Budget 2025: Fueling India's GCC Growth

31 Jan 2025 , 09:25 AM

With their gross output representing 1% of India’s GDP, Global Capability Centers—once merely back offices for big businesses to provide seamless operations—have developed into important participants in the country’s developing tech sector.

With over 2.5 million professionals employed and a projected value of $100 billion by 2030, the upcoming budget by Finance Minister Nirmala Sitharaman may enable these offshore subsidiaries of multinational firms to reach their full potential in the nation by extending to tier-2 cities.

The services Balance of Payment (BoP) reflects the GCCs’ quick development. According to the Economic Survey, “Other Business Services” accounted for 26% of services exports in FY24, which was second only to IT services (48%).

In order to balance their cost model, international players looked to India to establish their back-office operations due to the Russia-Ukraine conflict and squeezed wages from inflation. According to the Economic Survey, this led to the Global Capability Centers (GCCs) suddenly proliferating.

Companies are considering tier-II cities to establish their GCCs and expand their operations as the number of GCCs is growing rapidly and is expected to rise significantly each year. This is being aided by the availability of talent as a result of reverse migration, a trend that was initially sparked by the pandemic and is being driven by remote and hybrid working models.

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