Taking GCC Evolution To Tier-2 Cities: Focus On Skill Set, Infra, Bye-Law Reforms

Union Budget 2025 has proposed to create a National Framework for GCCs. This policy will be focussed on developing Global Capability Centres (GCCs) in tier-II cities of the country. “A national framework will be formulated as guidance to States for promoting Global Capability Centres in emerging tier-II cities. This will suggest measures for enhancing availability of talent and infrastructure, building-bye law reforms, and mechanisms for collaboration with industry,” Finance Minister Nirmala Sitharaman said in her budget speech.

Notably, India has emerged as a favourite destination for global firms to set up their technology captives. This movement, which started in late 2000’s, has now emerged as a prominent segment of Indian IT industry.Indiahoused around 1,700 GCCs in FY24, generating $64.6 billion in exports. The segment hasalso emerged as one of the major employers of Indian technology talent by employing over 1.9 million people, according to the Nasscom-Zinnov report. However, most notable phenomenon of this trend is that most of these centres have been opened in metro cities. Cities like Bengaluru, Hyderabad, Chennai, Pune, Gurgaon are the key centres for the GCCs in the country. In this perspective, the proposal to set up a framework for GCCs with special focus on tier-II centres is a welcome move. It’s not that tier-II cities have not seen setting up of such centres. Many cities like Jaipur, Vadodara, Coimbatore, Vishakhapatnam, Kochi & Bhubaneswar among others have seen such centres in recent years. But the majority of the GCCs are concentrated in metro cities.

Therefore, a policy push is required to set up centres in tier-II cities. This will also come up at an opportune time. After decades of presence in India, many companies are now expanding their presence in the country. And these companies are keen to go to tier-II centres for opening up such centres due to its obvious cost advantage. So, policy measures like tax incentives and reskilling of talent in tier-II cities will definitely help. Moreover, the trend shows that growth rate of tier-II cities in India has exceeded that of metro cities in recent years. That is the reason that most luxury brands are witnessing higher sales in tier-II centres than on metros. It indicates that the standard of living has improved and many technology professionals will be keen to work in these cities than living in metros, which are reeling under infrastructure bottlenecks, pollution and high cost of living. So, a national framework will definitely help in attracting talent to these tier-II centres. Global companies will also benefit from these centres. Because, traditionally the cost of setting up a technology centre is lower in these cities. Moreover, national policy will enable them to get faster clearance for setting up the project. So, it can be win-win for all stakeholders. However, the current technology ecosystem lacks the availability of high-end talent in tier-II centres. Professionals with good skills prefer to stay in metros because of sound job opportunities, better salary and other perks. This has to be addressed in the national policy for making GCCs an important element of Indian IT industry.