Preface
Global Capability Centres (GCCs), also known as Global In-house Centres (GICs) or captive centers, have become a cornerstone of India's IT and IT-enabled services (ITES) sector. Bengaluru, our home city, hosts the largest concentration of GCCs in the country, playing a pivotal role in this thriving ecosystem.
As I sat down to write this preface, the Government of Karnataka unveiled the nation's first-ever GCC Policy, with an ambitious goal to establish 500 GCCs by 2029, thereby creating approximately 350,000 jobs. Karnataka is not alone in this pursuit—many other Indian states are actively fostering the growth of GCCs, and the Government of India has been equally supportive in encouraging these centers as engines of innovation and employment.
Historically, GCCs were primarily set up to provide IT services, software development, and business process outsourcing (BPO) support to their parent entities. However, in recent years, we've witnessed a significant shift, with high-end services like engineering design, data analytics, and advanced technology solutions increasingly being offshored to India.
At Tax Compaas, we have had the privilege of working closely with numerous GCCs since our inception. Our involvement spans the entire lifecycle—from assisting with the initial setup to managing complex operational issues such as contracting structures, transfer pricing models, and tax litigation. We have also supported clients through strategic restructuring, exit strategies, and profit repatriation.
We are thrilled to present this publication, which draws on our extensive experience in advising GCCs in India. This document provides high-level insights into the tax and regulatory landscape, offering practical considerations for those looking to establish or expand their GCCs in the country.
We trust that you will find the information insightful and valuable. We welcome your comments and feedback, and look forward to engaging in further discussions.
Overview of GCCs in India
In recent decades, India has earned the title of the "office of the world." In the early 2000s, multinational corporations, particularly from the United States and Europe, began to view India as an appealing location for establishing offshore centers.
The main attraction was cost efficiency, as India provided access to a vast pool of highly skilled talent at a lower cost compared to developed markets.
Global capability centres, also known as GCCs or GICs or captive centers, are offshore units of multinational corporations that operate across the globe. These centres are set up for providing various support services, such as Information Technology (IT), finance, human resources, and analytics, to their parent entities. The first GCCs were primarily focused on IT services, software development, and business process outsourcing (BPO) . Companies like GE, American Express, and Citibank were among the pioneers, setting up their captive centers in cities like Bangalore, Hyderabad, and Pune.
The Government of India has also been supportive of setting up GCCs, providing various incentives and initiatives to investment, attract including foreign the establishment of Software Technology Parks (STPs) and Special Economic Zones (SEZs), which further facilitated the growth of these centers. The Government has also implemented policies to promote innovation and research and development, which has helped captive centres in India to develop cutting-edge technologies and services.
GCCs have undergone a significant transformation. They have grown beyond their initial roles, becoming influential players in the Indian tech sector. Multinational corporations have started leveraging on India not just for cost advantages but also for quality and expertise of talent pool. Today, GCCs are recognized as major tech hubs, deeply integrated with their parent organizations and serving as strategic assets that offer extensive access to digital talent.
This evolution has repositioned GCCs from being mere support centres to pivotal global hubs of strategic operations carrying out more complex and value-added functions such as research and development, product engineering, and knowledge process outsourcing within the tech industry. Over time and with the advent of technology, GCCs are now at the forefront of global innovation, creating cutting-edge solutions in the areas of Artificial Intelligence, Machine Learning, Cloud computing, Cyber engineering, Advanced analytics and Data sciences.
Based on a research carried out by ANSR, cost delivery centers have been set up globally, which include Mexico, Colombia, Brazil, Ireland, UAE Vietnam and Malaysia, Central and Eastern Europe, China and Philippines. It is interesting to note that India accounts for over 50% of the global GCC market. Further, it is also interesting to note that 22% Forbes Global 2000 Companies are present in India and 60% of Forbes Global 2000 Companies who have GCCs in India are set up in Bengaluru1.
GCCs are a key part of India's economy, providing high quality employment opportunities and contributing to the country's Gross Domestic Product. At present, GCCs in India account for more than 1% of the country's GDP and the share is expected to grow further2.
Footnotes
1 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4'23 and Karnataka, Leading the Way for GCCS 2024
2 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4'2
Click here to read the full report.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
