Amid concerns over GCC-IT services overlap, how industry is pushing for global centres

Back in the early 90s, India made a name for itself at the global stage as the back office of the world. Today, more high-tech services are being exported from India, with firms offshoring tasks such as data analysis to research and development, helping fuel a new wave of services-led growth for India.

With close to 1,600 GCCs of multinational companies in various sectors, India has become to the world what China is for tech hardware. Leading companies from across sectors — modern trade, apparel, finance, consumer electronics, automobile, and shipping — have opened big headquarters in India from where they manage a number of functions including designing, inventory and supply chain management and transportation.

The movement has come on the back of some key trends: the country’s large pool of engineers, availability of relatively cheap labour, low real estate and rental costs compared to other Asian destinations, and comparatively simpler labour laws which allow for longer working hours.

GCCs in numbers

The CII report said that India is the epicentre for GCCs, now hosting nearly 50% of all such operations worldwide. 64% of these centers serve United States headquartered organisations, while around 28% support companies based in Europe, Middle East, and Africa, and the remaining 8% cater to firms headquartered in Asia-Pacific.

The GCC sector has the potential to contribute between $470–$600 billion to India’s GDP by FY30. This includes $154–$199 billion in GVA, with the remainder comprising $151–$195 billion in indirect and $165–$213 billion in induced economic impact.

India-based GCCs employ more than 2 million professionals as of 2025. Every direct job at a GCC is estimated to generate 1x indirect jobs across allied services – telecommunications, facilities and 3x induced jobs through spending on housing, retail, education etc. The net employment impact of India’s GCC ecosystem is estimated at around 10.4 million in FY25.

“India can aspire to enable employment generation of ~20–25 million through GCC-led growth, including ~4–5 million direct jobs. This could be complemented by ~3.4–4.3 million indirect and ~12.3–15.6 million induced jobs,” the report said.

Policy suggestions and challenges

The industry body has outlined reforms on taxation and infrastructure to boost GCC growth further. It said India should identify high priority sectors where it wants to promote GCCs. Currently, more than 70% of the centers are anchored in BFSI, Retail, Automotive, Energy, Resources, and Industrials (ERI) and Technology, Media and Telecom (Software & Internet, ER&D etc.) sectors. Others include Healthcare and Life Sciences, Electronics System Design and Manufacturing.

Tax breaks: India should institutionalise a forward-looking and facilitative tax and incentive architecture that rewards high-value functions, fosters IP creation, promotes digital infrastructure and encourages ecosystem linkages, CII said. It said concessional tax regimes may be introduced for centres engaged in R&D, product development, and IP creation. These may include reduced effective corporate tax rates and tax holidays within notified digital economic zones. In addition, a concessional corporate tax rate may be introduced for GCCs setting up an entity or commencing operations within a specified timeframe in India. Further, to boost employment, a weighted deduction for salaries paid by GCCs to newly hired employees may be considered.

“On the corporate tax front, there is an opportunity to explore targeted concessional tax regimes for strategic service sectors, building on the success of the 15% rate offered to manufacturing units,” it said.

Safe harbour: India’s safe harbour markups are relatively higher than global norms, and recalibrating these to make them practical, “such as by eliminating the now outdated distinction between Software Development and R&D in Software Development” can enhance India’s tax competitiveness. The current eligibility thresholds under safe harbour rules could also be broadened to benefit a wider set of GCCs.

GST relaxation” To ease working capital issues, India could offer clarifications on the nature of services provided by GCCs and how they don’t qualify as ‘intermediary’ to expedite GST refunds and detailed scrutiny by tax authorities on refund applications. Since GCCs pay tax under reverse charge mechanism on various services imported from their offshore vendors, the policy may allow payment of GST under reverse charge mechanism by utilizing input tax credit.

A central law: India may consider enabling the development of Digital Economic Zones (DEZs). It should set up a multi-tier regulatory architecture that may ensure seamless implementation and responsive governance: a Central DEZ Authority as a statutory body to oversee national-level strategy, inter-state coordination, compliance monitoring, and integration with other national digital and industrial missions; and state level DEZ facilitation cells can be established to manage local infrastructure development, land and utility approvals, and investor support services.

Skills gap widening: As per various estimates, the widening digital skills gap, projected to grow from 25% in 2023 to nearly 29% by 2028 (in particular with advent of AI and AI based skills requirement) poses a challenge to maintaining the current growth momentum, the report said. Despite the high volume of graduates entering the workforce, employability remains a concern, with only about 43% of graduates deemed industry-ready, it added. This mismatch requires companies to make significant upfront investments in reskilling, especially when entering new or emerging geographies, showcasing limited industry-academia collaboration presently. Talent availability also becomes more complex with high levels of attrition in India viz other GCC destinations.

Overlaps with IT services

The Indian Express had earlier reported that policymakers are increasingly getting concerned over the overlaps in the work the GCCs are doing in the country and that it could make a dent in IT services exports.

Concerns around outsourcing replaceable work, potential threat to the IT services sector and lack of intellectual property coming India’s way — even as the government looks keen on promoting the country as a destination for GCCs, these are some questions it is battling internally, worried that the growth of these centres is coming at the cost of domestic IT firms, undermining the very ecosystem they had helped establish.

An analysis of the type of the work undertaken by in-house GCCs and that executed by outsourced service providers such as the Indian IT and software companies have similarities: both essentially seem to be focused on tapping into outsourceable work and moving them in varying degrees to India. Some of this, in very small amounts, includes instances of multinational firms vertically integrating their activities and bringing them in-house. Other than some rare cases, which could include automotive companies and semiconductor design firms, there is a feeling in policy circles that most of what is being done is still not a significant upgrade to what IT services companies are doing — that it is not non-outsourceable, high-end work that leads to intellectual property being vested in the Indian entity.