Global Capability Centres Wary Of Moving To Small Towns: Report

New Delhi, Jul 10 (KNN) The Indian government is actively encouraging Global Capability Centres (GCCs) to expand beyond traditional tech hubs like Bengaluru, Hyderabad, and Chennai.

However, industry leaders remain cautious about shifting operations to Tier II and III cities due to ongoing challenges such as limited infrastructure, smaller talent pools, and an underdeveloped startup ecosystem, according to business standard. 

To make these smaller cities viable for GCC expansion, three key components are essential: a strong presence of IT services firms, a robust startup environment, and the continued growth of existing GCCs. 

Cities like Ahmedabad, Indore, Mysuru, Coimbatore, Mohali, and Bhubaneswar have seen some progress, with major IT players like TCS, Infosys, Wipro, and Cognizant establishing delivery centres there. However, experts say these efforts are still in the early stages.

According to Sangeeta Gupta, senior vice-president at Nasscom, GCCs cannot thrive in isolation. A broader ecosystem, including industry, academia, and innovation hubs, is critical for their success. 

Industry consultants from EY agree, noting that while some states are actively trying to attract GCCs with incentives, many companies are hesitant due to better infrastructure and connectivity in Tier I cities.

Travel constraints are another concern. Multiple connecting flights, limited airport access, and long travel times make smaller cities less appealing for global teams and clients. 

As a result, many companies prefer to stay in well-established metros where global accessibility is easier.

Despite these concerns, the GCC landscape in India is expanding. Over 1,760 GCCs operate in the country, and around 500 are already working on advanced technologies like AI, machine learning, analytics, and generative AI. 

According to Zinnov, only 13% of GCCs are currently located in Tier II cities, but this number is expected to rise as companies seek more cost-effective alternatives.

State governments such as Karnataka and Tamil Nadu are developing policies to improve urban infrastructure, simplify business regulations, and align university curricula with GCC needs. 

Experts suggest that a hybrid model—starting with transactional work in smaller cities and gradually expanding—could be a practical way forward.

(KNN Bureau)