GCC expansion in Tier II cities: Breaking the paradox of intent vs execution

For decades, the story of India's economic ascent has been dominated by its Tier I cities. Bengaluru and Hyderabad became synonymous with technology, Mumbai with finance, Gurugram with global services. But the current trends tell a different story, where the country's Tier II cities are becoming wellsprings of investment and innovation.

Signals are everywhere. Metso has chosen Vadodara to strengthen manufacturing, Pernod Ricard has turned to Nashik to advance “Make in India”, HCLTech’s New Vistas Program is creating thousands of roles in Lucknow, Madurai, and Vijayawada. Infosys, TCS, and Accenture are building in Indore, Mysuru, and Coimbatore.

These shifts should not be perceived as isolated moves. These shifts indicate that the next wave of GCC maturity will be distributed, not diluted.

The shift: From cost arbitrage to capability building

For too long, Tier II expansion has been framed through a single lens: cost. While cost remains a consideration, it is no longer the defining driver. Other factors that are becoming equally compelling are:

1.          Harness untapped, early career talent eager for growth and stability.

2.          Higher retention rates driven by lower saturation.

3.          Better work life balance, increasingly prioritised by GenZ

4.          Agile cost structures that enhance operational resilience in long run

5.          The rise of remote work and the gig economy have accelerated this shift.

Despite growing interest, many Tier II strategies falter at the execution stage, revealing a persistent intent and execution gap. Key challenges include that the infrastructure ecosystems are still in their infancy, particularly regarding vendor networks and continuity planning; the ecosystem density is just starting to facilitate peer learning and benchmarking; and the talent readiness is still developing in terms of mid-level leadership and specialised technology skills. Crucially, operational obstacles are also brought about by the states' disparate regulatory complexities.

Tier II expansion often meets roadblocks because the ecosystem is still maturing. A synergistic model between captives and outsourcing partners can bridge these gaps. Rather than building everything from scratch, GCCs can lean on local third-party firms during the incubation phase to accelerate set-up, tap into regional intelligence, and stabilise early operations.

For established centres, selectively hiving off non-core functions to such partners can create operational headroom while leadership focuses on capability building. In Tier II, this hybrid approach will create agility needed to embed deeply and scale sustainably.

The GCC guide to winning in Tier II India

Winning in Tier II demands a new operating logic, called Intent–Capability–Commitment Engine.

Intent defines the “why”; a presence in a Tier-2 city must be a decisive strategic choice, not a passive experiment. It is about aligning core business needs with a city's unique strengths, not forcing a fit. Each city embraces its unique regional strengths by aligning development with its specific specialisations, cities like Kochi and Indore thrive.

Talent is not always discovered; it often needs to be cultivated. Therefore, the strategy must be to build and not assume the necessary capabilities. Create upskilling and reskilling programmes to bridge specific skill gaps in local talent. Collaboration with ed-tech platforms, local universities and skilling bodies, can turn out to be a game-changer.

Commitment must be signalled through facility investments, leadership presence, and cultural integration. For instance, a temporary co-working space portrays a “pilot project", whereas a dedicated facility signifies “permanence".

Enablers in motion: Government and academia step in

India’s Tier II momentum is supported by the Government and Academia. Academic Renaissance is unfolding with the help of IITs and NLUs in cities like Bhubaneswar, Jodhpur, Mandi, and IIMs in Trichy, and Udaipur. Government initiatives from SEZ incentives and operational subsidies are shaping infrastructure readiness.

The Skill India Mission, through schemes like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and Pradhan Mantri National Apprenticeship Promotion Scheme (NAPS), extends skilling to non-metro areas by offering industry-relevant, short-term training, apprenticeships, and on-the-job training to early career talent in rural areas.

Together, these forces are reshaping the geography of excellence. Talent is no longer metro-bound; it’s nationally distributed and globally competitive.

Final word: The view from the boardroom

In 2024, GCCs leased a record 28 million sq. ft. of office space across India, an all-time high. Today, they occupy more than one-third of the country’s Grade A commercial stock, a clear signal of long-term confidence in India’s talent. That confidence rests on a unique demographic edge, that India holds the deepest talent reservoir in the world; with 65% of the population under the age of 35.

This is India’s Amrit Kaal, the window to transform into a Viksit Bharat by 2047, and GCCs expansion across India will be century-defining. The subsequent phase for GCCs in India will not be defined by the paradox of intent and execution, but by the harmony they find in Tier II cities

Devashish Sharma is the Co-founder and CEO at Taggd.