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Karnataka, particularly Bengaluru, has transformed from a modest Business Process Outsourcing (BPO) hub into a global epicentre of technological innovation. This evolution mirrors India’s rise in the IT sector, with Bengaluru at its helm. The city’s journey from back-office operations to cutting-edge research and development showcases its adaptability and growth.

Today, Bengaluru is a prime location for Global Capability Centers (GCCs), attracting multinational corporations seeking to leverage India’s vast talent pool and innovative ecosystem. These centres have evolved beyond cost-saving measures, becoming crucial for global companies’ core operations and strategic initiatives.

Karnataka: From Offshore Capital to IT Hub

Before Bengaluru earned its reputation as India’s IT capital, the city primarily housed BPO centres because of the cost-effectiveness of doing business here and the presence of untapped talent. Initially, Karnataka offered services like call centres and back-office operations driven by multinational corporations (MNCs) that were looking to optimise human and resource capital. However, the turn of the millennium witnessed the rise of IT-enabled services (ITeS). Engineering, software development, and information science became cornerstones of Bengaluru’s growing value proposition, marking a shift from simple offshore outsourcing to a more intricate, value-added approach.

The Emergence of Global Capability Centers

By the early 2000s, as MNCs began recognising the potential of Karnataka’s human capital and dynamic market, the state saw a rise in Research and Development (R&D) centres. Over 400 companies of the Fortune 500 companies have established a presence in Karnataka, with most of them housing critical R&D functions in the state. What started as basic offshore capability centers has evolved into GCCs that add substantial value to global business operations.

Today, GCCs in Karnataka are not just about research and development but about enhancing the entire value chain—whether that means optimizing processes, reducing product development cycles, or driving innovation. These centers enable faster, more efficient global supply chains, with Bengaluru at the heart of this global revolution.

GCC Leadership: Karnataka’s Dominance

Today, India is the global capital for GCCs, and Karnataka is a leader within this space, hosting more than 460 GCCs. This accounts for 35% of the total workforce in GCCs across India. While various Indian states are vying to attract GCCs, Karnataka stands out, pioneering new policies to sustain its leadership position.

In the coming days, Karnataka will launch a groundbreaking GCC policy, ‘Nipuna’ designed specifically to cater to the evolving needs of these centres. Developed in collaboration with industry stakeholders, this policy will be the first in India. Unlike frameworks that align GCCs with either R&D or IT policies, Karnataka’s approach will be holistic, recognising the multifaceted role these centres play in today’s global economy.

Why Choose Karnataka for GCCs?

Karnataka offers several compelling reasons for companies to establish or expand their GCCs in the state:

1. Talent Pool: Bengaluru’s cosmopolitan nature and educational infrastructure provide a continuous pipeline of skilled professionals. Karnataka boasts 52 universities, 243 engineering colleges, and over 1,100 industrial training institutes. Moreover, Karnataka houses 50% of India’s Artificial Intelligence/Machine Learning talent, making it an ideal destination for emerging technologies.
2. Skilled Workforce Development: Recognising the specialised skills needed for GCCs, Karnataka has established a Skill Council on Emerging Technologies. This council has developed the “Nipun” initiative, which collaborates with industries to bridge the gap between university education and industry needs. This ensures that companies have access to a highly trained workforce tailored to the requirements of the most advanced GCCs.
3. Research and Development: As one of India’s premier R&D hubs, Karnataka’s ecosystem is deeply connected to global innovation. Whether in the initial research or final product testing stages, companies setting up R&D operations in Karnataka benefit from a vast and interconnected knowledge network.
4. Startup Ecosystem: Bengaluru is India’s startup capital and ranks among the top global startup ecosystems. Karnataka’s startups received 40% of India’s venture capital funding in 2023 despite global economic challenges. The state has also launched the “Elevate” program, which grants nearly 1,000 startups, fostering entrepreneurship from the ground up.
5. Business-Friendly Policies: One of Karnataka’s key strengths is its commitment to continuity. Irrespective of government changes, policies that support industry growth are consistently upheld. This stability and forward-thinking policies create a conducive environment for businesses to thrive.

Karnataka’s new GCC policy, developed in response to industry feedback, is poised further to strengthen the state’s leadership in the global economy. By aligning industry needs with government initiatives, Karnataka aims to be the destination of choice for companies looking to set up or expand their GCCs.

Also Read | Karnataka’s Strategic Initiatives Set Stage for Exponential Growth

In conclusion, Karnataka’s vision is to create an environment where innovation, research, and technology converge to drive global business forward. With a robust talent pool, cutting-edge policies, and a commitment to excellence, Karnataka is not just India’s IT capital but a global hub for GCCs.

Views expressed by Darshan H.V., IAS,  Director Electronics, Information Technology, Biotechnology and Science & Technology, Government of Karnataka

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