‘Adidas Eyes First Asia GCC Outside China in Chennai’

Adidas Establishing Global Capacity Centre in India: Layman’s Analysis

Source and Citation: Excerpts from ET Bureau Article Published on January 4th, 2024, highlighting Adidas’ plan to set up a Global Capacity Centre in Chennai, India.

Analysis for a Layman

Adidas, the renowned athletic apparel and footwear brand, is establishing a Global Capacity Centre (GCC) in Chennai, India. This center will manage crucial back-office functions such as procurement, finance, accounting, and reporting, tapping into India’s robust technology talent pool.

Chennai’s prominence in knowledge process outsourcing due to its educated workforce and infrastructure makes it an ideal location. The jargon used, like “source-to-pay” and “record-to-report,” refers to essential shared services activities handled globally from centralized locations.

‘Adidas Eyes First Asia GCC Outside China in Chennai’

Impact on Retail Investors

For retail investors, Adidas’ expansion into India confirms the country’s attractiveness as a profitable base for multinational operations in Asia. Stocks of athletic retail giants like Adidas, Nike, and Puma may benefit from the success of operations in this region, securing substantial market share in the long term.

Indian IT consulting and outsourcing stocks, such as TCS, Infosys, and Wipro, might experience marginal gains as this move emphasizes India’s global delivery model advantages. However, the impact is relatively minimal since Adidas is focusing on internal shared services rather than external customer services.

Impact on Industries

The establishment of Adidas’ GCC in India provides additional support for global shared services and business process management industries to invest locally. Competitor brands in athletic apparel and retail may need to adapt to optimized, lower-cost support processes, giving Adidas a strategic advantage in regional strategies.

Related sectors like real estate, facilities management, and workforce development could experience secondary impacts from the expected increase in headcount. The creation of 500-2000 skilled roles over the next 3-5 years in technology, accounting, analytics, and related domains fuels economic growth for local partners in the ecosystem.

Long Term Positives and Negatives

Long-term success for Adidas in India offers substantial benefits through continued access to top-tier technology talent focused on streamlining critical business capabilities. Centralized global processes ensure consistency, while decentralized GCCs enable localized agility and innovation simultaneously.

India’s pro-investment environment, with competitive tax incentives and technology upskilling subsidization, favors enterprises committed to growth in the region. However, Adidas must balance cost optimization with customer-centric efficiencies, avoiding a sole focus on driving higher margins. Striking this balance is crucial for sustained success.

Short Term Positives and Negatives

In the short term, India receives a notable endorsement for its expanding technology ecosystem on a global stage. However, Adidas faces execution risks, including talent acquisition, real estate buildouts, governance frameworks, and stakeholder alignment in launching the Chennai GCC.

While there is significant long-term upside for India operations, realistic targets are essential in the initial uncertain months. Overpromising and underdelivering operationally could lead to political tensions. Phased roadmaps emphasizing quality over scale are prudent initially. Once steady-state processes stabilize after 12-18 months, more ambitious expansion plans become feasible.

Impact of Adidas’ Chennai GCC:

Indian Companies:


  • IT Services Companies: Companies like Infosys, Tata Consultancy Services (TCS), and Wipro could benefit from increased demand for IT services related to setting up and managing Adidas’ GBS hub. This could lead to new project opportunities and revenue growth.
  • Staffing Firms: Recruitment agencies like TeamLease Services and CIEL HR Services could see increased demand for skilled professionals to fill positions at Adidas’ new centre. This could boost their placement rates and revenue.
  • Chennai Real Estate: Increased employment and economic activity in Chennai could benefit local real estate developers like Macrotech Developers and Sobha Ltd. through higher demand for commercial and residential spaces.


  • Other Indian Cities: Cities like Bangalore and Hyderabad, which also compete for attracting MNCs, might lose out on potential investments due to Adidas’ focus on Chennai. This could affect their economic growth and IT sector development.

Global Companies:


  • Adidas: The establishment of the Chennai GBS hub could lead to cost savings and operational efficiency for Adidas through centralized management of key processes. This could improve their profitability and competitiveness.
  • Other MNCs: Adidas’ decision to set up a GCC in Chennai could boost India’s image as a preferred destination for global expansion, potentially attracting other MNCs to invest in the country.


  • Global Competitors: Increased efficiency and profitability for Adidas could potentially put pressure on competitors like Nike and Puma to also consider similar cost-saving measures in Asia. This could lead to increased competition for skilled labor and resources in the region.

Market Sentiment:

The news of Adidas setting up its first Asia GCC outside China in Chennai is likely to be positive for the Indian stock market. Investors might view this as a sign of increased confidence in India’s IT sector and economic potential. This could lead to higher valuations for IT services companies, real estate developers, and potentially other sectors benefiting from the economic activity generated by the new centre.

It’s important to note that these are just potential impacts based on the available information. The actual consequences could unfold differently depending on various factors, including the overall economic climate, competitive landscape, and successful execution of Adidas’ plans.

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