Why Enterprises Are Looking Beyond Bengaluru And Hyderabad And Expanding GCCs To Tier 2 Cities

Even a few years ago, GCCs in India were largely concentrated around a few metro cities. As hiring pressure continues to build and operating costs rise in established hubs, enterprises are rethinking not just how they scale, but where to scale. The focus has shifted from building in India to building across India. Tier 2 cities are gaining relevance as potential centers for GCCs in India.

The GCC Boom and Its Tier 1 Ceiling

Today, India hosts more than 1,700 GCCs, which generate annual revenue of over $64 billion. These GCCs also provide employment to over 1.9 million professionals. According to forecasts, the size of the Global Capability Center in India may reach $100-110 billion by 2030, with the industry employing over 2.8 million professionals.

Traditionally, Bengaluru, Hyderabad, Chennai, and Pune were the major cities to set up a global capability center in India. While they still remain important, businesses face operational challenges in the metro hubs. Hiring the right talent has become slower and more competitive. Salary levels in key functions have hardened at the top end. Office space in established tech corridors is increasingly difficult to secure at scale. Naturally, companies are asking how much more they can realistically absorb in the same city before efficiency begins to decline.

The Tier 2 Opportunity: What’s Changed

Tier 2 cities were once considered peripheral to the GCC strategy. That positioning has changed quite noticeably in the last few years. Some of the factors that have made these locations more attractive include:

• Upgrades in infrastructure
• Better connectivity via road and rail
• Expansion of IT parks
• Active policy support at the state level

At the same time, talent patterns are shifting in a way that directly strengthens distributed growth. Around 11-15% of India’s technology talent already comes from Tier 2 cities, and a growing number of professionals are choosing not to relocate to metros.

Cost also plays a decisive role here. In many cases, operational expenses in Tier 2 cities can be 35-60% lower than Tier 1 hubs, depending on role mix and delivery model.

But the more interesting shift is behavioural. Companies are reporting stronger retention in several Tier 2 locations, largely driven by lower living costs, shorter commutes, and a more stable base for the workforce. These factors are changing how enterprises think about long-term delivery design.

City-by-City Spotlight: Emerging GCC Hubs

As GCCs continue to expand to Tier 2 cities, businesses are exploring new options beyond the metropolises. Let’s take a look at the emerging GCC hubs across different cities in India.

1.     Coimbatore

The strong engineering hub in Coimbatore makes it an emerging hub for GCCs in India. The steady academic output and talent base skilled in manufacturing make it suitable for product engineering and technical operations.

2.     Indore

The expanding IT infrastructure, developments of SEZs, and access to a young, cost-effective workforce define the growing momentum of Indore. Businesses are increasingly considering Indore for analytics and scaling up shared services.

3.     Jaipur

Jaipur appeals to businesses with its improved connectivity and stronger institutional pipelines. Organizations also have access to growing digital initiatives backed by the government. Many organizations consider it for support functions and customer operations.

4.     Chandigarh and Mohali

Chandigarh and Mohali continue to stand out for their planned infrastructure and steady availability of talent. Its proximity to northern enterprise markets adds to its appeal for engineering and operations teams.

5.     Kochi

Kochi is strengthening its position as a hub for digital services and tech-based operations. The improving infrastructure and strong education environment in the city make it a promising choice.

Along with these, cities like Vadodara, Nagpur, Bhubaneswar, and Mysuru are appearing in GCC planning discussions of businesses.

Today, the key difference is not just where companies are looking, but how they are evaluating these cities. The priority has moved from “cost advantage locations” to “capability distribution nodes.”

What Enterprises Get Right and Wrong When Expanding to Tier 2

While expanding to Tier 2 cities, many businesses rightly treat them as extensions of capability. These are not isolated cost centres. This involves:

• Setting up a strong leadership presence early
• Building structured hiring pipelines
• Working closely with local universities to stabilize the flow of talent

Standardization is another consistent factor defining success. Companies that replicate processes, governance models, and operating frameworks across locations are better poised to scale more smoothly.

Instances where things go wrong are often more predictable. Some enterprises underestimate the maturity of the business environment in the early stages. Vendor networks, specialized niche skills, and experienced leadership pools are still developing in several Tier 2 markets. Another common gap is cultural separation between Tier 1 and Tier 2 teams, which eventually affects alignment and the consistency of execution.

The Hybrid GCC Model: Tier 1 + Tier 2 in Tandem

The emerging trend is not a replacement model, but a distributed one. High-value work that involves strategy, advanced engineering, product ownership, and complex decision-making are still concentrated around Tier 1 cities. Meanwhile, Tier 2 cities are being preferred for scalable expansion of operations, analytics, support, and specialized delivery units.

With this hybrid structure, companies can balance the risk of concentration while maintaining their access to deep talent pools. It also creates a breathing room for Tier 1 centres, which otherwise remain constrained by space and hiring limitations.

Therefore, GCCs are no longer single-city operations. They are becoming multi-city delivery systems in terms of design.

What to Evaluate Before Choosing a Tier 2 Location

Decisions related to locations in Tier 2 markets now follow a more disciplined approach than before. Enterprises typically look at four core dimensions:

• Availability of talent, including depth of skills, hiring velocity, and the strength of the institutional pipeline
• Infrastructure readiness, which includes connectivity, office ecosystems, and digital infrastructure
• Cost structure, not just salaries, but total operating economics
• Scalability potential, including the availability of leadership and the maturity of long-term ecosystems

Apart from these factors, the capability of integration is also important. A seamless collaboration between Tier 1 and Tier 2 teams often determines success in the long-term more than the location itself.

How Xpansa Helps

Xpansa assists enterprises in designing GCC expansion strategies that reflect how the talent and location landscape in India is actually evolving. From evaluating Tier 2 readiness to building hybrid operating models, Xpansa helps organizations scale with better visibility and consistency at every stage of execution. Organizations planning to establish a global capability center in India can reach out to Xpansa to begin assessing the right location strategy for their growth plans. Book a consultation with Xpansa to evaluate location options, operating models, and build a GCC expansion roadmap aligned to your business objectives.  

Ms. Poornima brings extensive experience across business operations, talent development, and cross-border collaboration. Connect with her on LinkedIn to discuss how well-structured capability centers contribute to building successful global operations.

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