What's Happening?
Japanese companies are increasingly setting up Global Capability Centres (GCCs) in India to address talent shortages and support digital transformation. This trend is driven by Japan's rapidly aging population, with nearly 30% of its population aged 65
years and older. In contrast, India offers a large pool of technology and engineering talent, producing about 2.5 million STEM graduates annually. According to a Deloitte report, Japan is the largest contributor of GCCs from Asia Pacific countries to India, with over 100 Japanese companies operating these centers. These GCCs have evolved from support functions to engaging in high-value work such as electric vehicles, AI, and digital manufacturing. The India-Japan talent partnership is further institutionalized through a bilateral Action Plan for Human Resource Exchange and Cooperation, aiming to facilitate the mobility of over 500,000 people by 2030.
Why It's Important?
The establishment of GCCs in India by Japanese companies signifies a strategic shift in how these firms view India—not just as an outsourcing destination but as a partner in capability building. This development is crucial for India's economy, as the GCC sector could potentially add between $470 billion and $600 billion to the economy by 2030 and create up to five million direct jobs. For Japan, this partnership helps mitigate the challenges posed by its aging workforce by tapping into India's vast talent pool. The collaboration also strengthens bilateral ties and enhances workforce linkages, which could lead to increased economic and educational exchanges between the two countries.
What's Next?
The ongoing collaboration between India and Japan is expected to deepen, with more Japanese companies likely to establish GCCs in India. The bilateral Action Plan aims to send 50,000 skilled Indian professionals to Japan, enhancing workforce mobility and cooperation in education, research, and language training. This partnership could serve as a model for other countries facing similar demographic challenges, potentially leading to more international collaborations in the technology and engineering sectors.
