The Next Frontier for Global Business That Plays to Singapore's Strengths

Global capability centres drive innovation and competitiveness, with India leading the charge.

- Vikram Khanna

The drug company AstraZeneca's Global Innovation and Technology Centre in the Indian city of Chennai has created a digital replica of the firm's manufacturing facility in Sweden, accessed via virtual reality headsets.

It enables operators to learn about pharmaceutical production processes without entering a physical plant, leading to huge cost savings, easier scaling of skills and no material wastage.

In Singapore, Siemens' digital innovation centre has designed a suite of Internet-of-Things-based "Smart Building" solutions, including artificial intelligence-driven energy management systems that are being deployed in Singapore and other Asian cities.

Shopee's digital innovation centre has pioneered multilingual AI-powered chatbots to help manage orders, track logistics and resolve disputes.

In the Philippines, Toyota Motor creates digital twins of cars and other design innovations, which accelerate time-to-market for new models.

These are all examples of the work being done in so-called global capability centres (GCCs), which are spreading across the world, mostly in developing countries.

There are around 3,200 GCCs globally, more than half of which are in India. The rest are distributed across countries that include the Philippines, Vietnam, Singapore, Malaysia, Poland, Romania, Mexico and Brazil.

GCCs are mostly owned by multinational corporations (MNCs). More than two-thirds are run by Fortune 500 companies. They are not arms-length vendors, but extensions of parent company operations that create new products and services in areas that include information technology, healthcare, pharmaceuticals, financial services, automotive, aviation, retail and telecoms.

OUTSOURCED SERVICES HAVE CLIMBED THE VALUE CHAIN As in manufacturing, where companies climbed the value chain from simple assembly to contract manufacturing to innovation to brand-building, outsourced services have their own value-chain ladder.