India emerges as offshoring hub with growth in office leasing: Knight Frank Report

Business Thursday 18/April/2024 07:33 AM
India emerges as offshoring hub with growth in office leasing: Knight Frank Report

New Delhi: India has been recognised as one of the leading offshoring locations globally, according to the latest report from Knight Frank titled "Asia Pacific Horizon: Harnessing the Potential of Offshoring."

The report highlights that Indian offshoring market has evolved itself as a significant occupier in India's office space with leasing of over 46% of office space in 2023. In India the Global Capability Centres (GCCs) have emerged as the primary offshore occupier.

According to the report in 2023 India's offshoring market witnessed an increase in leasing volume, reaching 27.3 million square feet, marking a rise of 26% from the previous year.

"The growing share of Global Capability Centres (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[1]" said Viral Desai, Senior Executive Director, Knight Frank India.

The report further highlights that the GCC (Global Capability Centres) landscape in India has experienced growth with over 1,580 centers across the nation in 2023. The proposition of GCCs in Indian leasing transactions has seen a uptick by increasing from 25% in 2022 to 35% in 2023.

While the Information Technology sector remains the dominant occupier among GCCs in India, growth has been observed from GCCs in the industrial sector, particularly in the semiconductor, automobile, and pharmaceutical industries. These GCCs have secured large office spaces to capitalise on unique growth opportunities and align with global industry trends.

The report underscores the increasing preference among global companies for cost-effective solutions, leading to a surge in offshoring functions as a strategic avenue. Offshoring has emerged as a critical driver propelling office demand in key APAC hubs, including India, Philippines, Malaysia, and Vietnam.

Furthermore, Indian IT service exports are projected to expand from USD 185.5 billion in 2023 to USD 230.5 billion in 2025. With the current pace of additional commercial asset supply, the Indian office market is estimated to reach an impressive one billion square feet by 2025, indicating robust growth prospects for the sector.

The report also highlights the essential factors defining the region's appeal as a prime location for offshore services. It sheds light on significant changes in the industry landscape, providing valuable insights for businesses and investors navigating the offshoring market.