The Evolution of Global Capability Centres (GCCs) in India
The transformation of India from the "world's back office" to a strategic hub for the global corporate elite marks a significant shift in its economic landscape.
Key Developments in India's GCC Landscape
- The transition from captive centres to GCCs has positioned India as a crucial player in the global value chain.
- GCCs have evolved through four distinct waves, culminating in GCC 4.0, which focuses on autonomy and end-to-end product ownership.
- By early 2026, India is home to over 1,800 GCCs, employing nearly two million professionals.
Technological Advancements and Roles
- Nearly 58% of GCCs invest in Agentic AI, enhancing their capabilities in executing complex tasks.
- Indian GCCs are crucial for global strategy leadership, R&D, and intellectual property creation.
- They operate as global Centres of Excellence (CoEs) for various functions, including finance and human resources.
Impact on Regional Development
- The GCC boom has generated high-value employment and spurred regional development in Tier-II and Tier-III cities.
- This growth relieves pressure on metro areas like Bengaluru and Hyderabad, boosting local economies.
Challenges and Risks
Despite rapid growth, the GCC ecosystem faces significant challenges:
- A growing talent gap in niche skills such as AI security and cloud architecture.
- Increasing cybersecurity threats, especially with the implementation of the Digital Personal Data Protection (DPDP) Act.
- Geopolitical risks from trade policies and protectionism, particularly concerning U.S. tariffs and reshoring policies.
Policy Recommendations
- Transitioning policymakers from regulators to facilitators is crucial for sustaining the GCC revolution.
- Proposed measures include introducing a "Single-Window Clearance" system for GCCs, rationalizing transfer pricing norms, and providing tax safe harbours for R&D operations.
- Encouraging industry-academia collaborations and offering subsidies for Tier-II expansions are vital for future growth.
Authors: P. Saravanan, Professor at Indian Institute of Management Tiruchirappalli, and A. Paul Williams, Head of India at Sernova Financial.
