Over the past few years, Global Capability Centers (GCCs) — previously known as captive centers — have been at the forefront of digital transformation, innovation, and business process optimization for multinational companies. Traditionally centered in metros like Bengaluru, Hyderabad, and Pune, GCCs are now increasingly eyeing tier-2 and tier-3 cities across India for their next phase of growth. This shift is driven by a convergence of factors ranging from cost efficiency and talent availability to government incentives and improved infrastructure.

1. Abundant and Affordable Talent Pool

One of the foremost reasons for this transition is the availability of skilled manpower at a more affordable cost. Tier-2 cities such as Coimbatore, Jaipur, Bhubaneswar, and Chandigarh have seen the emergence of high-quality educational institutions churning out a steady stream of engineering and management graduates.

• Manpower Cost Advantage: The average salary expectations in tier-2 and tier-3 cities are 30–40% lower than in metros.
• Lower Attrition Rates: Talent in these regions tends to be more stable, with significantly lower attrition rates compared to metro cities.

2. Government Incentives and Policy Push

Both the central and state governments have recognized the potential of these smaller cities and are actively encouraging IT and GCC investments through favorable policies.

• Schemes like STPI (Software Technology Parks of India) have created IT infrastructure across the country.
• State-specific IT policies in Tamil Nadu, Odisha, and Rajasthan offer incentives such as capital subsidies, stamp duty waivers, and power tariff concessions.

3. Evolving Infrastructure

While earlier infrastructure bottlenecks made smaller cities unattractive, the situation has changed dramatically in recent years:

• Upgraded connectivity via national highways and regional airports (e.g., Bhubaneswar, Indore, Kochi).
• Development of IT parks and SEZs in smaller cities, often supported by public-private partnerships (e.g., TIDEL Park in Coimbatore).
• Digital infrastructure including high-speed internet and smart city initiatives that support remote and hybrid work models.

4. Education and Upskilling Ecosystems

Tier-2 cities have evolved into educational hubs, with institutes like:

• VIT University in Vellore
• KIIT in Bhubaneswar
• Manipal University in Udupi

These institutions collaborate with industry to offer customized programs, ensuring a workforce that is industry-ready. Additionally, platforms like NASSCOM’s FutureSkills Prime and state-led skill development missions are further boosting employability.

5. Lower Cost of Living and Quality of Life

• Affordable housing and lower costs for basic amenities make these cities attractive not just for companies but also for employees.
• Less congested lifestyles and cleaner environments are prompting many professionals to move back to their hometowns, a trend accelerated by the pandemic.

6. Rise of Remote and Hybrid Work Models

Post-COVID, GCCs have embraced distributed workforce models, making it feasible to operate satellite offices or hubs in smaller towns. Technologies enabling remote collaboration have made physical proximity to corporate HQs less critical.

Use Cases from India

1. Infosys in Indore and Nagpur

Infosys has set up campuses in tier-2 cities like Indore and Nagpur, citing both local talent availability and cost-effectiveness. These centers support global delivery in areas like software development and support.

2. HCLTech’s New Vistas Program

HCLTech launched its New Vistas program with operations in cities like Lucknow, Madurai, and Vijayawada. The program is designed to bring jobs to underutilized talent pools while promoting local economic development.

3. WNS in Bhubaneswar

The BPM major WNS Global Services opened a delivery center in Bhubaneswar, attracted by government incentives and the presence of local technical universities. It now employs over 1,000 people there.

4. ANSR in Coimbatore

Global GCC enabler ANSR partnered with local stakeholders to open capability centers in Coimbatore and Vizag, helping global clients set up distributed innovation hubs.

Some data points: 

Rising Footprint: Growing Numbers & Share

• GCC count growth: From ~1,430 in FY19 to over 1,700 in FY24, now projected to reach ~2,200 by 2029–2030 thehindubusinessline.com+5techcircle.in+5economictimes.indiatimes.com+5.
• Emerging city share: Tier‑2/3 cities’ share of GCC units rose from ~5 % in FY19 to ~7–8 % in FY24 moneycontrol.com+2content.techgig.com+2economictimes.indiatimes.com+2. Meanwhile, metro cities increased the total count, but their percentage share declined—Bengaluru saw its share slide from ~33.8 % to ~29.4 % between FY19–FY24 ey.com.
• Workforce trends: India’s GCC workforce was ~1.6 million in FY23, with ~1.9 million by FY24, and expected to exceed 2.2 million by 2026. The workforce in Tier‑2/3 cities is expanding faster—projected to grow 35–40 % in the next two years thehindubusinessline.com+1india-briefing.com+1

Key Metrics Over 5 Years

Industry Validation

Major consulting reports echo these sentiments:

• EY India Report:

“The growing ecosystem in non-metro cities is compelling for GCCs looking at long-term viability, talent retention, and innovation beyond cost metrics.”

• Zinnov’s GCC Nation Report:

“Tier-2 cities now contribute meaningfully to digital engineering and product innovation mandates of Fortune 500 firms.”

The most prominent success story in the tier-2 GCC movement — in terms of scale, visibility, and long-term impact — is:

HCLTech in Lucknow (Uttar Pradesh)

🔹 Why it stands out:

• Pioneering entry into a Tier-2 market: HCLTech’s decision to set up operations in Lucknow back in 2016 was a bold move, considering the city's limited IT footprint at the time.
• Massive scale and success: As of 2024, HCLTech has employed over 10,000 people in its Lucknow campus, making it one of the largest private employers in the region.
• Talent empowerment: Over 50% of the workforce comes from local colleges and universities, many of whom were trained through the HCLTech’s TechBee early career program.
• End-to-end delivery: The Lucknow center handles global delivery in areas like cybersecurity, digital transformation, cloud services, and engineering R&D — not just back-office support.

🔹 Leadership Perspective:

“When we started in Lucknow, we weren’t just building a facility — we were building an ecosystem. The idea was to tap into untapped aspiration. And that vision has paid off.”
— Srimathi Shivashankar, Corporate VP, HCLTech

🔹 Government Collaboration:

The Uttar Pradesh government supported HCLTech with land, infrastructure, and skill-development partnerships, making it a model for public-private collaboration in Tier-2 development.

🔹 Impact:

• Helped create a tech ecosystem in Uttar Pradesh.
• Attracted other firms and startups to the region.
• Triggered reverse migration of talent from NCR and Bengaluru back to Lucknow.

Why this is the benchmark:

HCLTech Lucknow is often cited as the prototype for Tier-2 GCC success in India. It proved that with the right mix of vision, investment, talent development, and government support, even non-traditional cities can become global technology delivery centers.

Conclusion

The GCC movement toward India’s tier-2 and tier-3 cities is not merely a cost-saving strategy; it’s a forward-looking decision rooted in sustainability, access to untapped talent, and local empowerment. With infrastructure maturing and policy tailwinds growing stronger, this decentralization could be the blueprint for the next phase of India’s digital and economic growth story.