Center of Excellence

5 things you should know before establishing a COE in India


Establishing a Center of Excellence (COE) in India can be a strategic move for companies looking to optimize their operations. However, before diving into this venture, it’s important to ensure a smooth transition and successful setup. Here are five things you should know before establishing a COE in India:


1. Facilities (Office, IT)

Setting up office space and IT infrastructure is a foundational aspect of establishing a COE in India. One of the primary advantages of choosing India is that even the tier -1 cities like Bangalore, is cost-effective compared to locations like Toronto, Canada. India, especially Bangalore, offers competitive rates for office rentals and employee salary, making it an attractive option for companies looking to establish a COE without breaking the bank. 


Here is a comparison chart highlighting the cost differences:


Facility Bangalore, India Toronto, Canada
Office Rent 1.2 – 2.4 CAD  per square foot 30 – 42 CAD  per square foot
Average Employee Salary 520.12 CAD/Month 4,795 CAD/Month

2. Legal Compliance and Operational Support

Navigating legal compliance and operational support is essential for any business, regardless of its location. Fortunately, setting up operations in India does not present major hurdles in terms of managing taxes and payroll. 


Moreover, India’s business-friendly policies and regulatory framework facilitate a conducive environment for foreign businesses. With the introduction of initiatives like “Make in India” and “Digital India”, the government is actively promoting ease of doing business and encouraging foreign companies to establish a presence in the country.


To incorporate a legal entity in India, a foreign company must appoint a local Indian resident as a company Director. The authority that this director holds can vary depending on the arrangement. However, typically this Director is an official signing officer for the company. 


3. Talent Management

When setting up a Center of Excellence (COE) in India, having a solid plan for managing talent is important. Although India has a deep pool of skilled workers, determining who to hire can be tricky, especially for companies from other countries.


Here’s what you need to know:


  • Hiring Challenges: Getting help with hiring, like from the Employer of Record services, might not cover everything. Companies might end up handling the hiring process on their own. With so many job applications flooding in, it can take a lot of time to find the right fit.
  • Checking Credentials: In fields like IT, some people might not be honest about their qualifications. This can be a big problem for companies looking for skilled workers. Some candidates might try to make themselves look more experienced than they really are, which can waste time and money for everyone involved.
  • Dealing with Challenges: To tackle these issues, companies starting a COE in India should have solid hiring processes and make sure to verify candidates’ credentials carefully. Working with trusted recruitment agencies or using technology to screen candidates can help make the hiring process smoother and reduce the risk of credential fraud.

Doing thorough background checks and confirming references can help make sure that the people being hired are qualified and trustworthy. Investing in training programs for employees also helps them stay up-to-date with the latest skills and tech, which is important for the COE’s long-term success.


4. Change Management

75% of COEs fail or do not meet initial business case expectations. Implementing change within an organization, especially when expanding to a new place like India, needs to be done thoughtfully.


  • Partnering with Local Experts: Working with a local partner who knows the industry and the Indian market well is important. They can help you avoid problems with how things are done and understanding different cultures. This partnership reduces risks and makes sure your plans work smoothly.
  • Creating a Supportive Culture: Building a workplace where people feel comfortable sharing ideas and working together is key. When employees feel heard and valued, they’re more likely to welcome changes. Regularly talking with them, getting feedback, and involving everyone affected by the changes are all important parts of making it work.

In short, successful change management in India involves partnering with local experts and creating a supportive workplace culture where communication and collaboration thrive.


5. Service Delivery & Value Capture

Operationalizing key performance indicators (KPIs), key result areas (KRAs), and other metrics is crucial for monitoring service delivery and capturing value from the COE.


  • Performance Monitoring:
    • Establish KPIs relative to your established business to ensure the COE is creating value to your organization.
    • Implement dashboards and weekly reviews to review costs and output from your new team.

Typical metrics can include:

  • # of deliverables processed
  • # of items needing rework
  • Home office vs foreign COE engagement surveys
  • Employee turnover metrics
  • Incremental costs/savings to the organization

Like all new projects, expect a learning curve and heavy change management to successfully establishing a foreign COE. Predicting challenges and developing sound mitigation strategies with MS2 can help ensure your initiative is successful in the long run.


Establishing a COE in India offers numerous benefits, including cost advantages, access to talent, and opportunities for growth. By understanding and addressing key considerations such as facilities, legal compliance, talent management, change management, and service delivery, companies can pave the way for a successful venture in India’s thriving business landscape.

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