India’s Global Capability Centres (GCCs) are branching out from their traditional hubs as tier-II cities like Mangalore, Bhopal, and Aurangabad emerge as innovative tech centers, driven by factors such as cost, talent, and supportive policies.
While GCCs have increasingly established themselves in smaller cities like Coimbatore, Indore, and Lucknow, many states are actively promoting policies and investing in infrastructure to attract these centers.
According to Sachin Alug, CEO of NLB Services, tier-II cities account for 30-32% of all new job postings. “The demand for tech and GCC roles in cities like Mangalore, Ahmedabad, and Nagpur is noticeably increasing, fueled by the rise of nano-GCCs,” he stated.
Nano-GCCs, which are smaller centers consisting of 20 to 100 professionals, focus primarily on in-depth R&D and AI-led initiatives rather than large back-office operations, with strong demand from the BFSI, fintech, and AI automation sectors.
“While tier-2 and tier-3 cities still represent a minority of new GCC activities, their share is growing,” noted Vikram Ahuja, co-founder of ANSR, a GCC service provider.
Demand for these locations has surged to nearly 35% of new evaluations in FY25, a significant increase from 14.9% in FY24. Nonetheless, 85-88% of new centers are still located in metropolitan areas.
Commercial real estate costs in smaller cities are often 50% lower, and living expenses are 25-35% cheaper, as reported by ANSR.
Additionally, the attrition rate in these cities stands at 10-14%, compared to 16-20% in tier-1 cities.
“Salaries in tier-2 cities are usually 10-25% lower than in Bengaluru, but lower living costs and an enhanced quality of life balance this discrepancy,” explained Neeti Sharma, CEO of TeamLease Digital.
This has led many professionals to return to their hometowns, while new graduates are increasingly considering career opportunities outside of major metros, she added.
Government support has also been crucial. Madhya Pradesh implemented a dedicated GCC policy as early as 2025.
Netlink and Qualfon are collaborating to establish a GCC in Bhopal, focusing on IT support, digital transformation, and business intelligence.
Aurangabad, now officially renamed Chhatrapati Sambhajinagar, is being developed as a key GCC hub under Maharashtra’s GCC policy for 2025-30.
Karnataka’s Beyond Bengaluru initiative, spearheaded by the Karnataka Digital Economy Mission (KDEM) in 2021, has generated over 6,000 tech jobs across tier-II cities from FY22 to FY26, with plans targeting 1,000 GCCs and 350,000 jobs by 2029.
Companies establishing operations outside Bengaluru can benefit from 50% rental reimbursement up to Rs 2 crore and a 20% investment subsidy, also up to Rs 2 crore for qualifying centers, as stated by ANSR. “Incentives serve as a catalyst but are not the sole motivator for selecting a city,” Ahuja remarked.
Tier-2 cities are starting to demonstrate significant growth. For example, EG Denmark expanded its India team in Mangalore from approximately 20 employees in 2019 to nearly 850 by 2025, while Bose Corporation has also set up a center there.
However, the shift remains gradual.
“We are still witnessing an early-stage, structured expansion rather than extensive redistribution,” commented Sharma. “Most businesses are opting for smaller teams or micro-GCCs, typically ranging from 50 to 120 employees.”
