According to Knight Frank, in 2023, the significant surge in office demand in India was propelled largely by international companies outsourcing jobs, with global capability centers and third-party IT service providers accounting for 46 percent of total workspace leasing, in its recent report titled 'Asia Pacific Horizon: Harnessing the Potential of Offshoring' by the real estate consultancy firm highlighted India's remarkable growth in the offshoring industry, solidifying its position as a top global service provider, capturing 57 percent of the global offshoring market.
The consultant clarified that the offshoring market encompasses companies delegating business processes or services to overseas providers, with the goal of capitalizing on cost reductions, specialized expertise, and operational enhancements.
The offshoring market, referred to as Business Process Outsourcing, includes diverse models like Global Capability Centers and Global Business Services. Global Capability Centers are internal divisions established by companies in offshore destinations, whereas Global Business Services entail centralized service delivery units offering a wide array of services worldwide.
"In 2023, India witnessed an overall leasing volume of 27.3 million square feet in the offshoring industry, marking a significant increase of 26 percent compared to the previous year", the report said. Offshoring includes a wide range of services, including IT outsourcing, research & knowledge process outsourcing, and other service process outsourcing.
The report highlighted that India hosts about 42 percent of the global firms that execute end-to-end business offshoring solutions from the country. "The offshoring industry significantly contributes to the Indian economy, accounting for nearly 60 percent of overall service exports in 2023. The industry's service exports have grown from USD 63 billion in 2013 to USD 185.5 billion in 2023 - a massive three-fold growth", it added.
According to the consultant, the Indian offshoring market emerged as a major player in the country's office space sector, securing over 46 percent of office leasing in 2023. In the same year, the offshoring market in India recorded a total leasing volume of 27.3 million square feet, with Global Capability Centers occupying 20.8 million square feet and third-party IT services occupying 6.5 million square feet.
By nurturing over 1,580 centers nationwide until 2023, the Global Capability Center (GCC) landscape in India has experienced substantial growth. Its contribution to office space leasing transactions in India surged from 25 percent in 2022 to 35 percent in 2023. While Information Technology remains the dominant GCC occupier, notable expansion has been observed in GCCs from the industrial sector, notably in the semiconductor, automobile, and pharmaceutical industries.
Viral Desai, Senior Executive Director, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency at Knight Frank India, said, "India has been a traditional leader in the outsourcing market and the meaningful policies of the government have augmented its position with a unique proposition of a high-skill, low-cost market".