India’s outsourcing landscape is seeing a major transformation as global capability centres continue to evolve beyond support functions and emerge as drivers of innovation and digital change. These centres have also shown resilience amid economic uncertainty and changing United States policies, making them future ready.
For years, global capability centres expanded steadily in major cities such as Bengaluru, Hyderabad, Chennai, Mumbai, and Delhi NCR. The focus is now shifting to tier 2 cities due to strong cost advantages and a growing talent pool. This shift is expected to play a key role as India strengthens its position as the world’s leading destination for global capability centres.
Studies indicate that around 150 global capability centres are already operating in tier 2 cities. Demand in these regions is projected to rise by 30% to 40% in the near future. This trend is encouraging businesses, especially startups and mid sized firms, to look beyond tier 1 locations and explore scalable and sustainable opportunities elsewhere.
Tier 2 cities are currently offering a strong mix of economic benefits, technology readiness, and improving infrastructure. One of the biggest advantages is cost efficiency. Compared to metro cities, operating costs are nearly 35% lower without compromising operational quality. Lower living expenses for housing, transport, and daily needs also reduce salary pressure, allowing companies to invest more in research, innovation, and workforce development.
Talent availability is another key factor. Studies show that tier 2 cities contribute 11% to 15% of India’s technology talent. These cities offer a steady supply of skilled engineers, IT professionals, and data scientists. The option to work closer to home also helps reduce attrition rates, creating a stable workforce.
Government policies are further accelerating this shift. Several state governments are promoting tier 2 cities through business friendly measures. Karnataka’s Global Capability Centre Policy 2024 aims to set up 500 new centres and generate $50 billion in economic output. The Beyond Bengaluru initiative is focused on spreading growth to cities like Mangaluru and Mysuru. At the national level, tax benefits and single window clearances are being promoted, while GIFT City offers tax incentives and GST exemptions.
Mr. Alouk Kumar, CEO and MD of Inductus Group stated, “The next phase of India’s GCC growth will be shaped by Tier II cities. As states strengthen digital infrastructure, talent pipelines, and ease of doing business, these cities are evolving into globally relevant capability hubs delivering high-quality employment while enabling more balanced and sustainable regional development.”
Cities such as Jaipur, Chandigarh, Coimbatore, Vadodara, GIFT City, Indore, and Nagpur are gaining traction due to skilled talent, strong infrastructure, better connectivity, and government support. Major companies including Genpact, TCS, Wipro, Bosch, Impetus, Deloitte, Cognizant, and HSBC have already established a presence in these locations.
According to a report, nearly 60% of the world’s top 500 companies have set up global capability centres in India. With sustained investments and supportive policies, tier 2 cities are set to become major growth hubs, while tier 3 cities are also rapidly catching up.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter
About us:
The Mainstream is a premier platform delivering the latest updates and informed perspectives across the technology business and cyber landscape. Built on research-driven, thought leadership and original intellectual property, The Mainstream also curates summits & conferences that convene decision makers to explore how technology reshapes industries and leadership. With a growing presence in India and globally across the Middle East, Africa, ASEAN, the USA, the UK and Australia, The Mainstream carries a vision to bring the latest happenings and insights to 8.2 billion people and to place technology at the centre of conversation for leaders navigating the future.
