Setting Up a GCC in India: What the Consultants Don't Tell You

I have been part of building and scaling India delivery operations for two decades — at IBM, where I was part of the leadership team that grew the India footprint to 25,000+ professionals across six centres, and now at Arth Group, where I advise companies on their India entry strategy. What I have observed is that the organisations that struggle are not the ones that made the wrong strategic decision. They are the ones that made the right strategic decision and then underestimated the operational complexity of executing it.

This piece covers the decisions and dynamics that consulting engagements tend to summarise rather than detail — the ones that determine whether a GCC becomes a genuine Centre of Excellence or remains a cost arbitrage operation that never quite delivers on its original promise.

The captive vs outsourced decision is not binary

Most organisations approach the captive vs outsourced question as a binary choice: build your own entity in India or contract with an established service provider. In practice, the most successful models I have seen are hybrid — and the hybrid is not a compromise, it is a deliberate architecture.

A pure captive gives you control, talent ownership, and the ability to build institutional knowledge that compounds over time. It also requires significant management bandwidth in the first three years, a deep understanding of India's labour market and regulatory environment, and the operational maturity to run a multi-location delivery organisation from a global headquarters. Organisations that underestimate this — particularly those setting up their first India operation — often find themselves two years in with a team that has not yet achieved the productivity or quality levels they projected.

A pure outsourced model gives you speed and de-risked initial setup but creates a different problem: you are building capability inside someone else's organisation. The talent, the processes, and the institutional knowledge belong to the vendor. When you want to bring that capability in-house — and most organisations eventually do — the transition is far more expensive and disruptive than if you had built captive from the start.

The hybrid model that works well typically starts with a small captive leadership and architecture team — ten to twenty people who own the vision, the standards, and the talent strategy — and uses a managed services provider for volume delivery in the first two to three years. The captive team sets the direction; the outsourced team delivers at scale while the captive builds. This lets you develop genuine understanding of the India operating environment without betting your entire delivery capability on a greenfield setup.

Location decisions are more consequential than most organisations realise

The default answer to "where in India" is Bengaluru. It has the deepest talent pool for technology roles, particularly at the senior and specialist end. But the default answer is not always the right answer, and it comes with trade-offs that have grown more acute in recent years.

Bengaluru's talent market has tightened significantly. Attrition rates in the 18–25% range are not unusual for technology roles, and the cost premium over Tier 2 cities has grown. For organisations whose GCC will primarily hire at volume in engineering, data, or finance operations roles, cities like Pune, Hyderabad, Chennai, and — increasingly — Coimbatore, Jaipur, and Indore offer meaningfully lower attrition and cost structures without significant quality trade-offs.

State-level incentives are a more material factor than most entry strategies account for. Several Indian states have established dedicated GCC policies with substantive incentives: capital subsidies, employment generation support, single-window clearance for regulatory approvals, and in some cases facilitated access to real estate. Telangana, Karnataka, Tamil Nadu, Maharashtra, and Gujarat have the most mature GCC incentive frameworks. Location selection should involve a structured conversation with the relevant state investment promotion agencies, not just a real estate comparison.

The talent strategy problem that appears eighteen months in

Most GCC entry strategies have a talent acquisition plan. Fewer have a talent retention and development plan that extends beyond the first year. This is where a significant number of organisations discover a problem they did not anticipate.

The talent that is easiest to hire for a new GCC is talent that has worked in similar environments — typically large IT services companies or established GCCs. This talent is competent and relatively quick to become productive. It is also talent that has the highest options value in the market and the highest attrition risk if the GCC does not quickly develop a clear value proposition as an employer.

What retains talent at the eighteen-month mark is genuine career development — visible paths to senior roles, rotational programmes that give India-based professionals exposure to global teams, and a culture where the GCC is treated as a strategic asset rather than a cost centre. The GCCs that make the transition from cost centre to Centre of Excellence are the ones that deliberately invest in building capability that cannot be replicated elsewhere: innovation labs, patent programmes, specialised CoEs, and direct client-facing roles not mediated through onshore teams. At IBM India, the 40+ patent submissions annually we achieved were not accidental — they were the result of a deliberate culture that treated India-based professionals as originators, not executors.

The governance model that actually works

GCC governance failures are rarely failures of intent. They are almost always failures of structure — specifically, the structure of the relationship between the India leadership team and the global headquarters function that nominally owns the GCC.

The most common failure is the "remote reporting" model: the India GCC head reports to a function head in headquarters, has limited visibility into strategic priorities, and spends significant energy translating global requirements into India delivery terms. This model produces a GCC that is operationally competent but strategically irrelevant — a factory, not a partner.

The governance model that produces genuine CoE outcomes is one where India leadership has a seat at the strategic table — not just in delivery reviews, but in the conversations where technology direction and business priorities are set. This requires a deliberate decision by global leadership to treat the GCC as a source of strategic input, not just delivery capacity.

Three things to get right before you start

The mandate needs to be specific. "Build a GCC to support our technology function" is not a mandate. "Build a 200-person engineering centre in Pune, focused on cloud-native development and data platform engineering, that takes on full delivery ownership of our core product infrastructure within 24 months" is a mandate. The specificity determines whether you can hire the right leaders, set the right culture, and measure the right outcomes.

The first India leader is the most important hire you will make. This person needs deep India market knowledge, the operational credibility to build and lead a team, and the global communication skills to navigate a headquarters relationship. The temptation to appoint someone from headquarters who "knows the business" rather than someone who can actually build in India is the single most common hiring mistake in GCC setup.

The timeline needs to account for the India operating environment. Regulatory approvals, entity setup, real estate, and hiring in India all take longer than equivalent processes in most Western markets. A realistic runway from decision to first team operating is nine to twelve months. Organisations that plan for six months consistently find themselves behind by the time they hire their first hundred people.

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