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India’s growing appeal as a hub for Global Capability Centers (GCCs) is capturing the attention of Fortune 500 companies as well as a wide range of small and mid-sized businesses. In fact, GCCs have undergone a profound transformation, evolving from cost-saving back-office operations into key innovation engines for multinational corporations. India, which hosts more than half of the world’s GCCs, is now a global hub for talent and technology. This shift reflects not only a change in GCC functions but also India’s growing importance as a driver of global growth and digital strategy. This cover story delves into the key trends shaping the GCC ecosystem, from the evolving role of technology in driving business transformation to the impact of strategic partnerships with startups and mid-market firms. Whether it’s enabling product development, fostering operational excellence, or contributing to sustainability initiatives, GCCs in India are at the forefront of shaping the future of business on a global scale
Amit Singh
Global Capability Centers (GCCs) have evolved significantly in recent years, moving from traditional cost-saving mechanisms to becoming key drivers of innovation and digital transformation. Once seen as captive centers that primarily focused on outsourcing and back-office operations, GCCs are now taking on strategic roles within multinational corporations, reshaping business models and contributing to global growth strategies. This evolution reflects the increasing importance of agility, innovation, and access to global talent as companies navigate the complexities of the digital age.
India has emerged as a dominant player in the GCC landscape, hosting more than 50% of the world’s GCCs. “India’s initial appeal was rooted in cost arbitrage, offering substantial savings on operational and talent expenses, with a cost differential of 1:4 for entry-level talent compared to markets like the US. However, this narrative has evolved. India is now a global talent hub that drives innovation, digital transformation, and research and development (R&D) for multinational corporations,” says Ramesh Alluri Reddy, CEO of TeamLease Degree Apprenticeship. Today, Indian GCCs are key contributors to their parent companies’ global innovation strategies, particularly in high-tech areas like artificial intelligence, cloud computing, and cybersecurity.
The rise of digital disruption, combined with advances in technology and the need for rapid business adaptation, has driven this transformation. GCCs today are hubs for innovation, providing expertise in areas such as data analytics, artificial intelligence (AI), cybersecurity, and automation. In the process, they have become indispensable to their parent organizations, playing a vital role in shaping global strategies, driving product development, and ensuring operational efficiency.
“Over 70% of GCCs in India are now involved in driving digital transformation initiatives for their parent organizations, as per NASSCOM’s recent report. Stemming from globalization, India’s appeal lies in its abundance of STEM graduates, particularly skilled in data science, cloud development, and related fields—ideal for GCCs prioritizing digital talent retention,” highlights Manjula Ramaswamy, VP, GCC Head, Kyndryl India.
As of FY2024, GCCs have generated approximately $64.6 billion in export revenue, marking a 40% growth over the previous year. “With an average GCC housing over 1,130 employees, more than 120,000 AI professionals are actively engaged in driving innovation,” notes Brathaban Karuppaiah, General Manager, SBM Offshore India. Market estimates suggest that the number of GCCs in India has risen to over 1,700. The industry is projected to reach $100 billion by 2030, with a workforce expected to surpass 2.5 million employees across sectors like Technology, BFSI, Engineering, Manufacturing, and emerging industries such as Retail, Automotive, Healthcare, and Oil & Gas.
A recent EY report, Future of GCCs in India – A Vision 2030, forecasts high growth potential, predicting the number of GCCs to rise between 2,400 and 2,550 by 2030, according to Biu Davis, Senior Vice President of Engineering at Model N. This rapid expansion is driven by India’s thriving ecosystem, government support, and its vast pool of skilled talent.
The expanding scope of GCC functions
GCCs in India have evolved far beyond their initial roles in IT and customer service, now driving a wide range of functions critical to business operations and innovation. From finance and human resources to research and product development, GCCs are not only managing but also transforming these functions with end-to-end ownership.
In the finance domain, GCCs oversee entire financial cycles—from budgeting and forecasting to financial reporting and treasury operations—while ensuring compliance across multiple regions. “GCCs now own the full financial cycle, from budgeting and forecasting to financial reporting and treasury operations. They also manage statutory reporting for multiple geographies, ensuring compliance and audit readiness,” explains Davis of Model N.
Human resources functions have similarly expanded, with GCCs managing recruitment, learning and development, and employee engagement. These centers are critical in experimenting with and deploying new HR tools and processes, driving global innovation in the field.
In IT, the shift is even more pronounced. GCCs have moved from routine support roles to spearheading digital transformation efforts, leading initiatives in cloud migration, cybersecurity, and AI adoption. “This evolution enables organizations to implement standardized practices and enhances data governance, aligning technological advancements with global business objectives,” adds Karuppaiah of SBM Offshore.
GCCs are also integral to product development, overseeing the entire product lifecycle, from conceptualization to market launch. “GCCs manage end-to-end digital products, including product development, cloud migration, cybersecurity, and digital banking solutions,” notes Davis, emphasizing their role in accelerating innovation.
Moreover, their involvement in managing digital products, cloud solutions, and cybersecurity frameworks ensures companies remain competitive in a rapidly evolving digital landscape. This broadening of responsibilities underscores GCCs’ transformation into strategic pillars within multinational enterprises.
India’s tech-savvy workforce, particularly its expertise in AI, machine learning (ML), and data science, has empowered GCCs to scale operations and drive innovation on a global scale. “The surge of AI and data science specialists from India’s premier institutions positions the country as a leader in the AI domain, with projections showing the GCC workforce expanding from 1.9 million to 2.8 million by 2030. Although the traditional cost advantage has narrowed to about 1:3 today, India’s depth of talent in advanced technologies sustains its competitive edge,” highlights Reddy of TeamLease Degree Apprenticeship.
Supporting this transformation is government policy, with initiatives like ‘Digital India’ and ‘Make in India’ attracting foreign direct investment (FDI) and fostering a culture of innovation. These policies, alongside a robust infrastructure, have cemented India’s reputation as a global technology hub.
As a result, multinational companies increasingly view India not just as a cost-saving location for their GCCs, but as a strategic base for innovation and digital leadership. These centers are now responsible for core business functions, co-creating new digital products, and enabling their parent organizations to remain at the forefront of global competition. “India stands as a strategic hub for S&P Global, with a workforce of over 14,000 professionals across Gurgaon, Ahmedabad, Hyderabad, Mumbai, Noida and Bengaluru. Our exceptional talent pool includes teams across data, technology, commercial, product and many other verticals that puts us at the forefront of innovation and transformation, unlocking opportunities and powering global markets,” says Nilam Patel, Managing Director, India Operations at S&P Global.
Role of GCCs in driving global expansion
GCCs have become crucial enablers for multinational corporations looking to expand into new markets. Their in-depth understanding of regional dynamics, coupled with the ability to navigate complex regulatory landscapes, makes them indispensable partners in global expansion strategies. GCCs serve as knowledge hubs, allowing companies to localize their products and services while maintaining global competitiveness.
In India, GCCs typically operate under three main models: DIY (Do It Yourself), BOT (Build-Operate-Transfer), and Hybrid BOT. One of the most effective approaches is the BOT model, which minimizes the upfront risk for foreign companies looking to establish a presence in India. “Through the BOT model, GCCs manage everything—from setting up infrastructure to overseeing daily operations—during the initial phase. This helps foreign firms ease into the market by alleviating operational complexities and ensuring stability as processes are customized to fit the local environment,” explains Reddy of TeamLease Degree Apprenticeship. “IT service companies, for instance, often adopt this model to oversee tasks such as invoicing, procurement, and library management systems for their clients. Once the operations are fully functional and self-sustaining, ownership is seamlessly transferred back to the foreign entity, enabling a smooth transition,” he adds.
GCCs also foster collaboration with local vendors, government agencies, and academic institutions, creating an ecosystem that supports market entry. These partnerships enable organizations to tackle challenges such as regulatory compliance, language barriers, and cultural differences. By leveraging their regional expertise, GCCs help companies scale globally while tailoring solutions to meet the specific needs of each market.
“Around 48 percent of GCCs seek strong local leaders with cultural fluency, industry expertise, and strategic insight to ensure operational success, which is key to their smooth functioning,” says Ramaswamy of Kyndryl.
Additionally, GCCs play a vital role in risk mitigation by conducting thorough feasibility studies before market entry, developing robust talent acquisition strategies, and implementing governance frameworks to ensure compliance with local laws. These capabilities help companies expand into new regions while managing risks and capitalizing on growth opportunities.
“Financially, GCCs assist foreign entities in navigating India’s intricate tax laws, currency regulations, and financial compliance requirements, ensuring that multinational corporations remain compliant with both local and international financial laws,” adds Reddy of TeamLease Degree Apprenticeship.
By combining operational expertise with regional insights, GCCs are driving successful global expansions, allowing multinational corporations to enter new markets with confidence and agility.
The rise of tier-2 and tier-3 cities
As GCCs expand their scope, many organizations are shifting their focus from major metropolitan areas to the untapped potential of tier-2 and tier-3 cities. These locations offer access to skilled talent, lower operational costs, and the opportunity to contribute to regional development. Cities like Hyderabad, Pune, and Kochi have already emerged as thriving hubs, attracting high-caliber professionals in areas such as IT, engineering, and customer service.
“More than 220 GCC units are now situated in tier-2 and tier-3 cities, highlighting their strategic importance in global expansion,” reveals Karuppaiah of SBM Offshore.
While tier-1 cities like Mumbai, Bengaluru, and Hyderabad continue to be strongholds for GCCs, the rapid expansion into tier-2 and tier-3 cities reflects a broadening geographical footprint. “The steady influx of new GCCs, supported by government initiatives, has spurred heightened competition among cities across India. Locations like Coimbatore, Kochi, Thiruvananthapuram, Mysore, Kolkata, Chandigarh, Jaipur, and Ahmedabad are increasingly attracting investment. With robust academic networks and lower operating costs, these cities are becoming key contenders in the GCC landscape,” shares Shalini Pillay, India Leader for Global Capability Centers at KPMG India.
The benefits of this trend are substantial. Expanding into smaller cities not only reduces labor costs but also stimulates economic growth in these regions. Government support, including incentives and infrastructure development, has further increased the appeal of these locations. “This growth is driven by initiatives such as Ease of Doing Business and Make in India, alongside favorable regulatory frameworks that encourage foreign investment. States like Karnataka are set to introduce a new GCC policy aimed at further accelerating the sector’s growth, positioning themselves as prime destinations for global companies,” adds Reddy of TeamLease Degree Apprenticeship.
By establishing operations in tier-2 and tier-3 cities, GCCs are playing a pivotal role in job creation, talent development, and regional progress. “Further expansion into these cities allows organizations to tap into a vast talent pool beyond traditional hubs, enhancing cost efficiencies and fostering regional growth. Model N’s expansion into Hyderabad has enabled us to leverage exceptional talent while achieving scalability and cost-effectiveness, which are integral to our long-term growth strategy,” says Davis of Model N.
As more organizations recognize the potential of these locations, the expansion of GCCs into tier-2 and tier-3 cities is expected to continue, diversifying the global business landscape and contributing to India’s position as a leading technology hub.
The rise of micro GCCs
A notable trend in the Global Capability Center (GCC) ecosystem is the emergence of micro GCCs—smaller, highly specialized centers that focus on specific functions or technologies. These centers typically operate with a workforce of 50 to 200 employees and offer companies greater agility, efficiency, and focus. Micro GCCs enable organizations to deploy targeted solutions, often specializing in areas such as artificial intelligence (AI), the Internet of Things (IoT), cybersecurity, and data analytics.
Operating independently or as part of a network of distributed centers, micro GCCs provide large organizations with the flexibility to address growing demands for specialization. “We see micro GCCs as a highly effective way to meet the need for agility and specialization in today’s competitive landscape. By setting up smaller, focused centers in emerging cities, organizations unlock niche talent, enhance business continuity, and reduce operational costs,” explains Davis of Model N.
One of the primary advantages of micro GCCs is their ability to respond swiftly to market needs. For instance, a micro GCC dedicated to cybersecurity can quickly address emerging threats, while one focused on AI/ML can develop advanced predictive models to give the parent company a competitive edge. Their specialized nature ensures faster time-to-market, enabling organizations to launch products and services with greater speed and precision. “Though smaller in scope, micro GCCs are designed to deliver specialized services and foster innovation in niche areas. They can rapidly prototype, test, and scale solutions, resulting in shorter product development cycles,” states Ramaswamy of Kyndryl.
The compact size of micro GCCs also allows them to maintain high-quality standards while simultaneously managing multiple projects. “Their specialization enables micro GCCs to tackle diverse project requirements with smaller teams, all while adhering to strict quality and schedule timelines. This expertise allows them to frame strategies that ensure successful project execution in today’s fast-paced market,” adds Karuppaiah of SBM Offshore.
Reddy of TeamLease Degree Apprenticeship adds, “By focusing on technologies like AI, machine learning, data analytics, cloud computing, and blockchain, micro GCCs cultivate deep expertise, enabling the creation of highly tailored solutions. This specialization allows teams to quickly adapt to changing market demands, resulting in faster product cycles and reduced time-to-market. Moreover, micro GCCs are also addressing skill shortages by serving as talent hubs and creating pathways for individuals to enter the workforce.”
Another factor accelerating the rise of micro GCCs is the growth of the GCC-as-a-service model, where vendors assist in rapidly setting up and incubating micro or nano GCCs. “This model provides organizations the ability to start quickly and scale efficiently,” adds Pillay of KPMG.
Micro GCCs are particularly well-suited for companies looking to scale rapidly or enter new markets. Their compact size and specialized focus make them highly adaptable to shifting business environments, positioning them as valuable assets in the next phase of global expansion.
Collaborating for innovation
GCCs are increasingly turning to partnerships with startups and mid-market organizations to accelerate innovation and maintain agility in the fast-evolving digital landscape. These collaborations are reshaping how GCCs operate, enabling them to integrate cutting-edge technologies, access niche expertise, and scale digital transformation efforts more effectively. Startups, known for their agility and ability to rapidly develop solutions tailored to industry-specific challenges, provide GCCs with the flexibility and speed needed to remain competitive. By co-creating solutions, GCCs can prototype and launch new products or services faster, enabling them to tackle technological disruptions and evolving business demands head-on.
According to a NASSCOM report, GCCs have established over 15 incubators, more than 40 accelerators, and various partner programs to foster collaboration with Indian startups. These partnerships take shape through innovation labs, hackathons, and startup incubators, giving GCCs access to the latest technologies and fresh ideas. “These collaborations enable GCCs to tap into emerging trends and accelerate innovation,” says Reddy of TeamLease Degree Apprenticeship.
Partnerships with startups allow GCCs to access specialized expertise in fields such as artificial intelligence, machine learning, blockchain, and cybersecurity—areas where many startups excel. This collaboration fills critical gaps within GCCs, enriching their capabilities. For example, a startup specializing in advanced AI models can provide GCCs with valuable insights and technologies to enhance operations. In return, startups benefit from the resources, infrastructure, and global market access that GCCs provide, helping them scale their solutions beyond local markets.
The benefits of these partnerships are multifaceted. “Firstly, they foster co-innovation, allowing GCCs to leverage the creativity and agility of startups while enhancing their product development capabilities. By investing equity stakes of up to 15% in startups, GCCs accelerate their innovation processes, enabling faster go-to-market for new products and services,” explains Reddy. These collaborations also provide GCCs with niche expertise, helping them stay ahead in rapidly evolving industries. This is especially critical in sectors like IT and business process management, which saw growth rates of 30% and 27% respectively in FY2023. Engineering, research, and development-focused GCCs also witnessed significant growth, with a 30% increase to approximately $25 billion in FY2022-23, showcasing the success of these collaborative approaches.
Mid-market organizations, while less agile than startups, bring their strengths to the table. They offer established processes and proven business models that align well with GCCs’ broader goals. These partnerships create an environment where co-innovation thrives, allowing GCCs to scale digital transformation initiatives across multiple geographies and functions. The outcome is a mutually beneficial relationship that enhances innovation, accelerates time-to-market and drives scalable solutions for global enterprises.
“Collaborations between GCCs and mid-market organizations create ecosystems where co-innovation flourishes. GCCs provide scalability, support strategic initiatives, and facilitate access to specialized knowledge in areas such as AI, cybersecurity, and cloud solutions,” notes Davis of Model N.
As these partnerships continue to evolve, they are becoming a cornerstone of the GCC strategy, enabling them to stay agile and innovative in an ever-changing business environment.
The role of emerging technologies
Technologies such as cloud computing, data analytics, AI, business intelligence, and cybersecurity have become central to the innovation efforts of GCCs. These technologies enable GCCs to scale operations, enhance agility, and make data-driven decisions that drive business outcomes.
According to a Zinnov survey, 15% of GCCs have advanced AI capabilities, and that number is growing every day. “Many AI use cases are being driven from India, and metrics across productivity, customer experience, employee experience, and now even product revenue influence, are emerging. The Software & Internet sector leads the way, with over 29% of AI Centers of Excellence (COEs), focusing on areas like AI-based customer behavior analytics and AI/ML coding assistants to enhance R&D, sharpen customer insights, and speed up software development,” informs Namita Adavi, Partner & Head – GCCs (India), Zinnov.
Sectors like BFSI and Automotive, and even Healthcare, are also strong adopters of technology. In BFSI, AI/ML-based financial services and real-time fraud detection are improving security and streamlining processes. In Automotive, AI is enhancing safety and convenience with innovations like driver monitoring systems and automated valet parking.
Further, cloud computing allows GCCs to deploy scalable solutions that can be easily adapted to the needs of the parent organization. Data analytics and business intelligence tools provide insights into customer behavior, market trends, and operational efficiency, enabling companies to make informed decisions. Cybersecurity, on the other hand, ensures that intellectual property and sensitive data are protected, reducing the risk of cyber threats and data breaches.
By leveraging these technologies, GCCs are at the forefront of digital transformation, helping their parent organizations stay competitive in a rapidly evolving business landscape. These capabilities are critical in enabling companies to innovate, respond to market changes, and drive long-term growth.
Conclusion
The evolution of GCCs from cost centers to innovation accelerators has reshaped the global business landscape. As strategic hubs for innovation, digital transformation, and global expansion, GCCs are playing an increasingly important role in shaping the future of work. With continued investment in talent, technology, and regional development, GCCs have the potential to drive long-term growth and innovation, not just for their parent organizations, but for the global economy as a whole.
