has been doing the rounds lately, so why should it not? In recent years, India has become a hotbed for GCCs, with over 1580 centres employing around 1.66 million professionals. These figures, reported by NASSCOM, further project the overall market size of GCCs in India to more than $46 billion in FY2023, growing at a compounded annual growth rate (CAGR) of over 11%. Going by these figures, the next decade could witness this market share rise to $130 billion! That is approximately equal to the current GDP of our neighbour, Sri Lanka!
Around 60% of the new GCCs established in India have all three functional areas – engineering research and development (ER&D), information technology (IT), and business process management (BPM), in Q4CY2023. For our readers in the electronics industry, 30% of the new GCCs set up in India in the fourth quarter (Q4) of calendar year (CY) 2023 were from the semiconductor vertical. In the global pool of 2.3 million semiconductor professionals, the US, China, and India collectively account for nearly 50% of the talent. For a layperson, these figures from NASSCOM could imply that the world views India as a formidable partner in the electronics and semiconductor development and manufacturing (ESDM) segment. But how have GCCs stirred up the growth in India with respect to electronics product design?
Tracing the evolution of GCCs
To evaluate the evolution of GCCs in India, we would have to go back to the start when GCCs came to India as satellite centres handling basic tasks, transitioning from outsourcing to insourcing with small internal teams. During the 1990s, the Y2K issue emerged, and the shift to viewing India as a key market for skill requirements began. GCCs were set up to harness local talent and expertise. Initially, the IT industry in India was focused on solving generic problems, but over the years, there has been a transition from mere capability centres to innovation centres as global companies aim to move forward with product development strategies.
Former Head of India Engineering at Logitech, Balajee Rajaram, explains that GCCs were originally conceived as a means to insource rather than outsource to third parties. “Internalising product development in India ensures that expertise remains within the local team when crafting products for the global market. Companies can cultivate internal proficiency and attachment to their products or services. GCCs provide competence and capabilities to a global organisation from India. This model is driven not solely by cost efficiency but also by India’s vast pool of diverse skills under one roof. This offers opportunities for Indians to assume global leadership roles, facilitated by effective global teamwork despite time zone challenges.”
Today, GCCs have moved far beyond mere insourcing to become full-fledged product development teams. As of FY2023, India houses more than 55 semiconductor GCCs, with over 95 centres and over 50,000 semiconductor engineers. GCCs in India are not just support hubs but integral parts of global operations, taking on independent product responsibilities and nurturing global leaders.
Measuring the contribution of GCCs – IP and innovation
Many GCCs, particularly in the semiconductor industry, are driving innovation by securing patents and building foundational IP solutions, emphasising opportunities for engineers to work on high-value IP and contribute to their companies’ global competitiveness. A vast majority of these GCC units are present in Bengaluru and Hyderabad, collectively accounting for over two-thirds of the semiconductor GCCs in India. These two cities also house over 80% of the semiconductor talent in India. Other key locations include NCR, Pune, and Chennai.
The product development at the Logitech India design centre contributes now to a significant chunk of its $5 billion business. Initially, the Chennai centre started developing a part of products like Harmony, a $20 million business of Logitech. However, in due course, the company pivoted its strategy to expand its engineering team’s role to contribute to almost every Logitech product.
The company’s recent product, the Zone Wireless 2 headset with noise cancellation on both sides, developed significantly in Chennai, has seen strong sales. The R&D division’s involvement spans almost all Logitech products, ensuring that the innovations cater to a global market rather than being limited to local demand.
Another semiconductor giant, sitting in the bustling city of Bengaluru boasts about the number of patents it has produced from its office for the world. Renowned for its analogue, digital and mixed-signal integrated circuits (ICs), Analog Devices proudly proclaims that its Bangalore GCC carries the record of contributing to more than 250 patents to its parent organisation.
Analog Devices’ India Site Head, Srinivas Prasad, believes that GCCs need to play an innovative role in enhancing the competitiveness of the parent company. “By building a strong patent portfolio and getting involved in the early stages of product development instead of later stages, we can support customers in areas such as product engineering and design,” he says.
While many GCCs are moving towards this model, where they own products, functions, and services entirely, hardware product development in India still has a long way to go, with most companies still harnessing Indian talent for their software skills.
Soft on hardware development!
Industrial technology company Hexagon has a strong portfolio of hardware patents, but all IP developed in its Hyderabad GCC has been software-based. Interestingly, Hexagon’s Hyderabad centre is the company’s largest R&D centre globally, with around 2100 employees, and is the only location where all the company’s product divisions operate. “When we file patents, they are registered in the Indian Patent Office. If the business requires it, we extend the filing to other countries per the division’s recommendation. Patents are company assets where the individual employees responsible are acknowledged and their names listed on the patent,” says Navaneet Mishra, Senior Vice President and head of Hexagon R&D India.
Indian GCCs are key players in semiconductor design, testing, quality assurance, and system integration, but physical fabrication and distribution activity is still nascent. This makes India an ideal hub for roles in software-oriented and design-heavy areas within the semiconductor industry, with the potential for further expansion in high-tech manufacturing as policies and infrastructure evolve.
Within wafer design and R&D, Indian GCCs have a high level of engagement in areas like architectural design, IP core development, and logic design. For design testing, activities like functional and physical verification, simulation and evaluation, and testbench development record high engagement. Even in QA testing, assembly, and packaging, India-based GCCs have high engagement in activities such as burn-in testing, functional testing, and environmental testing. Still, package design continues to remain a medium-engagement area. Harnessing the software capabilities of Indian talent, Indian GCCs show high engagement in firmware integration and driver development and a medium engagement in post-silicon validation and optimisation.
Prasad believes that the current situation presents more of an opportunity than a challenge for most companies. “India has four key aspects — engineering value, engineering excellence, a strong ecosystem, and an emerging market — making it a natural choice for companies to consider strategic investments in India. When making strategic investments, companies need to make choices such as establishing product marketing roles here and exploring India as a big market opportunity,” he shares.
Does this mean GCCs must also evolve and restructure their functional practices? Balajee explains what a global capability centre takes to develop products in India successfully. “Firstly, a successful GCC ensures that teams function as global units and enables them to have comprehensive visibility across all aspects of the project. Secondly, these teams are directly interacting with customers to understand user needs and preferences, and are then empowered to take ownership of the product and decisions, while also providing opportunities for them to assume leadership roles on a global scale,” he elaborates.
Partnering for exposure
The support that GCCs offer is not only limited to the organisation and its employees. Through semi-permeable membrane-like policies, many GCCs in India now collaborate with Indian startups lacking prior global product development experience, providing the necessary support and infrastructure to create products for the global market. This way, startups can utilise existing resources and expertise to propel their growth and, at the same time, share their knowledge and innovation with the GCCs to boost the company’s R&D capabilities.
Hexagon has recently partnered with Telangana-based accelerator T-Hub to set up a geospatial accelerator zone, offering its latest hardware and software to startups, free for proof-of-concept development. Along with this, the company publishes global problem statements for startups. If selected, they get an opportunity to reach an international audience in partnership with Hexagon.
“If the problem statements are solved by leveraging the startup’s Existing IP during the 100-day competition, the IP remains with startup. If they are building a new interface, which we both discuss and provide input on, and we pay for, that IP will belong to Hexagon. And, even before the engagement, all the IPs originally with Hexagon, remain with Hexagon,” explains Mishra.
Acknowledging the Indian government’s programmes for startups, Prasad says that state and central governments’ involvement in understanding the needs of the semiconductor industry in India has been very supportive. “GCCs are part of a strong ecosystem, including academia, research institutes, and a thriving startup community. We can partner with startups and the academic circle to accelerate our innovation and help shorten our product development time,” he adds.
The influx of global companies setting up their capability centres for R&D in India has been spurred by a growing market, highlighting India’s appeal in design engineering and product innovation. Bengaluru alone is home to approximately 600 foreign design engineering centres, a trend encouraged by pro-investment government policies and industry forums like NASSCOM and the American Chamber of Commerce. Adding various tie-ups has made GCCs in India an integral part of an ecosystem that combines engineering talent, government support, and corporate mentorship,
With examples of companies such as Analog Devices, Logitech, and Hexagon, Indian talent is not just limited to sales and support roles but is gradually contributing to patents, global product development, and customer-centric solutions, exemplifying the country’s capability to support and develop high-value IP for customers across the globe.
