Year in Review: Tier II cities become new hotspots for GCCs
Tier II cities have become a new focal area for GCCs in India looking to expand, as these destinations bring in several advantages.
The global capability centre (GCC) story of India is now spreading its roots beyond the top metros of the country into Tier II locations, as corporations seek to reap the benefits of their presence in such cities.
India has turned into a pre-eminent destination for GCCs around the globe, and global corporations are in no mood to slow down their plans of setting up centres in the country. Now, they want to look beyond metropolitan locations.
One of the key highlights for India GCCs in 2025 has been a push towards establishing such centres in locations outside of the metros.
Today, India is home to around 1,800 GCCs generating a revenue of around $65 billion, according to various estimates. This number is projected to rise to about 2,400 GCCs by 2030, with revenue set to cross $100 billion. The segment employs around 1.9 million professionals.
Though it must be noted that there is an overwhelming dominance of six cities—Bengaluru, Chennai, Hyderabad, Pune, Mumbai and Delhi-NCR—which are cornering the majority of GCC presence in India. Now, corporations are thinking otherwise, where they believe additional centres can be established beyond these metros.
In a study titled GCC Tier 2 Report 2025, InCommon, a specialised GCC operator, says that the share of GCCs in Tier II cities has increased from 5% in 2019 to 7% in 2025.
“Tier II hubs are no longer secondary options as they are emerging as core innovation ecosystems for digital engineering and R&D,” says Piyush Kedia, Co-founder and CEO of Incommon.
There are multiple reasons which are driving this change, including costs, talent, infrastructure and government policies.
Gaurav Vasu, founder and CEO of UnearthInsight, a data intelligence firm, says, “Primary driver for GCCs still remains 20-25% lower operating & talent costs across Tier II cities and availability of specialised talent.”
He cites the example of a location like Jaipur, which offers rich finance and accounting talent, and Coimbatore, which has engineering, testing, healthcare operations and business process management talent.
The InCommon report gives a list of Tier II cities which have GCC presence, like Ahmedabad, Vadodara, Indore, Bhubaneswar, Coimbatore, Kochi, Lucknow, Jaipur, Nagpur, and Mysuru.
The other factor which is also making these global corporations look into Tier II destinations is the government policies. Today, it is not just the technology-dominant states like Karnataka, Tamil Nadu, Telangana or Andhra Pradesh which are coming out with GCC-specific policies. Others have also joined the bandwagon.
These include states like Gujarat, Maharashtra, Uttar Pradesh and Madhya Pradesh, which have unveiled GCC-specific policies. These state governments are keen to see that the fruits of technology go much beyond their capitals, and corporations are also keen to explore this opportunity.
Also, as GCCs expand their operations in the country, they are also looking at how they can distribute their work where the core activity is done at the metro locations, while support functions can be done at the Tier II locations.
“With a 25% lower cost base, 20–30% lower attrition, and a rapidly expanding STEM talent pool, these cities are enabling organisations to scale faster while driving inclusive economic growth,” says Kedia.
However, there are challenges associated with GCCs in Tier II destinations and these range from talent availability, the aspirations of the talent, the kind of work that is undertaken and how much they can expand.
Kedar Pathak, GCC Talent Specialist at Xpheno, says, “We have seen talent from the tier 2 destinations keen to shift to a metro location for various reasons.”
The reasons could be for better career opportunities, higher compensation and exposure to higher-quality work. Generally, the norm with GCCs in Tier II destinations has been that the work done may not be of the highest value. Also, the opportunities for GCCs to expand in Tier II locations are largely limited.
Vasu says, “Tier II cities will take time to attract primary or first GCC centres. They will continue to attract second and third GCC units that support primary GCC locations.”
The doors have opened for the GCCs to look beyond the tried and tested strategies of setting up in a metro, and their presence in a Tier II destination brings in numerous benefits. This trend is expected to strengthen in the days to come.
Edited by Jyoti Narayan