India has undergone a significant transformation, evolving from the world’s back office into a Global Brain Trust through the rise of Global Capability Centres (GCCs).
The Historical Shift
- Past (Back Office): Historically, India was viewed as a cost-cutting destination where MNCs sent cheap work such as data entry, basic IT, and customer support (BPOs).
- Present (Brain Trust): Today, MNCs establish GCCs in India not just for cost savings, but for innovation and high-level decision-making. These centres now decide the future of their parent companies
Evolution of Global Capability Centres (GCCs)
- Wave 1.0 (1990s): Focused on labour arbitrage, routine IT tasks, and back-office support, driven by cost-cutting motives with no strategic or decision-making authority.
- Wave 2.0 (2000s): Marked by process transition, standardisation, shared services expansion, and the emergence of Knowledge Process Outsourcing (KPO).
- Wave 3.0 (2010s): Characterised by value migration, growth in analytics and finance functions, the beginning of product development, and the establishment of Centres of Excellence and regional hubs.
- Wave 4.0 (2020s–Present): Involves end-to-end product ownership, leadership in AI and quantum R&D, deployment of agentic AI, and emergence of global and shadow leadership roles within India-based GCCs.
Technological Leadership and Global Impact
- Agentic AI: Unlike standard generative AI (like ChatGPT), 58% of Indian GCCs are investing heavily in Agentic AI—autonomous systems capable of reasoning and executing complex tasks without human intervention.
- Centres of Excellence: GCCs in India are now hubs for cutting-edge fields such as Quantum Computing, Semiconductor design, Finance, and Legal services.
- “Follow the Sun” Model: This model ensures a continuous 24/7 innovation cycle.
- When the US office sleeps, the Indian team continues the work, creating a shadow leadership in India that mirrors the parent company.
- Current Scale: There are now over 1,800 GCCs in India employing approximately 20 lakh professionals.
Socio-Economic Impact on India
- High-Value Employment: Transition from low-end outsourcing to research, innovation, analytics and strategic roles has created high-skilled, high-paying jobs, strengthening India’s knowledge economy.
- Beyond Metros: Expansion of Global Capability Centres (GCC’s) into Tier-2 and Tier-3 cities promotes decentralised growth, boosts local economies, and reduces pressure on metropolitan infrastructure.
Challenges in Sustaining India’s Lead
- Talent Gap and Skill Mismatch: Despite a large engineering workforce, there is a shortage of specialised skills in emerging areas such as AI security, cloud architecture, etc.
- Data Protection and Cybersecurity Costs: Rising rates of cyberattacks and compliance obligations under the Digital Personal Data Protection (DPDP) Act, 2023, significantly increase the cost of maintaining data privacy and cybersecurity for Global Capability Centres (GCCs).
- OECD’s 15% Global Minimum Tax: The OECD’s 15% Global Minimum Tax reduces the advantage of profit shifting to low-tax jurisdictions, affecting multinational tax strategies.
- Transfer Pricing Complexities: Stringent transfer pricing regulations often lead to tax disputes between multinational companies and Indian authorities.
- Western Protectionism and Digital Sovereignty: Policies promoting digital sovereignty, especially in the US and parts of Europe, may restrict offshoring of high-value technology and knowledge jobs.
Way Forward
- Fast-Track the National GCC Policy Framework (Budget 2026): The Union Government should issue clear guidelines and incentives, with time-bound implementation, to ensure policy certainty.
- Establish a Digital Single-Window System: The Centre and States should operationalise an integrated clearance platform with statutory timelines for seamless MNC entry and compliance.
- Reform Transfer Pricing & Strengthen R&D Incentives: The Ministry of Finance should simplify transfer pricing norms and expand tax incentives to encourage corporate R&D and deep-tech investment.
- Bridge the Skill Gap: Government, industry, and academia should align curricula with frontier technologies and expand structured apprenticeship and certification programmes.
- Incentivise Tier-2 and Tier-3 Expansion: The Centre and States should offer fiscal and infrastructure support, while corporations diversify operations to promote balanced regional growth.
Conclusion
India needs to sustain this transformation through continuous skill upgradation, regulatory certainty, and strategic policy support to consolidate its position as a leading global knowledge and innovation hub.
23 Feb 2026
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