Indian offshoring sector commands prime office leases, capturing 46% share in 2023

India's Office Dominance: The Indian offshoring market has emerged as a major player in the country's office space sector, accounting for over 46 per cent of office leases in 2023, with Global Capability Centers (GCCs) being the primary occupiers.

In the calendar year 2023, the total office leasing volume in India reached 27.3 million sq ft, marking a 26 per cent increase from the previous year. This growth was driven by both GCCs (20.8 million sq ft) and third-party IT services (6.5 million sq ft).

GCC expansion soars

The report highlights the substantial expansion of GCCs across India, with more than 1,580 centres established in 2023 alone. Notably, the proportion of GCCs in Indian leasing transactions rose from 25 per cent in 2022 to 35 per cent in 2023. 

While Information Technology remains the largest occupier amongst GCCs, the industrial sector, particularly the semiconductor, automobile, and pharmaceutical industries, significantly contributed to the growth by securing substantial office spaces to capitalise on global industry trends.

IT sector dominates

In the offshoring market of India, the transacted area is distributed across various sectors. According to the data provided, the Information Technology sector leads the way with 11.0 million sq ft, constituting 41 per cent of the total area transacted.

Following closely behind are the Industrials and BFSI (Banking, Financial Services, and Insurance) sectors, each accounting for 20 per cent of the transacted area with 5.6 million se ft. 

The commercial & Professional Services and Others sectors both contribute 2.1 million sq ft, making up 8 per cent of the transacted area each. The healthcare sector represents a smaller portion, transacting 0.8 million sq ft, contributing 3 per cent to the total transacted area.

The sector-wise distribution of the transacted area in India's offshoring market indicates Information Technology as the frontrunner, followed by industrials and BFSI (Banking, Financial Services, and Insurance). 

Additionally, the report forecasts a promising outlook for GCCs, projecting their continued dominance in driving office market demand in the coming years. By 2030, India is expected to host approximately 2,400 GCCs, solidifying its position as a global technology and services hub.

APAC's offshoring impact

Offshoring has emerged as an important factor stimulating office demand in key Asia-Pacific hubs, including India, the Philippines, Malaysia, and Vietnam. India, in particular, is forecasted to witness a substantial increase in IT service exports, reaching $230.5 billion by 2025. 

With the current pace of commercial asset supply, India's office market stock is estimated to reach one billion square feet by the same year.

The report stresses the attractiveness of Asia-Pacific locations for offshoring activities due to considerably lower operating costs compared to mature markets like the US. The potential for significant cost savings, along with other advantages such as access to talent and government support, makes these regions highly appealing for global companies seeking efficient and cost-effective solutions.