This article has been contributed By Aditya Joshi, Chief Operating Officer, SA Technologies
For more than two decades now, the revolution of India’s Global Capability Centre (GCC) has really been anchored in tier-1 metros such as Bangalore, Hyderabad, Pune, Chennai, and the NCR. These metros now provide scale, support, and talent density needed for global enterprises and are rapidly evolving in the GCC model. It started off as a try at cost-cutting – but here it is today, as the driver for innovation, digital transformation, and global competitiveness. Affinity for resilience and sustainability among enterprises is now changing the narrative, but the next GCC boom will not be centered around Bangalore or Hyderabad. It will be tier-2 cities in India that make it flourish.
Industry research reinforces this trend. More than 200 GCCs are now already operating in tier-2 cities and expanding at an 11 percent annual rate. What was once a mere share of 5 percent in 2019 has currently risen to around 7 percent and is expected to double in the coming years. There are over 1,700 GCCs in India, which is well above half the total in the world-hence, smaller cities in the country are fast turning into the next frontier for expansion. This change is not only due to the costs, but the creation of sustainable, innovation-led ecosystems.
Cost considerations heavily feature this option. A location in tier-2 areas decreases operational expenditure by up to 30 percent; rental itself would typically be half the price compared to the rental costs in the tier-1 metros. But the larger advantage lies in the untapped talent in these professional pools. Many of these professionals are trained in these areas and would rather remain local than move to sprawling metros, thus making them loyal and less likely to jump jobs. Less attrition means a more stable workforce, which adds continuity-an extremely precious asset for enterprises engaged in highly complex, long-term projects.
The first signs of distress are now apparent in these original markets. Bangalore and Hyderabad are still important; however, increased congestion and more expensive housing and infrastructural bottlenecks have now forced global firms to rethink their dependence on these locations. The sustainability of the ecosystem becomes just as important as the initial cost advantage for companies reliant upon GCCs as strategic hubs of innovation and R&D. Hence it is not seeing tier-2 cities as a last resort; they now go on to become an integral part of the growth strategy.
Varun Bhardwaj
Investing in smaller cities has requirements of foresight and patience. Companies should not expect the density of niche talent they will find in Bangalore or Pune; rather, they should invest in the ecosystems, engage the universities, and develop powerful skilling programs aimed at preparing for careers in artificial intelligence, cloud computing, and data science. By taking a medium- to long-term approach, organizations can create the talent pipeline that will match their needs.
Most times, the best option is hybrid. Most companies still retain very complex or highly specialized functions in Tier 1 hubs, while shifting engineering, automation, and support functions to the tier-2 centers. Over the years, as the local ecosystems mature, higher-value functions can be brought back into the fold. This indeed ensures that an organization is touching immediate cost saving benefits without careening quality and ability. Investments in mentoring, leadership training, and global exposure for tier-2 employees can align outputs to that of-or even surpass-their peers in traditional hubs.
Digital infrastructure smoothes this kind of development. A 5G deployment, a deepening penetration of broadband, and a decidedly unconventional normalcy of distributed work after the pandemic have been smoothing the transition of tier-2 zones into global workflows. An employee based in Indore, Kochi, or Bhubaneswar may now effortlessly conduct business with a group of global peers, including those in Bangalore or Hyderabad.
Cities can never truly live up to their potential without putting increased effort into building up their ecosystems. This is where the government authorities now play an important role to quicken infrastructure projects, offer incentives, and bring educational outcomes in line with what is needed in the industry. Some states have already moved in this direction, launching targeted GCC policies with subsidized land and payroll incentives on offer to please the global investors. In fact, the Union Budget 2025 outlined by the Indian government even mentioned developing GCC ecosystems for smaller cities- solid proof of recognition of this shift on a national level.
This is where the private sect comes in: deeper ties with academia, co-creating certification programs, and nurturing local startup ecosystems. Public-private partnership in skilling, research, and infrastructure will hasten the forward march and growth of tiered hubs. Creating livable cities will go hand in hand. A highly talented professional will by all means go away and stay only if he gets high-end healthcare, education, housing, and social infrastructure. Cities must be built to stay in rather than work in, not only for jobs but to keep them here.
What is known is that the future is crystal clear. Bangalore and Hyderabad will remain strategically positioned, but the GCC story for India will not end there. Global enterprises today are eyeing cities like Indore, Coimbatore, Jaipur, Kochi, and Bhubaneswar. It is expected that by 2028, India will have more than 2,100 GCCs, and these tier-2 hubs will become the engine for growth in the sector.
Those who should have taken the cake will benefit the most: guaranteed accessible talent, significant cost advantages, and infrastructural risks that are less than what is obtainable now. Such enterprises are furthering the cause for inclusive growth, that is, opportunities and wealth to be shared outside metros. At SA Technologies, we are experiencing this revolution firsthand. Today, the Tier-2 advantage is no longer an expectancy of a long-term future; it is, rather, a present-day reality. Those who start today will lead the next wave of innovation and growth in India.
Jeenal Jain