Global capability centers (GCCs) are booming in India. In the last 12 years, the number of GCCs in India has grown: From 760 GCCs in 2012 to over 1,600 GCCs today. In the next few years, this number is expected to reach 2,000. These GCCs will account for a market size of over USD 60 billion. Close to 1.6 million people are employed in these GCCs.
GCCs operate across multiple service sectors: Software product development, IT services, and BPO and engineering services. Importantly, they are creating immense value across various industry segments. These segments include banking, financial services and insurance, aerospace, oil and gas, healthcare, pharma, software, telecom, semiconductor, and automobile.
The scale of operations in the GCC space is mind-boggling. Multinational companies are, in fact, investing huge sums of money to transform their GCCs into centers of excellence. They find the cost structure of operating in India very competitive and lucrative. This is a direct example of how GCC changes the requirement scale in India, as these centers are not just looking at cost-saving opportunities but also at driving innovation and efficiency across industries. Further, the government’s policies, the digital infrastructure being offered, and the available high-quality talent pool are enabling and supporting this boom.
Not just another back-office
A couple of decades ago, India was an investment destination for global companies that wanted to set up back-office operations here. No longer. The focus now is on setting up and operating a high-quality center that creates phenomenal value. This shift is a direct result of how GCC changes the requirement scale in India, pushing companies to innovate, increase productivity, and move beyond mere cost-saving operations.
Here are some examples of how companies are thinking about a GCC operation in India.
Some companies are transforming their India operations to include a GCC with top-end digital capabilities. This means bringing in artificial intelligence and machine learning capabilities into their operations. Companies are not just thinking for this decade alone; they are imagining a future and building capabilities to embrace that future.
Some companies are making their GCCs product development hubs. New digital product development is undertaken here. These products are then launched in other countries.
Counting on high-quality talent
A major factor contributing to the growth of the GCC space is the availability of high-quality talent in India. This talent is not just passing out of college in large numbers each year. This talent pool is spread across India’s thriving startup ecosystem. So, at one level, GCCs are tapping into the strong engineering research and development (ER&D) network in India. On the other, India’s robust startup culture offers exceptional talent across industry segments. And, finally, there’s talent available in the GCC universe itself.
Almost every GCC is out there in this buzzing talent marketplace. They are not just recruiting. But they are creating a vibrant culture of innovation. There are, for instance, several incubators and accelerators that have been set up in collaboration with startups. These initiatives are creating a fertile environment for global talent attraction, acquisition, and development.
Value gets created when people collaborate seamlessly. For example, in the automobile industry, GCC is working with startups to come up with better fuel efficiency solutions. Another GCC in the healthcare space is working with startups to develop cutting-edge medical software products.
Some of the global talent acquisition among GCCs is happening from India’s tier 2 cities. The reason is simple: Of the 1.5 million engineering graduates that come out of college annually, a majority are from tier 2 cities. Many of these graduates are conversant with English. They are also full of ideas and are willing to walk the distance to make a mark in the industry. So, attracting such talent, training them, and deploying them to innovation projects is sound thinking. Their hunger for growth helps GCCs succeed.
State government initiatives
Another factor contributing to the growth of GCCs and to the impressive scale and reach of their operations is the support being offered by various state governments in India. Almost every state in India is rolling out a red carpet for GCCs.
This support comes through financial subsidies. Land is cheaper, and acquiring land is made possible without hassles and red tape. Another major contribution is a cheaper and uninterrupted power supply.
State governments also make sector-specific growth policies. They assist in connecting GCCs with tier 2 and tier 3 cities. This ensures that the talent pipeline is in place and that there is a steady inflow of talent. Specifically, these GCC-friendly policies of state governments include tax cuts, incentivization of capital investments in research and development, fast-tracking on the patenting, intellectual property rights, and licensing processes, offering research grants, and helping launch innovation hubs.
New GCC Policy from MeitY
The Ministry of Electronics and Information Technology (MeitY) is crafting a comprehensive policy framework to introduce new incentives for Global Capability Centers (GCCs). These proposed incentives aim to complement existing state-level policies, facilitating GCC expansion into smaller towns and cities. A key focus is the creation of dedicated office zones in areas constrained by limited space, ensuring large-scale operations are not hampered. In this context, the central government is also exploring incentives to establish smaller GCCs focusing on niche areas such as healthcare and finance.
According to officials, this new policy framework is set to emphasize long-term talent-building strategies in frontier areas like generative artificial intelligence (AI), healthcare, and financial intelligence. The approach marks a shift from short-term fiscal incentives to sustainable development strategies. This aligns with India’s broader objectives of advancing technology and nurturing a skilled workforce for the future.
Growth Path of GCC in India
India’s Global Capability Centers (GCC) market is experiencing significant growth. According to Nasscom, the market size is expected to reach US$100 billion by 2030, with over 2.5 million professionals employed. In FY 2024, GCCs in India generated US$64.6 billion in revenues and employed nearly 2 million people.
From Q1 2023 to Q4 2024, 124 new companies entered the GCC market, establishing office space for greenfield operations or R&D centers. Notably, small and mid-sized businesses made up a large part of these deals, with 55 out of the 124 companies having annual revenues of less than US$1 billion.
GCCs in India have also become multifunctional hubs. Around 90 percent of domestic GCCs now manage a variety of functions such as technology, operations, and product engineering. According to a report by Inductus in November 2024, engineering-focused GCCs grew 1.3 times faster than the overall GCC sector, highlighting a clear shift toward high-value functions.
India is actively working to strengthen its GCC ecosystem as part of its broader economic and innovation strategy. The country’s new umbrella policy and state-level initiatives are designed to foster an environment where GCCs can thrive. With a focus on technology, talent, and infrastructure, India is poised to maintain its competitive edge and remain a top choice for global capability centers.
Advanced technologies are playing a key role in the evolution of GCCs in India. By 2026, more than 70 percent of these centers are expected to adopt AI technologies, such as machine learning for operational analytics, AI-powered customer support, and cybersecurity training. This shift highlights India’s increasing importance as a center for innovation and digital transformation.
Transformation of GCCs into Global Innovation Centers (GICs)
A notable shift in India’s GCC landscape is the transformation of these centers into Global Innovation Centers (GICs). GICs focus on core operations and innovation, often serving as hubs for specialized development. This change is driven by the need for speed, resilience, and specialized talent.
Smaller GICs are emerging as smaller versions of their parent GCCs, supporting essential functions while fostering innovation. As they mature, these centers are expected to evolve into multifunctional hubs, much like their tier-1 counterparts.
Conclusion
Even so, despite all the growth that GCCs have seen and are continuing to see, the sector is expected to boom further. GCCs are actively looking to make their understanding of India’s cultural diversity into a competitive advantage. If you have learned to do business in India, you can do it very, very well. One aspect of this will involve optimizing cost efficiencies while growing rapidly. It is in mastering this complex process that GCCs can really scale up. Understanding how GCC changes the requirement scale in India is crucial to sustaining this growth trajectory.
