Introduction: The Rise of the China+1 Strategy

In the wake of evolving global supply chains and increasing geopolitical uncertainties, the China+1 strategy has emerged as a pivotal approach for multinational corporations seeking to diversify their operations beyond China. As highlighted in a recent BusinessLine interview with Ingram Micro CEO Diego Utge, this strategic shift is unlocking unprecedented opportunities for India, particularly in the professional services sector and the establishment of Global Capability Centres (GCCs).

This comprehensive article delves into the impact of the China+1 strategy on India, referencing the latest research and expert insights. We also examine how Han Digital, with its deep understanding of India’s talent markets and connections with senior leadership, is uniquely positioned to guide organizations through this transformative phase.

Understanding the China+1 Strategy: A Global Imperative

The China+1 strategy refers to the practice of companies diversifying their manufacturing, service, and operational bases by adding at least one other country—most commonly India—to their China-centric operations. This approach is driven by several factors:

• Rising labor costs in China
• Geopolitical tensions and trade wars
• Supply chain disruptions (e.g., COVID-19 pandemic)
• Regulatory and compliance challenges

According to a 2024 McKinsey report, over 60% of global companies with significant operations in China have either initiated or are actively considering China+1 strategies. India stands out as the top alternative due to its large talent pool, robust IT infrastructure, and government incentives.

India’s Competitive Edge: Why India is the Preferred ‘+1’

India’s ascension as a preferred destination for global business expansion is underpinned by several key advantages:

• Vast Talent Pool: India produces over 1.5 million engineering graduates annually (AICTE, 2024), offering a deep reservoir of skilled professionals for technology, finance, and business services.
• Cost Efficiency: Labor and operational costs in India are significantly lower compared to China and other Southeast Asian countries.
• Government Initiatives: Policies like ‘Make in India’ and ‘Digital India’ have created a favorable ecosystem for foreign direct investment (FDI) and business process outsourcing.
• English Proficiency: India’s workforce is largely English-speaking, facilitating seamless integration with global teams.
• Proven Track Record: India is home to over 1,500 GCCs, serving as innovation and service hubs for Fortune 500 companies (NASSCOM, 2024).

As Ingram Micro CEO Diego Utge emphasized in the BusinessLine interview, “The China+1 strategy has certainly opened up new opportunities for India, not just as a market, but as a global hub for innovation and capability.”

Professional Services Companies and GCCs: Riding the China+1 Wave

Professional services firms—including IT, consulting, finance, and legal services—are at the forefront of leveraging the China+1 strategy. The establishment of Global Capability Centres (GCCs) in India has accelerated, with recent research by EY (2024) indicating a 20% year-on-year increase in new GCC setups in India.

Key drivers for this trend include:

• Access to Specialized Talent: India’s talent market is rich in digital, analytics, cybersecurity, and AI/ML expertise.
• Scalability: GCCs in India can scale rapidly, supporting global operations with agility and cost-effectiveness.
• Innovation Ecosystem: Proximity to leading universities, startups, and R&D centers fosters innovation.
• Regulatory Support: The Indian government has streamlined policies for ease of doing business, further incentivizing GCC investments.

According to NASSCOM’s 2024 GCC Trends Report, India is expected to house over 2,000 GCCs by 2025, employing more than 2 million professionals and contributing significantly to India’s GDP.

Ingram Micro CEO’s Perspective: India as a Strategic Growth Engine

In the BusinessLine interview, Diego Utge, CEO of Ingram Micro, underscored the transformative impact of the China+1 strategy on India’s business landscape:

“India’s unique combination of talent, technology, and entrepreneurial spirit makes it a natural choice for companies looking to diversify beyond China. We are seeing increased investments in digital infrastructure, cloud, and cybersecurity, which are critical for global operations. The government’s proactive approach and the maturity of India’s professional services sector have made it easier for global companies to establish and scale their GCCs here.”

This sentiment is echoed by industry leaders across sectors, highlighting India’s emergence as a strategic growth engine for global enterprises.

Han Digital: Your Trusted Partner in Navigating India’s Talent Landscape

While the opportunities are immense, establishing and scaling operations in India requires nuanced understanding of the local talent market, regulatory environment, and cultural dynamics. This is where Han Digital plays a pivotal role.

Han Digital’s Unique Value Proposition

• Deep Talent Market Insights: Han Digital’s proprietary research and analytics provide real-time intelligence on talent availability, compensation trends, and skill hotspots across India’s major cities.
• Senior Leadership Connections: With established relationships with CXOs and business leaders across industries, Han Digital facilitates strategic hiring and leadership onboarding for new GCCs and professional services firms.
• Customized Talent Solutions: From workforce planning to executive search, Han Digital offers end-to-end talent solutions tailored to the unique needs of global organizations entering or expanding in India.
• Diversity and Inclusion Expertise: Han Digital’s focus on building diverse teams ensures organizations benefit from varied perspectives and innovation.

Han Digital’s recent 2024 India GCC Talent Market Report reveals that demand for digital, analytics, and cybersecurity talent in India has surged by over 30% in the past year, with Bengaluru, Hyderabad, and Pune emerging as top talent hubs.

Case Study: Successful GCC Establishment in India with Han Digital

Consider the example of a leading European financial services firm that partnered with Han Digital to establish its first GCC in Hyderabad in 2023. Han Digital’s team conducted a comprehensive talent market mapping, identified key leadership hires, and facilitated seamless onboarding of over 200 professionals within six months.

The result? The GCC not only achieved operational stability ahead of schedule but also became a center of excellence for digital transformation initiatives, serving global clients across Europe and North America.

Key Considerations for Professional Services Companies Entering India

For professional services firms and GCCs looking to capitalize on the China+1 opportunity, the following strategies are essential:

1. Talent Strategy: Partner with local experts like Han Digital for talent mapping, leadership hiring, and workforce planning.
2. Location Analysis: Evaluate cities based on talent availability, infrastructure, and cost. Bengaluru, Hyderabad, Pune, and NCR are top choices for GCCs.
3. Regulatory Compliance: Stay abreast of evolving labor laws, tax incentives, and FDI regulations.
4. Digital Infrastructure: Invest in robust IT systems, cybersecurity, and cloud platforms to enable seamless global operations.
5. Cultural Integration: Foster a collaborative and inclusive work culture to attract and retain top talent.

Recent research by Gartner (2024) projects that India will add over 500 new GCCs by 2025, with professional services and technology firms leading the charge.

Challenges and Solutions: Navigating the Indian Market

While India offers immense potential, companies must navigate certain challenges:

• Talent Competition: High demand for digital skills can lead to attrition and wage inflation. Solution: Build strong employer branding and invest in employee development.
• Regulatory Complexity: Varying state-level regulations can complicate operations. Solution: Engage local legal and compliance experts.
• Infrastructure Gaps: While Tier 1 cities are well-developed, Tier 2/3 cities may face infrastructure challenges. Solution: Conduct thorough location due diligence.

Han Digital’s advisory services help organizations anticipate and address these challenges, ensuring smooth market entry and sustainable growth.

The Future Outlook: India as a Global Services