Japanese Firms Expand Global Capability Centres in India: J2W Survey

Amid rising operational costs, talent shortages, and a digital transformation gap at home, Japanese multinational corporations (MNCs) are rapidly pivoting to India as a strategic growth partner. The latest JoulestoWatts (J2W) GCC Adoption Survey 2025 — spanning senior leaders from over 50 Japanese firms across automotive, electronics, BFSI, and manufacturing sectors — highlights a strong and accelerating trend toward establishing Global Capability Centres (GCCs) in India.

Respondents of the survey rated access to India’s skilled talent pool highest at 4.8/5, cost savings at 4.6/5, and acceleration of digital transformation at 4.4/5 — making these the top three drivers for GCC expansion. The survey identifies Bengaluru, Hyderabad, Chennai, Pune, Mumbai, and Delhi-NCR as preferred GCC destinations, thanks to their mature infrastructure and deep talent pools. Bengaluru and Hyderabad emerged as the most-preferred locations, with over 60% of respondents shortlisting them for their next phase of growth, followed by Chennai, Pune, Mumbai, and Delhi-NCR.  Japanese firms are drawn by India’s unmatched supply of 1.5 million STEM graduates annually and the potential to reduce operational costs by up to 40%. Crucially, this expansion transcends cost savings — companies are building innovation-driven hubs focused on R&D, automation, and 24/7 global operations.

Key problem statements driving the shift include Japan’s domestic labour shortage (cited by 72% of leaders), high operational costs at headquarters (64%), and slow pace of digitalisation (48%). Ms. Priti Sawant, Founder & CEO of JoulestoWatts, commented, “Our survey found that 72% of respondents cite Japan’s domestic labour shortage as the leading driver for investing in India-based GCCs, closely followed by high costs and slow digitalisation at their headquarters. To maintain global competitiveness, firms are pursuing ambitious transformation goals in India — including 85% process efficiency, a 20% reduction in average handling time, and launching at least 15 AI/ML projects in the coming year.” In fact, the survey finds that 42% process automation, 15 AI/ML project launches, and a 60% employee upskilling rate were set as firm targets by respondents for their India GCCs in 2025.

Sustainability is now a core GCC priority. Many Japanese companies are deploying real-time carbon monitoring systems, targeting a 25% reduction in emissions by 2026 and aiming to source 40% of their power from renewable energy. These initiatives align with global ESG standards and support India’s green energy ambitions. ESG scored a mean importance of 3.6/5 among survey participants, but 65% plan to implement real-time carbon monitoring and green energy adoption in the next two years.

Industry-specific focuses are emerging as well. BFSI and IT respondents placed compliance and fintech innovation at the top of their GCC agendas, while automotive and manufacturing leaders prioritised EV battery R&D and smart factory technologies. Overall, the investment emphasis favors AI-driven decision-making, automation, cybersecurity, and ESG integration.

Priti also noted, “Interest in Tier-II cities like Kochi and Pune is growing rapidly, driven by cost advantages and emerging talent pools. Companies are placing strong emphasis on workforce development, aiming for a 60% upskilling rate across their Indian operations.”

Japanese corporations now view their India GCCs as Centers of Excellence — not just support centers — driving strategic transformation. Notably, 85% process efficiency, a 20% reduction in average handling time, and a Net Promoter Score of 60 or higher were identified as critical KPIs for measuring GCC success.

India’s favorable talent ecosystem and policy framework continue to attract long-term, innovation-led investments from Japan. These GCCs play a vital role in helping Japan address domestic challenges while strengthening Indo-Japanese economic ties. As Japanese firms look to future-proof their operations, JoulestoWatts’ survey underscores India’s emergence as a global GCC powerhouse offering unmatched talent, cost efficiencies, innovation capabilities, and sustainability leadership.