In today’s Finshots, we talk about how Indian GCCs are transforming from simple call centers to global business leaders, and why this evolution matters for India.

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The Story

Remember the days when India was the call center capital of the world? ‘BPO’ or Business Process Outsourcing was the buzzword, and customer service calls from across the globe landed in bustling rooms filled with headsets and scripted responses. Well, BPOs are old news. And today we’re talking about something way bigger ― Global Capability Centres (GCCs).

What’s that, you ask?

Well, think of it like this. Instead of just answering calls, you’re now sitting in an office developing software for a Fortune 500 giant or building AI models for healthcare innovations in Chicago or driving financial strategies for a global bank. That’s how India’s BPOs have evolved into GCCs. They’re no longer in the back office but at the forefront of global business strategy and innovation.

A report by PwC India puts this transition nicely:

Originally called ‘captive centres’, these facilities came to be known as Global In-House Centres (GICs) and later as Global Capability Centres (GCCs). The growth has been phenomenal. In 2012, there were about 760 GCCs operating in India. By 2016, that number surpassed 1,000, and today, India is home to over 1,800 of them. By 2030, we’re poised to have over 2,000 such centres, with the market size projected to reach $100 billion.

More than 65% of the GCCs in India are headquartered in the US, and these centres have moved from being mere “support roles” to leading global operations. They currently employ between 1.3 to 1.9 million people, a number expected to rise to about 2.5 million by 2030. Meaning, if India’s GCCs were a city, it would be bigger than Vienna.

If you’re wondering how they work, imagine that a big company wants to expand its presence in another country. But instead of managing everything themselves, they set up a Global Capability Centre (GCC). Think of it as their one-stop solution hub. The GCC takes care of all the heavy lifting — planning operations, hiring talent, finding office space and making sure that everything runs like clockwork. It’s like building a new office far away but outsourcing the groundwork for a fixed fee.

And why has India become the go-to destination for GCCs?

Well, two words ― talent and cost.

Companies love that India has a large, skilled workforce at much lower costs than places like the US or UK. Salaries, office rents and exchange rates are all more affordable. Just look at Goldman Sachs’ Bengaluru GCC. It’s no longer just a support centre. It’s a key global hub, developing advanced risk management algorithms used globally.

GCCs in India aren’t just about saving money, though. They’re also transforming fields like AI, data analytics, cloud computing and R&D.

And the demand for skilled talent is so high that GCCs are pouring millions into partnerships with edtech firms and universities ― almost like building their own “education factories”.

Many companies are even embracing something called the “10/30/50 approach”, where 10% of the company’s leaders, like senior managers and decision makers, come from its GCC arm, 30% of the total workforce works there, and the GCC focuses on developing 50% of the company’s new and innovative skills, such as AI and data analytics. This shows how GCCs aren’t just small branches but have become critical parts of companies, driving growth and success.

Then there’s the Indian government’s support. With schemes like production linked incentives (PLIs), relaxed FDI (foreign direct investment) rules, investments in R&D and the China-plus-one strategy (investors finding alternatives to China), setting up a GCC in India has never been easier. Karnataka, for example, is aiming to establish 1,000 new GCCs by 2029, cementing India’s position as a tech and services hub.

Oh, and let’s not forget India’s booming consumer market. Companies aren’t just tapping into talent here, they’re also catering to Indian customers, making it a win-win.

And now, GCCs are also building Centres of Excellence (CoEs). These are specialised teams of experts dedicated to perfecting specific areas of work, ensuring high quality output and smooth operations.

But there are some problems too. If the world economy slows down, GCCs could be affected. We’ve seen this happen with BPOs in the past. For instance, during the 2008 global financial crisis, several BPO operations in India were downsized or shut down as companies cut costs. The GCC model is vulnerable to the same risks, and a slowdown could lead to a freeze in hiring or a reduction in operations.

Another problem is keeping talented workers. These workers are in high demand everywhere. GCCs have to offer good pay and benefits to make sure they stay. It’s like cut-throat competition to retain the best people with constant incentives like higher salaries, better perks and more flexibility.

Then there are second-order effects too. The rapid growth of GCCs has contributed to rising real estate prices and urban congestion in major cities like Bengaluru, Hyderabad and Pune. Bengaluru and Hyderabad are among the top 10 global cities for office space absorption, with GCCs accounting for over 60% of this demand. That’s why we’re seeing some GCCs eyeing Tier-2 cities like Jaipur, Coimbatore and Visakhapatnam which are emerging as the new growth hubs.

So yeah, new GCC policies, like the one from the Karnataka government, are definitely a step in the right direction. But to keep up with this rapid growth, we need a broader national policy to ensure it all stays on track. Without that, the risks could outweigh the benefits GCCs bring to the Indian economy.

Right now, GCCs already contribute more than 1% to India’s GDP, and many reports suggest this could just be the beginning. But if India wants to stay the top choice for GCCs and make sure this growth is sustainable for its cities, we’ve got to plan ahead. Moving GCCs to smaller cities and teaming up with startups to drive fresh ideas is a great start.

Take, for example, a Bengaluru-based startup creating smart tools for farming. They could team up with a GCC helping a big company improve farming tools for farmers worldwide, solving major challenges and making life easier for farmers.

But India needs to keep moving fast because countries like Malaysia, Indonesia and Vietnam are also ramping up their efforts to set up more GCCs.

Until then…

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