Setting up a Global Capability Center (GCC) used to mean zeroing in on a metro like Bengaluru, Hyderabad, or Pune. But that’s changing—fast. Forward-looking companies are now turning their attention to Tier-2 cities across India, and for good reason.
These emerging hubs offer something Tier-1 cities no longer can: access to quality talent without the skyrocketing real estate costs or fierce hiring wars. Cities like Indore, Bhubaneswar, and Coimbatore are stepping up with improved infrastructure, strong educational ecosystems, and growing policy support.
But launching a GCC outside the usual hotspots comes with its own playbook. You can’t just lift and shift your strategy from a metro and expect it to work. There are key steps you need to follow to get it right.
This checklist breaks down everything—from regulatory compliance and location strategy to hiring and tech infrastructure. It’s built from real insights and current trends to help you confidently establish your GCC in Tier-2 India and build it to last.
What you Need to Set Up a GCC in Tier 2 Cities
Market Research and Feasibility
Before setting up a Global Capability Center (GCC) in a Tier-2 Indian city, it’s crucial to evaluate the market landscape. This step helps you assess demand, competition, operational viability, and alignment with your long-term strategic goals. Without solid groundwork, businesses risk launching in locations with mismatched capabilities or insufficient support infrastructure.
Key Considerations
- Define Functional Scope:
Clearly determine what functions the GCC will perform—such as software development, data analytics, finance, procurement, or HR. This directly impacts your talent acquisition strategy, technology stack, and physical infrastructure. Choosing a focused scope early on allows for quicker onboarding and process alignment. - Assess the Competitive Landscape:
Study other GCCs already operating in Tier-2 cities. Analyze their scale, service offerings, hiring strategies, and technology adoption. This helps you benchmark your plan and uncover white spaces where your GCC can add unique value or serve underserved functions. - Evaluate Cost Structures:
Tier-2 cities offer cost advantages, but it’s important to validate assumptions with real numbers. Examine office rent, internet and utility rates, employee salary benchmarks, and cost of compliance. Factor in hidden costs such as relocation allowances or vendor management fees to create a realistic financial projection. - Understand Ecosystem Maturity:
Investigate the depth of the local business ecosystem. Are there reliable legal advisors, hiring agencies, managed IT services, and HR vendors? A strong support ecosystem can significantly reduce operational friction and speed up time-to-market for your GCC.
Legal and Regulatory Compliance
Establishing a legal presence in India requires you to navigate regulatory obligations at the national and state levels. Choosing the right business structure and adhering to compliance norms not only ensures smooth operations but also builds investor and partner confidence.
Key Considerations
- Select the Appropriate Entity Structure:
For most foreign businesses, a Private Limited Company offers the right balance of control, credibility, and ease of compliance. It enables you to repatriate profits, issue equity, and raise funding locally if needed—all of which are crucial for scalability. - Complete Statutory Registrations:
You’ll need to register your company with the Ministry of Corporate Affairs, obtain a PAN and TAN, and register for GST if applicable. This process typically includes filing SPICe+ forms, preparing incorporation documents, and setting up a business bank account. - Draft Foundational Legal Documents:
Prepare a Memorandum and Articles of Association that reflect the operational scope of the GCC. Secure Director Identification Numbers (DINs) for your leadership team and establish internal policies for data protection, vendor contracts, and employee NDAs.
Location Selection
The city you choose for your GCC will significantly affect hiring, retention, cost-efficiency, and long-term viability. While Tier-2 cities offer lower costs, not all are equally mature or suited for every business function.
Key Considerations
- Evaluate Infrastructure Quality:
Ensure the city has reliable internet connectivity, power backup systems, transport links (air and rail), and access to quality office spaces. Some Tier-2 cities are building SEZs or tech parks, which offer added advantages like pre-approved compliance and plug-and-play facilities. - Gauge Talent Availability:
Choose cities known for educational institutions that produce graduates aligned with your domain—engineering, business, or design. Also, consider the availability of mid-level managers and experienced professionals, as this layer is crucial for leadership and knowledge transfer. - Explore Government Incentives:
Many states offer policy incentives to attract GCCs, including tax exemptions, capital subsidies, and discounted land or rental spaces. Look for cities with single-window clearance systems and ease-of-doing-business rankings that indicate administrative support.
Infrastructure and Technology
Your infrastructure choices, both physical and digital, will define your operational resilience and ability to scale. Early investment in the right tools and platforms can also lead to long-term cost savings and increased efficiency.
Key Considerations
- Establish Robust Cybersecurity Measures:
Implement secure networks, VPNs, and endpoint protection. If your GCC handles sensitive or regulated data, ensure compliance with standards like ISO 27001, SOC 2, or GDPR. Security should be part of your foundational infrastructure, not a retrofitted patch. - Adopt Scalable Tech Platforms:
Cloud-first tools (like AWS, Azure, or GCP), collaboration platforms (Microsoft Teams, Zoom, Slack), and enterprise systems (SAP, Salesforce) help create a seamless operational environment. Choosing modular and scalable technologies ensures your systems grow with your team. - Choose the Right Office Setup:
Decide between SEZs, non-SEZ business parks, or co-working spaces. SEZs offer tax benefits but come with compliance overheads. Co-working spaces are ideal for pilot teams or companies testing the market before deeper investments.
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Talent Acquisition and Workforce Planning
Building the right team is central to your GCC’s success. A well-planned hiring strategy, tailored to the local market, can ensure faster onboarding, stronger retention, and a motivated workforce.
Key Considerations
- Forge Academic Partnerships:
Collaborate with local universities and technical colleges for internships, apprenticeships, and fresher hiring pipelines. This provides early access to talent and helps align skill development with your GCC’s needs. - Offer Market-Responsive Compensation:
Understand salary benchmarks in Tier-2 cities. While they’re generally lower than Tier-1 metros, top-tier candidates still expect competitive pay, benefits, and growth opportunities. Compensation should reflect your brand’s global standards while being locally optimized. - Focus on Culture and Career Development:
Build a culture of ownership, collaboration, and learning from day one. Offer structured training programs, mentorship, and clearly defined growth paths to retain top performers and minimize attrition.
Operationalizing the GCC
Once your GCC is staffed and equipped, the focus shifts to execution. Operational discipline, process clarity, and continuous optimization will determine whether your center evolves into a high-performance unit or struggles with inefficiencies.
Key Considerations
- Define Clear SOPs and Performance Metrics:
Standardize workflows across departments with well-documented SOPs. Establish KPIs and SLAs for every team to ensure alignment with global HQ and internal accountability. - Encourage Collaboration Across Geographies:
Use tools and rituals that enable smooth collaboration with global teams—daily standups, cross-functional syncs, and asynchronous updates. Cultural alignment and time-zone management play a key role in cross-border efficiency. - Implement Feedback and Iteration Loops:
Regularly review operations through audits, employee feedback, and leadership retrospectives. Make continuous improvement part of your organizational DNA by acting on what you learn and evolving practices accordingly.
Conclusion
Building a GCC in a Tier-2 Indian city is a long-term investment in scale, resilience, and talent diversity. The ecosystem in these cities is evolving fast, and those who move early will benefit from first-mover advantages, community goodwill, and a loyal workforce.
But success doesn’t come from just setting up desks and hiring a team. It comes from thoughtful planning, local insight, and a willingness to adapt. This checklist is your starting point, a roadmap to help you navigate the complexity and unlock the potential of Tier-2 India.
The companies that win in this space are the ones that treat their GCCs not as back offices, but as strategic partners driving innovation, efficiency, and global growth. If you’re ready to build something long-term and future-ready, there’s no better time or place to start.
FAQs
Is a Tier-2 city really suitable for high-skill functions like AI, product development, or cybersecurity?
Yes. Many Tier-2 cities have strong educational institutions producing highly skilled graduates in emerging tech areas. With the right training and leadership, these cities are proving capable of supporting sophisticated operations beyond just support or back-office tasks.
What’s the typical time frame to set up a fully operational GCC in a Tier-2 city?
It depends on scale, but most companies can go from registration to full-scale operations in 4 to 6 months. That includes legal setup, space procurement, hiring, and basic infrastructure. Starting with a smaller team in a co-working space can reduce this timeline even further.
How does the talent pool in Tier-2 cities compare with Tier-1 metros?
While Tier-1 cities may have a higher volume of experienced professionals, Tier-2 cities offer strong foundational talent, especially among fresh graduates. Attrition rates are also significantly lower, and many professionals prefer to work closer to home when opportunities are available.
Are government incentives really accessible or just on paper?
In many cases, they are real—but the application and approval process may require local know-how and persistence. Engaging local consultants, industry associations, or government liaison firms helps ensure you take full advantage of available incentives.
Should companies relocate experienced employees from HQ to Tier-2 centers in the beginning?
Yes, at least in the initial phase. Relocating a few trusted managers helps set the tone, ensure process alignment, and mentor the local team. Over time, leadership can be transitioned to local talent with targeted development plans.