Tier-2 Cities with Robust Academic Networks and Lower Operational Costs, are Attracting New GCC Investments: KPMG

The GCC model has consistently attracted global organizations to leverage India’s rich tech talent base, leading to the establishment of numerous technology centers and innovation hubs across the country. This growth is largely driven by the accelerated pace of technology adoption, particularly as emerging technologies continue to disrupt traditional business models and value chains.

What sets this phase of GCC evolution apart is the opportunity to combine the end-to-end process capabilities of these centers with their role as the technological nerve center for global organizations. Technology has become the cornerstone of this transformation, as GCCs pivot toward building advanced capabilities.

The adoption of emerging technologies like artificial intelligence (AI) and machine learning (ML) has been a key enabler. GCCs in India are now functioning as strategic hubs for global enterprises, driving innovation through advanced AI, data analytics, and automation capabilities. This evolution has not only fostered innovation but also positioned GCCs as critical partners in helping global businesses stay competitive in an increasingly digital landscape.

Over the past two decades, the GCC model has evolved significantly, transitioning from basic support functions to becoming robust capability hubs. As digitalization accelerated across business value chains, it became clear that GCCs were well-positioned to take on end-to-end process ownership. What started with siloed functions such as accounts payable, reconciliation, and payroll has now expanded into comprehensive processes like Procure to Pay, Order to Cash, Record to Report, and Hire to Retire.

From an IT perspective, GCCs have evolved from providing back-end support, infrastructure management, and helpdesk services to playing a central role in managing the organization’s entire technology stack. Today, GCCs support core technology architecture, driving tighter integration across the business value chain and promoting innovation through emerging technologies.

By harnessing the power of data through AI and adopting blockchain technologies, GCCs have extended their influence to an organization’s broader ecosystem of partners, delivering real impact to end customers. Additionally, India’s vibrant startup ecosystem has spurred the development of innovative proof-of-concepts (PoCs) and sandbox projects within GCCs, many of which are now delivering value to global operations.

Leveraging startups that specialize in niche technologies and operate with agility has become a strategic advantage for GCCs. These startups, often with cross-industry experience and a collaborative mindset, bring fresh ideas and innovative solutions. By partnering with them, GCCs can experiment and innovate in a controlled environment while benefiting from niche expertise. In return, startups gain the opportunity to scale their ideas and address core business challenges within the larger framework of a global organization.

This model is not new—many GCCs have successfully run incubator and accelerator programs for over a decade, demonstrating the value of these partnerships. These collaborations foster co-innovation, provide access to specialized skills, and accelerate digital transformation efforts. As GCCs evolve, such partnerships will continue to play a pivotal role in driving sustainable growth and helping companies maintain a competitive edge in the global marketplace.

Global organizations have developed extensive networks of GCCs and hubs, tapping into talent pockets across various regions, regardless of their domestic market presence. These service delivery models have enabled companies to expand globally and take full advantage of talent markets around the world.

However, entering new geographies involves navigating several challenges, including understanding the regulatory landscape, cultural nuances, and talent market trends. Organizations must also be attuned to the local ecosystem dynamics that support the GCC model. In India, where the GCC model has matured significantly, many centers are well-prepared to address emerging risks and challenges, ensuring they remain resilient and adaptive in the face of evolving market conditions.

The success of the GCC model in India is largely driven by access to top-tier talent, with key locations emerging as hotspots for growth. Bangalore holds the dominant share of GCCs due to its status as the country’s tech capital, startup hub, and strong academic research base. Other cities like Hyderabad, Pune, and NCR have also risen as leading destinations, supported by their vast talent pools and vibrant ecosystems. Meanwhile, Chennai and Mumbai continue to maintain a solid GCC presence.

With a steady influx of new GCCs being established and supported by government initiatives, we’ve seen heightened competition among cities across India. Tier-2 locations such as Coimbatore, Kochi, Thiruvananthapuram, Mysore, Kolkata, Chandigarh, Jaipur, and Ahmedabad are gaining traction. These cities, with robust academic networks and lower operational costs, are increasingly attracting new GCC investments.

However, the future success of these emerging hubs will depend on their ability to build a sustained talent pipeline while focusing on niche, emerging technologies. The development of a robust tech ecosystem in parallel will be critical for these regions to capitalize on their growth potential.

As GCCs advance along their maturity curve, geographic boundaries are becoming less relevant, and technology continues to disrupt the landscape. GCCs are actively adapting to these dynamic changes, constantly evolving to meet the emerging challenges of this new landscape of opportunity.

Over the years, the GCC model has evolved from being primarily low-cost delivery centers to becoming deep capability and transformation hubs. A significant trend in this evolution is the adoption of hybrid operating models. This shift means global organizations no longer rely solely on in-house capabilities within their GCCs but effectively leverage an external ecosystem of service providers. As a result, highly specialized and focused micro or nano GCCs have emerged, where core functions are retained and developed internally, while non-core areas are outsourced to vendors.

The hybrid model provides organizations with greater agility, allowing them to be more flexible and responsive to market needs. It also enables faster setup of GCCs by focusing on niche areas that drive strategic value. Additionally, the rise of the GCC-as-a-service model, where vendors assist in rapidly setting up and incubating micro or nano GCCs, has accelerated the adoption of this approach. This model offers organizations the ability to start faster and scale more efficiently. However, organizations must carefully evaluate the pros and cons of any operating model to ensure it aligns with their specific business goals.

AI is revolutionizing GCCs by enabling them to harness vast data reservoirs and extract insights that were previously unattainable. With advanced machine learning algorithms and analytics, organizations can now predict customer behavior, optimize supply chains, and drive operational efficiency. This transformation is not merely about keeping pace; it’s about accelerating innovation and fostering a culture of continuous improvement. Data-driven decision-making empowers GCCs to be more responsive and agile in their strategies, allowing them to stay ahead of market trends and shifts.

Cloud computing plays a vital role by providing the necessary infrastructure for scalability and flexibility. Cloud-based solutions enable GCCs to rapidly deploy new applications, scale operations in real-time, and collaborate seamlessly across geographies. In an environment where speed is critical, organizations can test ideas quickly, adapt to evolving consumer preferences, and respond to competitive pressures without the constraints of on-premises infrastructure. The cloud also supports effective remote collaboration, essential in today’s hybrid work models, ensuring that teams can work together smoothly, regardless of location.

Cybersecurity, too, is recognized as a foundational element of innovation. As GCCs embrace more digital solutions, the protection of sensitive data and intellectual property becomes increasingly crucial. A strong cybersecurity framework not only safeguards these assets but also builds trust among stakeholders, including clients and partners, reinforcing the GCC’s role as a strategic asset to global operations.