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Why are GCCs in India, touted as the next big thing, in a tax tangle?
Monika Yadav New Delhi
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India has become a preferred location for many foreign companies to set up their back offices or tech hubs, known as Global Capability Centres (GCCs). These centres handle IT services, finance, customer support, software development, and more — mostly for the parent companies based in the US, Europe, or other regions.
At a recent event organised by the Confederation of Indian Industry (CII), Finance Minister Nirmala Sitharaman said, 'There are about 1,800 GCCs in India, employing nearly 2.16 million professionals. The CAGR at which it has grown is 11 per cent over the last five years. And this number of
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Time of India
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Lenskart's Rs 8,000 crore IPO; IT's GCC threat
Next Lenskart's Rs 8,000 crore IPO; IT's GCC threat Want this newsletter delivered to your inbox? Also in the letter: Lenskart files for Rs 8,000 crore IPO; founder Peyush Bansal boosts stake IPO snapshot: Fresh issue: Rs 2,150 crore. Rs 2,150 crore. Offer for sale: 132.2 million shares from existing investors, including SoftBank, Temasek, Kedaara Capital and Alpha Wave Global. 132.2 million shares from existing investors, including SoftBank, Temasek, Kedaara Capital and Alpha Wave Global. Cofounders Peyush Bansal, Neha Bansal, Amit Chaudhary and Sumeet Kapahi are together selling 31.8 million shares. Founder move: He will also offload 20.5 million shares in the IPO, potentially netting Rs 700–750 crore. Founder stake top-ups ahead of IPOs have become a familiar trend in India's startup ecosystem, from Zomato to Swiggy and Freshworks. By the numbers: FY25 revenue: Rs 6,625 crore, up 22% year-on-year. Rs 6,625 crore, up 22% year-on-year. 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This and more in today's ETtech Morning Dispatch.■ Nasscom's warning■ Inside Swiggy's annual report■ W Health Ventures' new fundPeyush Bansal, CEO, LenskartEyewear retailer Lenskart has kicked off one of the year's most anticipated new-age listings, filing its draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (Sebi) for an initial public offering (IPO) of up to Rs 8,000 Bansal recently bought a 2.5% stake in the company for Rs 222 crore from early investors at a $1 billion valuation, even as Lenskart now eyes a listing at Rs 70,000–75,000 ($8–9 billion) eyes will now be on how public markets price a profitable, global-facing Indian startup betting on vision, both literally and booming global capability centres (GCC) are quietly reshaping the country's tech landscape . Their meteoric rise is starting to squeeze the traditional, people-heavy outsourcing model that has powered India's services exports for over three companies (MNCs) are increasingly building or expanding GCCs in India to handle critical technology work in-house. Instead of outsourcing to Indian IT giants, they are insourcing core functions. The trend is slowing third-party demand and fuelling job cuts across the sector.A recent HFS survey of 200-plus enterprises shows the scale of the pivot. Over 65% of companies expect to shift at least 10% FTEs (full-time equivalent, which measures the work based on employees' work hours) from vendors to their own impact is already visible. Tata Consultancy Services (TCS), India's largest software exporter, announced it would trim 12,000 jobs this year, around 2% of its workforce, rattling the say the surge of GCCs is biting hardest in banking, financial services, and insurance (BFSI), where clients have aggressively scaled up Indian Top 5 and Morning Dispatch are must-reads for India's tech and business leaders, including startup founders, investors, policy makers, industry insiders and Reach out to us at spotlightpartner@ to explore sponsorship after TCS announced its mass layoffs s , IT industry body Nasscom said it expects some job cuts soon in the wider $283-billion technology industry body, which convened a meeting in Bengaluru on Tuesday, stated that these layoffs are a result of the shift towards product-oriented delivery models and the increasing demand from global clients for greater agility, speed, and said that the technology sector is experiencing a structural shift as artificial intelligence (AI) and automation become integral to business operations, affecting both service delivery and workforce legacy roles are still on the chopping block as firms relocate talent and trim middle management. 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Time of India
an hour ago
- Time of India
GCCs taking to ‘hub plus one' plan to cut concentration risks
Academy Empower your mind, elevate your skills At least a fifth of fresh investments into new global capability centres (GCC) over the next one to two years would follow the "hub plus one" strategy, where companies expand from their metro base to add a centre in tier-II cities , showed the data from a major industry facilitator.'Having a second delivery center mitigates risks tied to over-concentration in one city,' said Vikram Ahuja, cofounder, ANSR, which helps clients set up GCCs across the country. 'Improvements in physical and digital infrastructure are making these cities viable for global delivery.'The model is picking up pace, driven by considerations of talent diversification, cost efficiencies, and business continuity and risk diversification, experts said. GCCs have lately been at the forefront of adding technology talent, even as locally listed pureplay outsourcing companies either shed jobs or run a tight ship amid growth challenges in the metros are seen as the nerve centres anchoring complex R&D, high-value functions, and global process ownership, while the 'plus one' centres typically handle standardised or volume-based transactional processes and support functions and may have specialised skill emerging cities offer specialised, high-quality talent pools, especially in areas like analytics, cybersecurity , and digital engineering , Ahuja said, adding that these locations are also evolving into self-sufficient innovation hubs.'The Hubs Plus One model is a strong indicator of a larger trend towards a more dispersed and distributed GCC model,' said Alouk Kumar, CEO, indicates strategic evolution, he said, where core functions and high-value strategic work will remain concentrated in the established metro hubs while scalable, repeatable, and specialised functions will increasingly be pushed out to multiple "plus one" or even "plus X" national and state governments are taking steps to ease GCC setups, Kumar stressed the need for an expedited and pragmatic approach addressing gaps for timely execution and on-ground action.'The approach combines the advantages of tier-I cities with the scalability of tier-II hubs, allowing companies to hedge location risks while optimising costs,' said Kapil Joshi, CEO Quess IT staffing. 'These cities are estimated to contribute 15-18% of net new GCC hiring by 2026, as the 'Hubs Plus One' strategy transitions from pilot to mainstream adoption.'Tier-II and III locations are increasingly tapped for shared services, mid-office operations, digital engineering, and cloud by GCCs in tier-II and III cities has been growing faster than that in the tier-I hubs. Quess data showed that in Q1 FY26, hiring grew in Coimbatore by 34% sequentially, in Kochi by 28%, and Ahmedabad by 25%, outpacing the six metros where hiring grew between 3-10%. On average, tier-II hiring by GCCs is growing at nearly 20% are challenges, cities are still struggling to meet the depth requirements of advanced digital roles, such as full-stack DevOps, GenAI engineering, and L3+ cybersecurity. About 50% of complex mandates are being re-routed back to tier-1 locations, where talent density, peer networks, and marquee projects remain key magnets for senior professionals, as per of the end of June, among GCCs of Fortune Global 500 companies in India, over 20 companies have GCCs in emerging hubs acting as 'plus one' centre, ANSR data instance, Uber which has centres in Hyderabad, Bengaluru has its 'plus one' in Vizag. Allianz has a metro centre in Pune and a satellite in Trivandrum. Ford has set up in Coimbatore alongside its centres in Bengaluru, NCR, and progress, some tier-2/3 cities still lag in Grade-A office spaces, power reliability, internet bandwidth, and urban mobility, Ahuja said.
Time of India
2 hours ago
- Time of India
Rapid GCC growth reshapes India's outsourcing industry
Academy Empower your mind, elevate your skills Recent exponential growth of global capability centres ( GCC ) in India may have come at the expense of the people-led tech outsourcing industry – the country's biggest services exports over the past three decades and unquestionable change agents for once-sleepy towns such as Bengaluru, Pune, and Hyderabad MNCs, which are setting up these GCCs or expanding existing facilities, are also the top spenders of tech for the $280-billion listed Indian pureplay. The increasing insourcing of core tech tasks – especially the top end, high-value work - may be leading to one of reasons for the current rot in the outsourcing industry, marked by a protracted slowdown and now FY24, GCCs' grew at a rate of 40% even as the top five Indian IT companies posted negative to sub-5% growth for the same period and reported similar numbers for fiscal 2025, as per estimates by Nasscom and the the IT industry the subdued numbers continued in FY25. While the official numbers are yet to be out for GCCs, the growth is expected to be in double Indian technology services industry which operates in a pyramid structure by hiring more entry-level coders is now witnessing a foundational shift with AI, experts said.'The pyramid is collapsing. GCCs are rising. AI is automating the middle. Pricing is shifting from effort to outcomes, and that means a full-stack transformation—not just of how services are delivered, but how they're sold, priced, and measured,' said Saurabh Gupta, president at US-based technology research and consultancy firm HFS Research Earlier this week, India's largest software exporter Tata Consultancy Services (TCS) announced that it is going to lay off around 2% or 12,200 people in the current fiscal as it grapples with low growth amid a challenging macro situation and AI-led disruption, sending shockwaves in the to an HFS data survey with 200-plus enterprises, over 65% enterprises expect to relocate at least 10% FTEs (full-time equivalent - which measures the work based on employees work hours) from third parties to have seen tremendous growth in the past few years as multinationals sought to leverage India's skilled talent and cost advantages. Estimates suggest that two new GCCs opened every week last year, increasing the total to 1,700 centres employing nearly 2 million Joshi, partner at another US-based Everest Group, said that the accelerating pace of GCCs in India is having an impact on the net demand for service providers, specifically in segments such as banking, financial services and insurance (BFSI) where these clients have scaled their GCCs in India. As per data by ANSR, over 50 banking GCCs run more than 90 centers in India employing over 180,000 BFSI contributes around anywhere between 30% and 50% of the revenue share for most Indian IT companies. Almost all large multinational banks and financial services firms have huge GCCs in India. In fact, firms like JPMorgan Chase , Wells Fargo have more employees in India than a mid-tier IT firm, with 50,000 people, representing roughly 20% of its global IT industry employed around 5.4 million professionals as of FY24, while GCCs employed nearly 1.9 million people. Net addition of talent by GCCs in FY24 stood at 90,000 and surpassed 100,000 in year, GCCs hired a total of around 110,000 people, while India's top IT companies grew their headcount by a mere 13,500 in FY25, after a reduction of 64,000 in which typically function as back office operations for large overseas companies, established their presence more firmly in India post to Ramkumar Ramamoorthy , partner at Catalincs, a tech growth advisory firm, GCCs have publicly stated that their focus to largely be on driving innovation using digital technologies, as they believe they are core to their business and they should own these capabilities.'IT services companies which were once in denial about the impact of GCCs are today proactively forming crack teams to work alongside them to jointly shape and participate in their transformation and innovation agenda,' he says alluding to the investments and acquisitions by IT firms in the GCC space.'Large IT services companies have been stuck in a low single-digit, organic revenue growth cycle for three years in a row, " he said. Prominent companies collectively generated approximately $20 billion in free cash flow last year. 'The real question we should be asking is, are these companies reinvesting enough back into the business to rewire their business, operating and financial models for accelerated growth?''With a significant portion of the revenue coming from 'run the business' as opposed to 'change the business', from time-and-material (T&M) contracts as opposed to outcome or risk-reward based contracts, from pass-through revenue from product license sale as opposed to newer service opportunities such as cyber security, interactive and platforms, companies need to take bold, unconventional decisions to force-cannibalize revenue, where appropriate, and invest their way out. If they don't act now, we risk looking back in regret for having missed a generational opportunity,' Ramamoorthy per government data, the industry had estimated revenues of $254 billion, marking a 3.8% YoY growth in FY24 (excluding e-commerce). Of this, GCCs contributed to $64.6 billion in the same period, industry body Nasscom numbers year, the government's Economic Survey also pointed out that the share of IT in India's services exports fell two percentage points over three years, while indicating an expansion of "other business services" which include GCCs of the growth has fastened at a time when the AI-led disruption is aiding more innovation and R&D work by multinationals based out of India as GCCs, which are no longer just back-office factories. Key leadership of many of these centres is based out of India making them key decision making destinations say, the 12,000 workforce layoffs announced by the largest Indian IT major TCS on Sunday is just the beginning as the Indian players are yet to get return on investments from the large AI investments made. With AI, many companies including GCCs and smaller tech firms are getting higher output with the same people.
