Global Capability Centres: The Brain Drain Under Our Nose

CBRE, the real estate consultancy, estimates that office space leasing in India touched 82.4 million sq ft last year. A lot of the demand was driven by Global Capability Centres, which, in a departure from the past deployment of workers in India by MNCs to execute relatively low-value tasks, now create intellectual property for foreign firms. The consultancy estimates that, in October-December, GCCs absorbed 39% of the total leased space.

Suppose we extrapolate that share for the total year. GCCs would account for 32.214 million sq ft. Assuming 100 sq ft per employee, on average, that means that GCCs employed 322,140 people just last year. In a December 15 report, NASSCOM put the total headcount at India’s 1,760 GCCs at some 1.9 million. It estimates the figure to climb to 2.8 million people by 2030.

India produces upwards of 2.55 million graduates annually in Science, Technology, Engineering and Mathematics, engineers accounting for about 1.5 million of them. However, the vast majority of these graduates are classified as unemployable by would-be recruiters. About 10-30% are deemed to be fit for work.

If we assume the talent pool that can be deployed in innovative work to be 10% of the STEM graduates, we find India produces some 255,000 quality young workers. Of the total STEM graduates, 2-3% migrate abroad, initially for higher studies. The rate is 30% for STEM PhDs. Three percent of the total is 30% of the top 10%. The quality talent that remains in India is thus 70% of 255,000 or 178,500. In other words, GCCs put to work last year a number greater than a year’s output of top talent. In other words, the GCCs would have lured away some of the talent working at Indian companies, including at traditional IT companies.

In other words, there is a war for talent between domestic firms and MNCs. This is good news for India’s young, in a context of stagnant starting salaries at software firms. But is it good news for India?  

In the fast-changing geopolitical configuration, indigenous capability across a broad spectrum of technologies is becoming ever more critical for holding on to and strengthening strategic autonomy.

The Australian Strategic Policy Institute has expanded the list of critical technologies that shape strategic capability from 64 in 2024 to 74 as of November, 2025. These are grouped into eight broad classes, labelled as

• Advanced information and communication technologies
• Advanced materials and manufacturing, AI Technologies
• Biotechnology gene technology and vaccines
• Defence space robotics and transportation
• Energy and environment
• Quantum
• Sensing timing and navigation                                               
• Aukus-relevant technologies — underwater technologies such as air-independent propulsion, autonomous underwater drones, and elements of electronic warfare, such as jamming and protecting against jamming of GPS signals.

In 66 and 74 of these technologies, China is the leader; the US is the leader in the remaining eight. The institute makes this assessment by looking at emerging research in these area, both quantity and quality, and by tracing the authors of the most cited articles to the institutions to which they are affiliated and the nations where these institutions are located. China’s position might be even stronger than it appears under this methodology, if we consider the possibility of China being able to woo back to the home country a significant proportion of the sizeable expat Chinese researchers working abroad.

India is among the top 5 in 50 technologies, and number 2 in five. For the country that produces the second largest number of STEM graduates, and has to rely on itself to protect strategic autonomy, this is hardly good enough. But that is not all. The gap between China and the rest is widening to create a technology monopoly situation in several sectors.

In a world in which warplanes can be targeted not so much by radar from a plane launching a missile or by the missile’s miniature radar or heat-seeking characteristic, as from a satellite in low-earth orbit, so that the targeted plane is not even aware that it is being targeted, strategic dominance is delivered by mastery of multiple advanced technologies. If the gap between the leader and the laggard itself further widens the gap as research proceeds apace, it is vital to catch up fast.

The short point is that India needs to invest massively in its own base of research and technology development. For that, it needs research funds, research talent and a combination of ambition, drive and determination. India spent 0.65% of GDP on R&D in 2020, according to the World Bank. China spent 2.53% of its GDP, four times as much proportionately, as India’s. China’s GDP is five times as large as India’s. That means that China spends about 20 times as much, in absolute amounts, as India does in R&D.

The US spends 3.6% of GDP on R&D in 2023, but Trump might dent that figure, with his cuts to funding for the National Institutes of Health and the National Science Foundation, which fund research at universities and other research centres. South Korea spends more than 5% GDP on R&D, and that figure is 6% for Israel.

Many companies around the world spend more than 10% of turnover on R&D. Some, like Huawei of China, spend a fifth of their revenues on R&D, stuffing R&D teams with tens of thousands of engineers. That proportion went up to 25% in 2022, when it set out to compensate for denial of American high-tech by creating crucial technologies on its own. Today, Beijing can turn up its nose at NVIDIA’s H200 chips — two generations behind the cutting edge Rubin series — because Chinese companies, choreographed by Huawei and the state, can produce equivalent chips in China. Indian companies, in contrast, licence technology from America to make potato chips.

Reliance spends less than 0.4% of revenues on R&D, and the bit it does is thanks to its foray into telecom. Adani outcompetes Reliance in this race to the bottom, its R&D spend/turnover even closer to zero. TCS spends about 1%, Infosys even less. Pharma companies spend decent proportions, of up to 7% of turnover on R&D. Hindustan Aeronautics Ltd spends about 8% of GDP on R&D.

Since Indian companies do not do R&D, quality STEM talent that stays back in India ends up working for GCCs of MNCs. It is good for the workers, who get jobs and incomes. It is good for the government, which gets taxes. This quiet, virtual brain drain is bad only for India’s ability to keep abreast of its strategic rivals in technology. But the erosion of strategic autonomy that results from the brain drain is bad enough.