Over 46% office space leases in India by offshoring industry: Report

April 17, 2024

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Indian Offshoring market has evolved itself as a significant occupier in India’s office space with leasing over 46% of office space in 2023, with global capability centers (GCCs) being the biggest offshore occupier, showed a Knight Frank report that has cited India amongst the leading offshoring locations in the world.

India’s offshoring market witnessed a 26% rise in overall leasing volume of 27.3 million sq ft in calendar year 2023 including GCC’s absorption of 20.8 million sq ft and third-party IT services’ 6.5 million sq ft.

In recent years, India’s office real estate market has seen a positive trend from GCCs, seeking growth opportunities in the global offshoring industry. The GCC landscape in India has grown significantly by fostering more than 1,580 centres across the nation in 2023. The GCC’s proposition in the Indian leasing transactions has increased to 35% in 2023 from 25% in 2022.

Though Information Technology remains the biggest GCC occupier in the country, the growth was significantly propelled by GCCs from the industrial sector, particularly in the semiconductor, automobile, and pharmaceutical industries. These GCCs secured large spaces to capitalise on unique growth opportunities and align with the momentum of these industries globally.

“India has been a traditional leader in the outsourcing market and the meaningful policies of the government has augmented its position with a unique proposition of a high-skill, low-cost market. Over the past decade, India has transformed itself from a cost-effective centre into a value-adding captive centre. By aligning itself with evolving needs of global businesses, India is now an established centre of excellence,” said Viral Desai, Senior Executive Director, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency Knight Frank India.

According to him, the growing share of GCC in total leases will remain supportive of office market demand in 2024.Further it is projected that GCCs will potentially drive the office market in the next decade. By 2030, there will be an estimated 2,400 GCCs across India as it emerges as a global technology and services hub. Assuming a similar pace of growth, the number of GCCs in India may scale up to 2,880 by 2034.

Global companies increasingly seek cost-effective solutions to minimise expenses, and a growing number are now looking towards offshoring functions as a strategic avenue. Offshoring has emerged as a critical driver propelling office demand in four APAC Hubs – India, Philippines, Malaysia, and Vietnam.

Indian IT service exports are expected to expand to $230.5 billion in 2025 from $185.5 billion in 2023. The current pace of additional commercial assets supply is expected to expand Indian office market stock to an estimated one billion square feet by 2025.

  • Published On Apr 17, 2024 at 02:00 PM IST

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