The Geography of Talent: How Tier-2 India Is Powering the Next Wave of GICs

The Next Question After India is “Where in India?”

The first wave of the modern Global Capability Centre story was about India itself. For years, the central question for global companies was whether serious capability could be built outside headquarters. That question has now been answered at scale. India’s GCC ecosystem is projected to generate $98.4 billion in revenue in FY26, with 2,117 centres employing 2.36 million professionals, according to a Nasscom-Zinnov report cited by Reuters.

These are no longer narrow back-office units built only for labor arbitrage. They now support software development, finance, research and development, analytics, AI, and enterprise operations for companies such as JPMorgan Chase, Nvidia, McDonald’s, Eli Lilly, FedEx, Lufthansa, and others.

The second wave is about access. Large corporations built their own Indian capability centers because they had the capital, patience, and management depth to do so. Mid-sized firms are now trying to build smaller versions of that model through mini-GCCs, GIC-style structures, and dedicated India-based teams that offer more control than conventional outsourcing without the full burden of setting up a captive subsidiary. Capability ownership is no longer limited to the Fortune 500 firms with a 2,000-person India center.

That brings us to the next question. Once a company accepts that it can build an India-based capability unit without creating a giant captive operation, where should that unit sit in India? For a long time, the answer was almost automatic: Bengaluru, Hyderabad, Pune, Chennai, Mumbai, or the Delhi- NCR (National Capital Region). These cities have built India’s services reputation and hold deep talent pools, senior leadership, vendor networks, and enterprise infrastructure.

But as the GCC and GIC model spreads beyond large multinationals, the old one-city logic starts to look blunt. Engineering, finance operations, analytics, design, virtual assistance, customer support, bilingual work, CAD/BIM, cybersecurity support, content, and marketing operations do not all have the same talent needs. They do not all need the same city.

This is why the next phase of India’s capability story is becoming more geographic. The issue is not whether Tier-2 cities are cheaper, though many are. The sharper point is that location is becoming part of operating design. A company building a product engineering pod may look at a different city from one building a finance operations team.

A firm that needs creative production, client-facing communication, or virtual assistance may care more about language quality, retention, work discipline, and cultural fit than about access to the largest technology labor market. Similarly, a business building AI-supported operations may want stable teams that can learn internal processes over time rather than keep replacing trained people in every hiring cycle.

This is where cities such as Coimbatore, Indore, Mohali, Jaipur, Kochi, Mysuru, Vadodara, Bhubaneswar, Chandigarh, Kolkata, and others enter the story. They are adding a second layer to India’s global capability map. An Economic Times report on GCC expansion notes that firms are now looking at Tier-2 cities including Mohali, Jaipur, Kochi, Indore, Coimbatore, and Bhubaneswar, driven by rising costs, talent saturation, and competition in Tier-1 cities.

A separate report quoted India’s Ministry of Electronics and Information Technology saying that roughly 95% of GCC operations remain concentrated in six major cities, which is precisely why unlocking Tier-2 locations has become a policy and business priority.

The geography of talent, then, is not a side story. It is the next operating question. Article 1 established why India became the new center of global capability while Article 2 showed how mid-sized firms can now build mini-GCCs and GIC-style teams without inheriting the old captive burden.

This article looks at the map inside India, and why the smartest firms will stop treating location as an administrative decision. In the next phase, where a team sits will influence how long people stay, what work they can own, how fast capability compounds, and whether the India model becomes merely a hiring base or a properly designed operating system.

The Metro Premium is Becoming a Design Problem

India’s original GCC map was built around a handful of cities because global firms needed certainty before they needed variety. Bengaluru, Hyderabad, Pune, Chennai, Mumbai, and Delhi-NCR offered what early offshore capability centers required: large talent pools, Grade-A offices, telecom reliability, international connectivity, recruiters, senior managers, service vendors, and enough professional density to make the model feel safe. For a multinational setting up a 1,000-person technology or operations center, these cities reduced perceived risk. They became the default because they had already solved the trust problem.

This default is now becoming expensive in ways that do not always show up in a simple salary comparison. When too many global banks, retailers, SaaS companies, industrial firms, consulting groups, pharma companies, and technology majors hire from the same city clusters, the labor market changes character.

Hiring becomes faster for companies with the strongest brand and compensation power, and slower for everyone else. A mid-sized firm trying to build a 30-person engineering pod in Bengaluru may technically have access to a large market, but it is also competing with firms that can pay more, move faster, and absorb churn better. In that situation, talent density can become a trap.

The real estate data tells part of the same story. CBRE reported that India’s office leasing hit a record 82.6 million sq ft in 2025, with Bengaluru, Mumbai, and Delhi-NCR leading absorption. In Q2 2025 alone, Bengaluru, Mumbai, Pune, and Chennai accounted for 73% of office space take-up, showing how heavily enterprise demand remains concentrated in the largest business districts.

This is good news for India’s commercial office market, but it also shows why the metro footprint is becoming more contested. The biggest cities have become high-pressure operating environments where office demand, commuting strain, wage competition, and employer-brand competition all move together.

The pressure is especially visible in the GCC labour market. Zinnov’s 2025-26 salary and attrition study for India GCCs surveyed 87+ GCCs and focused specifically on salary increase, attrition, and hiring trends across job levels, which itself signals how compensation and retention have become board-level operating concerns for global capability leaders.

NASSCOM’s community note on the same study says GCCs are adjusting pay practices around specialized skills and changing workforce expectations, rather than treating hiring as a simple volume exercise. For companies that once assumed India meant abundant talent at predictable cost, this is the uncomfortable update: the deepest metro pools are also the most contested pools.

This matters more for mini-GCCs and GIC-style teams than for large captives. A global corporation with a mature India center can absorb churn. It can move work across teams, pay more for scarce talent, and carry a bench. A mid-sized firm building its first India unit does not have that cushion. If a few trained people leave, the damage is immediate.

That is why location now matters more. Bengaluru and Hyderabad remain world-class capability hubs, especially for complex engineering, AI, product, and senior technology roles. But every function does not need to sit in India’s most crowded labor markets. The premium companies pay in metros include recruitment time, retention pressure, commute fatigue, and the constant risk of replacement apart from salary and rent.

For some work, that premium is worth paying. For other work, it may simply be inherited behavior. The next generation of GCC and GIC design will make that distinction more carefully. Metros will remain the right base where rare talent density and senior ecosystem depth matter. Emerging cities will become stronger choices where stability, role fit, and lower operating friction matter more. That is where Tier-2 India stops looking like a backup option and starts becoming part of the operating strategy.

Tier-2 India is a Map of Different Capability Pools

The mistake many companies make with Tier-2 India is to treat it as a single category. It is spoken about as if Coimbatore, Indore, Jaipur, Kochi, Chandigarh, Bhubaneswar, Kolkata, Ahmedabad, and Trivandrum offer the same operating proposition with different rent levels.

That is too narrow a viewpoint. India’s smaller and emerging cities are not interchangeable talent warehouses. They have different histories, industries, universities, language cultures, migration patterns, and employer ecosystems. A company choosing between them is basically choosing the kind of capability it wants to build.

Coimbatore is a good example of why the old Tier-2 label is inadequate. The city’s advantage does not come from being a cheaper version of Bengaluru. It comes from its industrial and engineering depth. CBRE described Coimbatore as a rising GCC frontier in South India, especially for core industrial and product engineering R&D, supported by the city’s manufacturing legacy and engineering talent base.

Zinnov and CII’s Coimbatore report adds more detail: the city has seen a 21% CAGR increase in new GCC setups over the past five years, now hosts 50+ centres, employs 11,000+ GCC professionals, and has nearly 60% of its GCC workforce focused on engineering R&D. This is a city-function fit story and not a generic low-cost story.

Ahmedabad and the wider Gandhinagar-GIFT City corridor tell a different story. Their strength is less about engineering density and more about finance, regulation, capital markets, fintech, corporate treasury, and business services linked to Gujarat’s commercial base. GIFT City is India’s first International Financial Services Centre, and its own positioning includes banking, capital markets, fund management, insurance, finance companies, global in-house centres, fintech, aircraft leasing, and ship leasing.

Reuters reported in May 2026 that companies including Adani Group, Bharti Airtel, Genpact, ZF Friedrichshafen, and ArcelorMittal were setting up or moving corporate treasury operations into GIFT City, helped by regulatory changes and a tax holiday extended to 20 years. That makes the location useful for a very different kind of global capability design: finance-heavy work that benefits from proximity to India’s most developed international financial services experiment.

Trivandrum and Kochi bring another pattern. Kerala’s advantage usually comes from education, English-language comfort, healthcare exposure, services maturity, and quality-of-life pull. Zinnov’s recent location analysis places Trivandrum among India’s emerging GCC cities and identifies it with product engineering and insurance operations, while also noting that Ahmedabad, Coimbatore, Kolkata, Trivandrum, and Jaipur together now host 250+ GCC units and about 85,000 professionals as of FY2025.

Their collective share of India’s GCC talent base has risen from 2.7% in FY2019 to 4.2% in FY2025. These numbers are still small compared with the metros, but the direction matters. These cities are beginning to hold work locally, and are no longer just feeder markets sending talent to Bengaluru or Chennai.

Kolkata sits differently. It is rarely treated as a fashionable technology hub, which is precisely why it is often misread. Its strengths lie in education depth, communication-heavy roles, finance talent, research orientation, design sensibility, and a large professional base that does not face the same intensity of salary escalation as India’s hottest technology corridors.

For companies building teams where judgment, language, documentation, analysis, creative production, or client-facing maturity matter, Kolkata offers a different kind of advantage. It can be a strong choice where talent quality depends on thinking, writing, interpretation, and continuity rather than only on coding density.

Jaipur, Chandigarh-Mohali, Bhubaneswar, Mysuru, Vadodara, and Indore add further variations. Jaipur has a growing services and design economy, strong hospitality exposure, and a widening pool of digitally trained graduates. Chandigarh and Mohali combine North Indian access with planned urban infrastructure, stronger quality of life, and proximity to Punjab, Haryana, Himachal Pradesh, and parts of Jammu and Kashmir.

Bhubaneswar has benefited from Odisha’s education investments and a more deliberate technology-policy push. Vadodara draws on Gujarat’s industrial and business culture while Indore has become one of central India’s more visible business and technology destinations, helped by its location, improving infrastructure, and graduate supply. None of these cities should be sold as a universal answer, but their value lies in matching the right work to the right local advantage.

This is the deeper shift behind the Tier-2 conversation. The next India strategy will be built by asking which city has the right mix of talent, retention, education, infrastructure, language, industry memory, and lifestyle stability for the work being placed there. For a large captive, location strategy may still begin with scale. But for a mini-GCC or GIC-style team, it must begin with the right fit.

Continuity is the Hidden Advantage

The strongest case for emerging cities is often misunderstood because the first number people notice is cost. Lower rent and lower salary pressure are real advantages, but they are not the most important ones for a company building a smaller India-based capability unit. The deeper advantage is continuity. In a mini-GCC or GIC-style model, the value of a team grows as people understand the client’s systems, judgment calls, reporting rhythm, quality expectations, and informal ways of working.

This is where smaller cities begin to matter in a more serious way. A professional in a crowded metro may have more employers within reach, more recruiters calling, more salary jumps available, and more reasons to move every 18 months. A professional in Coimbatore, Indore, Kochi, Jaipur, Chandigarh, or Kolkata may see a strong local role differently, especially when it allows career growth without relocation pressure, long commutes, or the cost of metro living.

The Economic Times has reported that Tier-2 cities are drawing GCC interest partly because they offer reduced attrition alongside lower costs and emerging skilled talent pools. This is not just a soft HR benefit because for smaller capability units, lower churn can be the difference between a team that compounds and a team that keeps restarting.

The campus data points in the same direction. Deloitte’s 2024 campus workforce trends report found that one-year, two-year, and three-year attrition rates for top-tier campuses stood at 21%, 26%, and 28%, while Tier-2 and Tier-3 campuses were lower at 19%, 21%, and 25%. The gap may look modest on paper, but in a small team, even a few percentage points matters. A 500-person captive can absorb people leaving because the system has depth while a 30-person team cannot.

This is also why location cannot be reduced to labor availability. A city with a smaller talent pool may still be a better operating base if the people who join are more likely to stay, learn about the client’s business, and grow with the work. That is what metros often struggle to offer for every role.

They have depth, but they also create constant optionality. For high-end specialist work, that optionality is worth the price because the ecosystem is difficult to replicate but for many smaller capability teams, the better question is whether the location helps the employer become a meaningful career destination instead of one more stop in a crowded market.

There is another layer here: stability changes management behaviour. When a team is built in a place where people stay longer, managers can invest differently. In a smaller GIC, this is critical. Recent hiring commentary from India’s technology sector points in the same direction.

An upGrad Rekrut report cited by The Economic Times said companies are increasingly looking at Tier-2 and Tier-3 cities to retain talent amid muted salary growth and tighter hiring conditions. It shows that companies are beginning to view smaller cities as stability anchors, not merely as cheaper hiring pools.

For the next wave of mini-GCCs and GIC-style teams, this may become one of the decisive location filters. The question will not be, “Where can we hire the fastest?” It will be, “Where can we build a team that keeps getting better?” That is a different test. It values tenure, local career pull, managerial attention, quality of life, and the slow accumulation of client knowledge.

The Smartest Firms Will Design by Location

The next stage of India’s GIC and mini-GCC growth will be decided by whether companies can match work to the city that naturally supports it. This is already visible in the way different states are trying to shape their own capability maps.

Karnataka’s GCC Policy 2024-29 explicitly identifies a “Beyond Bengaluru” strategy, with cluster development in places such as Mysuru, Mangaluru, and Hubballi-Dharwad-Belagavi. The policy matters because it shows how mature technology states are now thinking beyond one dominant city. The goal is to create smaller innovation and delivery clusters that can absorb work which does not need to sit inside Bengaluru’s highest-pressure talent market.

Gujarat is building a different kind of location thesis through GIFT City. Its value is that it gives finance-heavy global work a regulatory and institutional base. This is a useful example because it shows location design in practice: the work is moving to the place whose policy, infrastructure, and ecosystem fit the work.

Odisha is trying to create a different path through policy-led regional clustering. In November 2025, the state cabinet approved a Global Capability Centre Policy that aims to attract more than Rs 1,000 crore in investment, create at least five GCC hubs across the Bhubaneswar-Cuttack-Puri-Paradip and Bargarh-Jharsuguda-Sambalpur regions, and generate more than 50,000 direct and indirect jobs.

Whether Odisha reaches these targets will depend on execution, but the intent is important. Smaller states are building local capability corridors around education, infrastructure, incentives, and industry demand. Coimbatore offers perhaps the cleanest example of city-function fit. Its rise is tied to manufacturing depth, engineering education, and industrial problem-solving, not simply lower salaries.

This is where a GIC-style model becomes useful. The best version of such a model is a location strategy layer. It helps a company decide whether a team should sit near a finance ecosystem, an engineering education base, a design and communication market, a policy-backed technology corridor, or a lower-churn regional talent pool.

The client still gets dedicated capability and operational control, but the geography is chosen with intent. In the old outsourcing map, location was mostly a vendor’s decision. However, in the next GIC map, it has become part of the operating architecture.

AI Makes Location Design More Important

AI is often described as if it will flatten geography. If software can write, analyze, summarize, code, classify, translate, and retrieve knowledge, the argument goes, then location should matter less. However, this view misses what is actually happening inside companies.

AI reduces the value of some repetitive effort, but it raises the value of people who can supervise systems, understand business context, check judgment, manage exceptions, and improve workflows over time. These people do not all need to sit inside India’s most crowded technology markets.

GCCs are increasingly being built to absorb business complexity. Reuters reported that India’s GCC growth is being pushed not only by cost pressure and geopolitical uncertainty, but also by AI-led disruption, with global companies using India-based centers for software development, finance, research and development, and other strategic functions.

Zinnov’s latest India GCC landscape report also describes India as the world’s second-largest enterprise AI talent market, with 250,000+ AI/ML professionals and the highest AI hiring intensity globally. The point is clear: AI is pulling more complex work into India’s capability centers.

Microsoft’s India findings from the 2025 Work Trend Index show how quickly this shift is entering management thinking. According to Microsoft, 93% of Indian leaders intend to use AI agents to extend workforce capabilities in the next 12 to 18 months, while 90% say 2025 is a pivotal year to rethink core strategy and operations.

This means work itself is being redesigned. Companies will need smaller teams that can do more with tools, but those teams will need stronger training, clearer ownership, and better continuity because AI makes weak process visible faster. A badly governed team does not become strong because it has an agent. It simply becomes a faster source of mistakes.

There is already evidence that AI’s impact is strongest in knowledge work that involves information, communication, writing, analysis, and decision support. A 2025 Microsoft Research study based on 200,000 anonymised Bing Copilot conversations found that common work activities using AI included gathering information and writing, while the highest AI applicability scores appeared in knowledge-work groups such as computer and mathematical occupations, office and administrative roles, and sales-related work involving information and communication. This means roles are being reworked around human-AI collaboration, where the human layer becomes more about direction, review, context, and accountability.

For mini-GCCs and GIC-style teams, this is a major shift. The ideal unit is a smaller, more stable team that can use AI inside a defined operating rhythm. This makes city selection more important now as a firm may still use Bengaluru, Hyderabad, or Pune where it needs rare technical density and senior AI leadership. But for many AI-enabled business functions, the better location may be one where the employer can build a steady team, reduce churn, train people deeply, and keep institutional knowledge inside the unit.

The Risks: Tier-2 Cannot Simply Copy the Metro Playbook

The Tier-2 story becomes weak when it is told as if every smaller city is ready to absorb sophisticated global work at scale. Some cities have strong graduate supply but thin senior leadership depth, some have good office infrastructure but limited specialist talent, while some can support steady teams, but not yet the complexity of advanced engineering, AI, cybersecurity, or enterprise transformation center. The opportunity is real, but it is uneven.

The senior talent gap is the biggest constraint. A Quess report on India’s GCC tech talent market said Tier-2 cities are gaining momentum, but still face acute mid-senior talent shortages, with only one qualified profile for every 6-10 open roles in advanced domains. The same report notes that Tier-2 markets have grown to around 10-12% of GCC hiring, while Tier-1 cities still account for roughly 88-90%. This simply means Tier-2 cities need a different build strategy.

AI makes this constraint more visible. The same Quess findings, cited by The Economic Times, warned of an AI talent gap of nearly 40% as one of the biggest bottlenecks for GCC growth, with complex roles often moving back to metro cities because Tier-2 locations do not yet have enough advanced AI talent.

This is exactly why the Tier-2 argument should not be oversold. A smaller city may be excellent for building stable capability around defined workflows, domain learning, and long-term process ownership but it may still not be the right first base for scarce AI leadership, frontier architecture, or deeply specialized platform work.

The second risk is assuming that graduate supply equals employability. Smaller cities produce large numbers of capable graduates, but global work often needs more than technical basics. It needs communication discipline, client context, documentation habits, security awareness, workflow ownership, and comfort with distributed collaboration. India has faced this gap for years.

NASSCOM’s digital talent demand and supply report noted that Tier-2 and Tier-3 cities contribute around 60% of India’s recent graduates from engineering, arts, and science colleges, but turning that supply into ready talent requires structured skilling, employer participation, and stronger industry-academia links. This is why the best Tier-2 strategies must involve training and governance strategies.

Infrastructure also needs a sober reading. Many emerging cities now have better airports, IT parks, fiber connectivity, and business districts than they did a decade ago, but enterprise readiness is still not uniform. The Economic Times’ coverage of Tier-2 GCC expansion makes this point indirectly by noting that companies need to focus on talent development and industry-academia collaboration, rather than assuming smaller cities are already plug-and-play substitutes for metros. A location may have adequate connectivity for everyday work, but fewer vendors for compliance audits, specialized facility management, cybersecurity reviews, or rapid executive travel.

The management risk is just as important. A distributed GIC can reduce concentration risk, but it can also create fragmentation if governance is weak. Different cities may develop different work cultures, quality standards, reporting habits, and escalation rhythms.

Without a clear operating layer, the company ends up with scattered teams rather than a capability network. This is why the next generation of location strategy will need shared systems, common security standards, clear escalation routes, leadership cadence, documented processes, and a serious training model.

This is where Tier-2 India should be understood with precision. These cities are not miniature versions of Bengaluru or Hyderabad and should not be forced to play that role. Their value comes from specific strengths including retention, local talent loyalty, emerging education bases, lower operating pressure, better quality of life, and in some cases, deep sectoral fit. The firms that succeed will be the ones that build around each city’s real capability curve, use senior expertise where it is needed, and let emerging locations mature into durable parts of the India operating map.

Conclusion: India’s Next Advantage is a Capability Grid

The next phase of India’s GIC and GCC story will be defined by how well companies use the country as a connected capability grid. Bengaluru, Hyderabad, Pune, Chennai, Mumbai, and Delhi-NCR will remain critical because they carry deep senior talent, global delivery maturity, leadership density, and specialist ecosystems that cannot be replicated quickly.

The mistake would be to treat that strength as proof that all India-based capability must keep concentrating there. The smarter reading is different: metros are becoming high-value nodes, while emerging cities are becoming fit-for-purpose nodes. Together, they create a wider operating map.

This is already visible in real estate, policy, and hiring signals. JLL reported that GCCs leased a record 31 million sq ft of office space in India in 2025, with Bengaluru, Hyderabad, Delhi-NCR, Chennai, Pune, and Mumbai still dominating the footprint.

But the same report also noted that Tier-2 cities could become new frontiers for GCC set-ups as companies look for additional growth corridors beyond the top six markets. This matters because office demand usually follows operating conviction as companies do not take long-term space in new cities only because the location is inexpensive.

The policy map is moving in the same direction. Different states are trying to build different kinds of capability corridors rather than waiting for every skilled graduate to move to the same six metros. Let’s take the example of Kolkata at the eastern-end of India.

It shows how quickly a city can move when the market begins to recognize a different kind of fit. The city recorded a 239% year-on-year increase in GCC leasing in 2025, rising from 0.1 million sq ft in 2024 to 0.5 million sq ft, according to Cushman & Wakefield data reported by The Times of India.

GCCs accounted for 30% of Kolkata’s total office leasing activity, up from 9% the previous year, with companies such as Wipro, KPMG, Accenture, Virtual Employee and Tata Steel among major occupiers. Kolkata’s appeal lies in a large, educated workforce, communication depth, comparatively lower operating pressure, and a business culture that can support certain kinds of long-running capability work.

This is how the grid starts to form. One city may be strong because of its engineering heritage while another could be because of finance policy and institutional support. Similarly, another city could boast of communication-heavy talent and so on.

For a large multinational, the grid offers risk distribution and access to specialized regional pools but for a mid-sized company, it offers a way to build smaller capability units without being forced into the most expensive and competitive markets from day one.

The strategic questions have changed considerably. It has moved on from, “Can we build in India?”, to “Can we build a smaller GIC-style team without setting up a full captive?” to a more pertinent question now: “Which part of India best fits the work we want to own?” Companies that answer that question well will design their India footprint with more discipline. They will use metros where rare density matters and use emerging cities where retention, local relevance, and operating stability matter.

This is the real promise of Tier-2 India. It is not a cheaper version of the old map. It is a wider map with more choices and the firms that understand this will build teams in India that are less exposed to metro churn, better matched to local talent pools, and more durable over time. In this next phase of global capability, the advantage belongs to companies that do not simply find talent in India, but learn how to place capability in the right part of India.