How to set up a Global Capability Center (GCC) in India

Setting up a Global Capability Center (GCC) in India comes down to six decisions taken in the right order: why the GCC exists, which city it sits in, which legal vehicle owns it, how it is taxed and priced, who is hired first, and how it is governed once it is running. Most of the expensive mistakes come from taking those decisions out of order — signing a lease before the mandate is written, or hiring forty engineers before anyone senior is accountable for them. This guide walks through each decision in sequence. It is general information, not legal or tax advice; every entity, tax and employment step below needs a qualified Indian adviser signing it off for your specific case.

Should you set up a GCC at all?

A GCC is a GCC that you own (or will own) and that does work for your own organisation, as opposed to work bought from a vendor under a services contract. That distinction is the whole point. You set one up when the work is core enough that you want the people, the knowledge and the intellectual property inside your own walls for years, not for the length of a contract.

It is the wrong answer when the work is genuinely temporary, when you cannot name the executive at headquarters who will own the GCC's mandate, or when the real motive is a one-line cost saving with no plan for what the GCC will be responsible for. A centre that exists only because labour is cheaper tends to be staffed with work nobody at headquarters wants, and it loses its best people accordingly.

Write the mandate down before anything else. One page is enough: what the GCC owns end to end, which headquarters teams it serves, what it is explicitly not responsible for, and what it should look like in three years. Every later decision — city, entity, hiring profile — is easier to test against a written mandate.

You will not be alone: the scale of India's GCC market

India is a well-trodden path. The Zinnov-nasscom India GCC Landscape Report 2026 counts 2,117 GCCs in India operating 3,728 units and employing about 2.36 million people as of FY2026, and finds that mid-market and private-equity-backed companies — not only the largest enterprises — now run a large share of them. The practical consequence is that the legal, tax and real-estate steps are well understood by the advisers who handle them, and the hard part is no longer paperwork. It is competing for senior talent with every other GCC in your city.

Which city: Bengaluru, Hyderabad, Pune or somewhere else?

Choose the city by the talent you need most, not by the rent. According to Zinnov's 2025 city analysis, Bengaluru hosts more than 880 GCCs and Hyderabad more than 355, and six metros — Bengaluru, Hyderabad, NCR, Pune, Mumbai and Chennai — together host the large majority of all GCCs in the country.

• Bengaluru has the deepest pool of product engineers, data and AI talent, and senior engineering leaders who have already run GCCs. It also has the most competition for exactly those people. Karnataka was the first state to publish a dedicated Global Capability Center Policy (2024-2029), which is worth reading for the incentives on offer.
• Hyderabad is the most common alternative for engineering-heavy GCCs and has grown on the back of state government support.
• Pune, Chennai and NCR each have particular strengths — automotive and manufacturing engineering, banking operations, enterprise functions — that matter if your mandate leans that way.
• Tier-2 cities can work for a second site once the operating model is proven. They are rarely the right place to stand up the first one, because the first hires need to come from people who have done it before.

A useful test: list the ten most senior roles you will hire in year one and ask a recruiter in each candidate city how many people are realistically available for each. The city with the shortest list of impossible roles usually wins.

Which legal entity should a GCC use?

For almost every GCC the answer is a private limited company incorporated under the Companies Act, 2013, wholly owned by the parent (in practice with a second group shareholder, because a private company needs at least two). The main options look like this:

• Wholly owned subsidiary. The standard vehicle. Foreign direct investment in IT and IT-enabled services is permitted up to 100% under the automatic route, meaning no prior government approval, per India's FDI policy as set out in the DPIIT Consolidated FDI Policy. A private company needs at least two directors, and under Section 149(3) of the Companies Act at least one director must have stayed in India for 182 days or more in the financial year.
• Limited liability partnership (LLP). Foreign investment in an LLP is allowed only in sectors where 100% FDI is permitted on the automatic route with no FDI-linked performance conditions. It is used occasionally, but most parents prefer a company because their group structures, audit processes and investors already understand it.
• Liaison office. Not a GCC vehicle. Under RBI rules a liaison office can act only as a channel of communication with the head office and cannot undertake commercial activity or earn income in India.

Plan for the entity to take weeks, not days, once you include bank accounts, tax registrations and the employment registrations that have to exist before the first payroll run. If a provider is incubating the GCC for you, the entity question becomes a timing question — when your own company takes over the people — which is covered in our companion piece on captive, build-operate-transfer and hybrid models.

Tax and transfer pricing basics

Because the GCC's customer is its own parent, the price it charges headquarters is a transfer price, and Indian tax authorities expect it to be at arm's length. The usual arrangement is a cost-plus service agreement: the Indian entity recovers its costs plus a markup, and earns a modest, stable profit in India.

India has long offered safe harbour rules under which, if the GCC accepts a prescribed margin, the tax authority accepts the price without a detailed audit. Those rules are in transition. Draft rules published in February 2026 proposed consolidating IT, ITeS, KPO and software R&D into a single IT services category with one margin and a much higher eligibility threshold, with approval that can run for several years. Check the notified position with your tax adviser before you model the GCC's economics; the margin you plan on matters more to the business case than most of the other line items.

Two older incentives are worth understanding mainly so you do not plan around them. The SEZ income tax holiday under Section 10AA was closed to units that began operations after the sunset date in 2020, so a new GCC should not expect it. The Software Technology Parks of India (STPI) scheme still exists and registers software exporters, including for certification of software exports; whether STP unit status is worth it for your GCC is a question for your adviser, not a default.

Workspace: managed office or your own lease?

For the first twelve to eighteen months, a managed or serviced office is usually the better choice. It lets you start in weeks, scale seat by seat while hiring is unpredictable, and defer a long lease until you know the real size of the GCC. Move to your own fitted-out space once headcount is stable enough to forecast and you need things a shared building cannot give you: your own security perimeter, a client-audited network, a lab, or simply an identity your people are proud to walk into.

Who to hire first

Hire leadership before scale. The order that works is roughly:

1. A GCC head who has run an Indian engineering organisation before and who reports to an executive at headquarters, not to procurement.
2. An HR lead and a finance and compliance lead, because payroll, statutory registrations, policies and the transfer pricing file all need an owner from day one.
3. Two or three engineering leads aligned to the first workstreams in the mandate, who then hire their own teams.
4. The first teams, deliberately small, working on something real and visible to headquarters within the first quarter.

The common failure is the reverse order: a large batch of individual contributors hired against a headcount target, managed remotely from another time zone, with nobody locally who can make a decision. Attrition follows, and the GCC's reputation at headquarters is set in its first six months.

Governance and intellectual property

Write the governance down as carefully as the architecture. At minimum:

• An inter-company services agreement that states who owns the intellectual property created in India (normally the parent), and employment contracts with matching assignment clauses.
• A steering cadence: a monthly review with the headquarters sponsor, a quarterly review of the mandate itself, and named owners on both sides.
• Access to headquarters systems through your normal identity and access controls, with the Indian entity treated as part of the enterprise, not as a third party.
• Employment policies aligned to the four labour codes that India brought into force with effect from 21 November 2025. Your payroll and HR advisers need to confirm compliance from the first offer letter.

A realistic first-year sequence

Timelines vary too much with the parent's own approvals to quote honest numbers, but the sequence is stable:

1. Mandate and business case — written, costed and owned by a named executive.
2. City and operating model — captive from the start, build-operate-transfer, or a hybrid.
3. Entity, banking and registrations — in parallel with leadership hiring.
4. Workspace and infrastructure — managed space, network approved by security.
5. Leadership hires, then first teams — on real work, with acceptance criteria agreed with headquarters.
6. First mandate review — at the end of the year, test the GCC against the one-page mandate and decide what it takes on next.

Why GCCs fail

• No owner at headquarters. The centre has a budget but no executive whose success depends on it.
• Ticket work only. The centre receives fragments of work with no ownership of outcomes, so good engineers leave.
• Cost as the only metric. Savings get measured; capability does not. The centre is then cut at the first budget squeeze.
• Transfer pricing and compliance as an afterthought. The finance team discovers the problem at the first tax audit.

Frequently asked questions

Can a foreign company own 100% of a GCC in India?

For IT and IT-enabled services, yes: FDI up to 100% is permitted under the automatic route, subject to the conditions in the Consolidated FDI Policy. Investors from countries that share a land border with India are subject to separate government-route rules, so confirm your position with counsel.

Do we need an Indian resident director?

Yes. Every company must have at least one director who stayed in India for at least 182 days in the financial year.

Is Bengaluru the best city for a GCC?

For product engineering, data and AI work it has the deepest talent pool and the most experienced centre leaders, and also the most competition for them. For other mandates, Hyderabad, Pune, Chennai or NCR may fit better. Decide by the roles you need, not by the city's reputation.

Should we build the GCC ourselves or use a partner?

If you have done it before and have a GCC head lined up, building directly is reasonable. If not, a build-operate-transfer arrangement lets a partner carry the setup risk while you keep a contractual path to full ownership. Our guide to GCC operating models compares the options.

Haivisoft sets up GCCs in Bengaluru with hiring, delivery practice and governance in place from day one, and a written path to your own leadership running them. If you are weighing a GCC and want a second opinion on the mandate before you commit, book a discovery call.