Did you know, 55% of the new GCCs established in the first half of 2023 were set up in locations other than Bengaluru, indicating a significant shift towards Tier-2 cities?
As Bengaluru and Hyderabad near saturation in both cost and talent churn, enterprises are looking elsewhere for scalable, future-ready GCCs. The spotlight has now shifted to tier-2 cities like Indore, Coimbatore, Bhubaneswar, and Jaipur—once overlooked, now aggressively competing for global investments.
The rationale isn’t just about saving on rent or salaries. These cities offer access to untapped STEM talent, lower attrition rates, and improved infrastructure, all backed by state-level incentives and smart city programs.
For example, Indore—ranked India’s cleanest city five years in a row—has already attracted over a dozen IT and consulting firms to its Special Economic Zones (SEZs), with hiring focused on analytics, engineering, and digital CX.
NASSCOM data shows that GCCs expanding into tier-2 cities are not only reducing operational costs by up to 35%, but also experiencing 40% lower attrition compared to Tier-1 locations. That’s a massive advantage in industries where talent stickiness drives delivery continuity and IP retention.
In this blog, we’ll explore why tier-2 cities aren’t just an alternative—they’re quickly becoming the preferred hubs for next-generation GCCs.
What Defines a Tier-2 City—And Why It Matters
In the context of India’s business and urban development landscape, tier-2 cities refer to emerging urban hubs that are smaller than metros in population and commercial footprint, but rapidly growing in economic influence, talent capacity, and digital infrastructure. Cities like Indore, Coimbatore, Bhubaneswar, Jaipur, Nagpur, and Kochi fall into this category—not large enough to be classified as Tier-1, but far beyond rural or semi-urban centers in capability.
What sets tier-2 cities apart isn’t just size. It’s the combination of affordability, stability, and access to untapped resources.
- Academic Infrastructure: Many tier-2 cities are home to top engineering and management institutions—NIT Trichy, IIM Indore, and IIIT Bhubaneswar, to name a few. These colleges produce thousands of job-ready STEM graduates each year, many of whom prefer to work closer to home rather than migrate to congested metros.
- Cost Advantage: Operating costs in tier-2 cities are significantly lower—real estate is 40–60% cheaper, and salary expectations are 25–30% lower than their Tier-1 equivalents. Yet the quality of output remains comparable, especially when supported by structured training and exposure.
- Infrastructure Readiness: Smart city programs, SEZ developments, and new IT parks have brought high-speed internet, better roads, and logistics access to these cities. Many are already equipped with international airports, enabling easy integration with global operations.
- Workforce Stability: Unlike metro talent that frequently job-hops, professionals in tier-2 cities show higher levels of retention and loyalty—a critical factor for long-term GCC operations. Companies no longer need to overspend just to retain talent or manage transitions.
Tier-2 cities also benefit from lower saturation, which means less hiring competition, fewer wage wars, and faster team ramp-ups. For companies designing GCCs that are lean, agile, and innovation-ready, these cities present a compelling operational canvas.
8 Reasons Tier-2 Cities Are the Next GCC Hotspots
Access to Untapped, High-Quality Talent
Tier-2 cities are home to some of India’s top educational institutions, including IITs, NITs, IIITs, and numerous AICTE-accredited engineering colleges. Every year, thousands of graduates in computer science, IT, data science, and electronics enter the job market from these cities—but remain underutilized due to limited local opportunities.
By establishing GCCs in these locations, companies can tap into a fresh, eager, and under-competed talent pool—without fighting the attrition wars common in metro cities. These professionals are highly trainable, digitally literate, and increasingly proficient in technologies like Python, React, and cloud platforms.
Cost Efficiency Without Compromising Capability
Operating costs in cities like Indore, Bhubaneswar, or Coimbatore are 20–35% lower than those in Bengaluru or Mumbai. This includes real estate, salaries, and operational overhead. But this cost advantage doesn’t mean compromising on output.
GCCs in tier-2 locations can deliver the same level of service, engineering, or analytics quality—provided they invest in initial onboarding, training, and infrastructure alignment. The ROI becomes clear within 12–18 months of stable operations.
Rapid Infrastructure Development
Smart city initiatives and industrial corridor investments have significantly improved tier-2 city infrastructure over the past five years. Cities like Indore and Coimbatore now offer Grade A office parks, fiber-optic internet, uninterrupted power supply, and airport connectivity.
Many states are also developing IT parks and SEZ clusters outside the metros, with built-in plug-and-play facilities and faster regulatory clearances—making it easier and faster for companies to set up GCC operations.
Government Incentives and Policy Support
State governments are aggressively promoting tier-2 cities as tech and business hubs. Incentives include capital subsidies, tax breaks, employment-linked incentives, discounted land leases, and single-window approvals for GCCs and IT/ITES units.
For example, Madhya Pradesh’s startup and IT policy offers rental reimbursements and power tariff subsidies for companies investing in cities like Indore and Bhopal. Tamil Nadu, Odisha, and Rajasthan have introduced similar incentive frameworks to attract technology-driven enterprises.
Lower Attrition and Higher Workforce Stability
In tier-1 cities, employee attrition often crosses 18–20%, especially in junior and mid-level engineering roles. Tier-2 cities, in contrast, report significantly lower churn rates, thanks to factors like proximity to home, better work-life balance, and lower cost of living.
For GCCs, this translates into higher productivity, better knowledge retention, and lower hiring costs over time—a key advantage in functions where continuity is critical.
Faster Setup Through Local Ecosystem Partnerships
Unlike the early 2010s, today’s tier-2 cities have a growing ecosystem of co-working spaces, IT infrastructure providers, staffing firms, and training partners. This ecosystem reduces setup time and makes it easier to scale teams quickly.
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Emerging Tech and Startup Culture
The startup culture in tier-2 cities is growing steadily, driven by digital inclusion, mentorship networks, and incubators set up by academic institutions. Events like E-Summits, developer meetups, and government-backed tech expos have started creating local innovation ecosystems.
This growing entrepreneurial mindset supports the kind of agility and experimentation that modern GCCs are increasingly adopting—especially in product, AI, and CX roles.
Long-Term Scalability Without Urban Saturation
Unlike tier-1 cities that face rising rental prices, talent saturation, and infrastructural bottlenecks, tier-2 cities offer room to grow—both physically and strategically. Companies can plan multi-phase expansion without having to relocate or redesign every two years.
With the ability to build distributed GCCs across multiple tier-2 cities, enterprises can reduce geographic dependency, tap into localized talent, and build resilient, scalable global operations.
Conclusion
Tier-2 cities in India are no longer on the sidelines—they’re becoming the frontlines of global capability building.
With access to skilled talent, lower operational costs, growing infrastructure, and strong government backing, these cities are ideally positioned to host the next wave of high-performing GCCs.
The strategic value isn’t limited to cost savings. It’s about building centers that are more stable, more scalable, and more innovation-ready—without the saturation challenges of traditional metros.
For global enterprises, this is an opportunity to redesign their operating models. Instead of clustering everything in overburdened Tier-1 cities, they can decentralize intelligently—by tapping into India’s rising tier-2 ecosystems that offer both agility and long-term value.
FAQs: Setting Up GCCs in Tier-2 Cities
1. Are tier-2 cities suitable for high-skill GCC functions like engineering or AI?
Yes—if supported with the right onboarding and training.
Tier-2 cities produce thousands of engineering and data science graduates annually. With proper technical assessments, upskilling, and integration into agile global teams, companies can build high-performing GCC units focused on product, AI, DevOps, and analytics.
2. What are the biggest advantages of tier-2 cities compared to tier-1?
Lower costs, better talent retention, and less saturation.
Operational costs (real estate, salaries, utilities) are 20–35% lower. Attrition is significantly less. And hiring cycles are faster due to reduced competition. These factors help companies build more stable and scalable teams.
3. Are there any infrastructure risks in tier-2 cities?
Thanks to Smart City investments, cities like Indore, Coimbatore, and Bhubaneswar now have reliable internet, international airports, coworking spaces, and SEZ-ready tech parks. Infrastructure gaps can be further mitigated with the right local partners.
4. How do companies ensure cultural alignment and quality standards?
Through hybrid onboarding, embedded leadership, and strong process governance. Successful GCCs in tier-2 cities blend local teams with experienced leaders from HQ or metro hubs. They also implement strong SOPs, agile rituals, and continuous L&D programs to ensure quality and cultural consistency across locations.
5. How does Supersourcing support GCC setup in tier-2 cities?
Supersourcing helps global companies launch GCCs in tier-2 Indian cities with speed and confidence. Our services include location feasibility, hiring high-quality tech talent, legal and infra setup, local vendor coordination, and operational playbooks tailored to your business goals. Whether you’re exploring your first GCC or scaling an existing one, we help you do it right—and fast.