Setting Up a Global Capability Center in India from the US: A Complete Guide

Struggling with rising operating costs or talent shortages in the US? Many businesses face these challenges when expanding globally, and that’s why starting a global capability center in India has become a strategic move. 

India is now called the “GCC Capital of the World,” housing around 1,700 GCCs (FY24), and by 2030, the number is expected to surpass 2,200 with a workforce of 2.8 million.

For US entrepreneurs, SMEs, and professional service firms, exploring a global capability center setup in India is more than just cost arbitrage. It involves accessing a deep talent pool, maintaining compliance, and building future-ready operations. With expanding policy support and India’s proven track record as a GCC hub, setting up a GCC in India gives you a competitive edge in both growth and efficiency.

In this guide, you’ll discover the practical steps to set up a global capability center in India, covering entity structure, regulatory compliance, hiring, and scaling operations.

In a Nutshell

• Beyond Cost Savings: GCCs have shifted from back-office roles to strategic hubs driving R&D, compliance, and global digital transformation.
• Structured Setup: Success depends on a clear roadmap. It includes defining purpose, testing feasibility, choosing the correct location, selecting the right entity, embedding compliance, building scalable infrastructure, and more.
• Operating Models: Options include the DIY model, Build–Operate–Transfer (BOT), or hybrids like joint ventures and virtual captive centers. Each offers different levels of control and speed.
• Key Challenges: You must plan for talent competition, compliance complexity, cost management, scalability, and leadership alignment to avoid costly missteps.

Understanding a Global Capability Center (GCC) in India

A Global Capability Center (GCC), also known as a captive center, is a wholly owned subsidiary that multinational corporations, especially from countries like the US, establish in India to manage critical operations for their global headquarters. Unlike outsourcing, a GCC provides direct ownership and control over operations, intellectual property, and workforce quality.

Key Functions and Advantages of GCCs in India

1. Core Business Functions
   
   • Software and product development
   • Data analytics, AI/ML modeling, and automation
   • Finance and accounting services
   • Risk management and compliance reporting
2. Talent Advantage
   
   • India has one of the world’s largest pools of engineers, finance professionals, and IT experts.
   • US businesses can tap into specialized skills at scale without inflating domestic payroll costs.
3. Innovation Hubs
   
   • GCCs in India now drive digital transformation projects, testing new technologies before global rollout.
   • Many Fortune 500 companies use their Indian GCCs to pilot automation, AI tools, and new service models.
4. Cost Efficiency Without Compromise
   
   • You can reduce operating costs compared to the US. This includes salaries, infrastructure, and overhead.
   • Unlike outsourcing, savings come with complete control and brand consistency.
5. Supportive Ecosystem
   
   • India’s government and industry bodies actively support GCC growth through tax policies, skill development programs, and infrastructure investment.
   • Cities like Bengaluru, Hyderabad, Pune, and Gurugram are established GCC hubs with strong vendor ecosystems.

What it Means for US Businesses:

Suppose you’re a US-based fintech startup looking to scale operations without ballooning payroll expenses in New York or San Francisco. By setting up a Wholly Owned Subsidiary GCC in India, you could:

• Hire a 50-member finance and compliance team in Gurugram to support US clients.
• Run 24/7 operations to cover multiple time zones.
• Maintain complete control over data security and processes while achieving a significant reduction in annual operating costs.

So, how do you go from exploring the idea of a GCC to actually setting up one in India? Let’s break down the process step by step.

Starting a Global Capability Center in India: A Complete Planning Guide for US Businesses

Industry experts predict that India’s GCC ecosystem will continue expanding for the next decade, with more global players across technology, finance, pharma, and professional services setting up advanced operations. 

For US companies, setting up a GCC in India requires a structured, step-by-step approach. Here’s how to plan yours effectively:

Step 1: Clarify the Purpose of Your GCC

Remember, a GCC is not a mere cost center; it should act as a strategic extension of your business. Defining objectives upfront translates into clarity and alignment with the parent company’s long-term goals.

What to do:

• Identify the primary purpose of your GCC: IT services, R&D, finance, compliance, or customer support.
• Align these with the parent company’s growth strategy (e.g., scaling product development, improving customer service, or reducing operational costs).
• Document Key Performance Indicators (KPIs) such as the number of product features per quarter, employee attrition, etc., to measure success.

Example: A California-based SaaS firm establishes a GCC in Bengaluru focused exclusively on AI/ML development, while US teams remain customer-facing. KPIs include reducing feature rollout time by 25% and lowering engineering costs by 40%.

Pro Tip: Don’t treat your GCC only as a cost-saver. Define 2–3 measurable outcomes, such as reducing product release cycles by 20% or cutting compliance turnaround times by half. This way, your GCC delivers clear strategic value.

Step 2: Test Viability with a Feasibility Study

Before committing resources, validate the viability of your GCC through a detailed feasibility study. It helps validate whether a GCC in India makes sense for your business.

Feasibility Checklist:

Key Insight: Companies that perform feasibility studies typically reduce setup risks, compared to firms that skip this step.

Step 3: Select the Right Indian Location

Why location matters: Different Indian cities specialize in different industries, offering unique advantages.

Key GCC hubs in India:

• Bengaluru & Hyderabad: IT, SaaS, and engineering innovation
• Gurugram & Delhi NCR: Finance, consulting, legal, and audit support
• Pune & Chennai: Manufacturing support, automotive, engineering services
• Hyderabad (Pharma): R&D and biotech GCCs

Pro Tip: Balance cost with ecosystem maturity. While Tier-1 cities offer advanced ecosystems, Tier-2 cities provide 15–20% lower costs with growing talent pools.

Step 4: Pick the Right Entity Structure

To legally hire and operate, you must establish a recognized place of business in India. It defines how much control you have, how you hire, and your compliance requirements.

Here are some of the common structures for GCC setup:

Why it matters: Choosing the wrong entity can restrict your hiring capabilities or add compliance overhead.

Pro Tip: Avoid choosing a structure purely for ease of registration. A Branch Office may look fast, but it restricts hiring and requires RBI monitoring. If long-term scaling is your goal, consider a Wholly Owned Subsidiary (WOS) for maximum control.

Also Read: Documents Needed For Company Registration In India From The US

Step 5: Understand the Legal and Compliance Landscape

Ignoring compliance is one of the fastest ways to derail your GCC plans. You need to take care of the following key compliance areas to stay on track: 

• Taxation: Corporate tax, GST registration, and transfer pricing for cross-border transactions.
• Labor Laws: Hiring contracts, provident fund, gratuity, maternity benefits, and working hours.
• Data Protection: Compliance with India’s Digital Personal Data Protection Act.
• FEMA/RBI: Ensuring foreign direct investment (FDI) approvals are aligned with FEMA and RBI rules.

Pro Tip: Always build compliance into your initial business case rather than treating it as an afterthought.

Also Read: How Do FEMA Advisory Services in India Help in Growing Your Business

Step 6: Build Scalable Infrastructure & Technology

The success of your GCC depends on building an infrastructure that grows with your business. From flexible office layouts to secure IT systems, every element should integrate smoothly with your US operations while supporting long-term expansion.

Checklist for setup:

• Office Space: Flexible layouts that allow future scaling.
• IT Systems: Secure integration with US systems.
• Cybersecurity: End-to-end data protection and restricted access protocols.
• Cloud & ERP Tools: For finance, HR, and project management.

Did You Know? India achieved Tier 1 status in the Global Cybersecurity Index 2024. With this recognition and one of the world’s largest pools of cybersecurity professionals, US firms setting up GCCs in India gain access to top talent and a highly secure operating environment.

Pro Tip: Build compliance into your budget and timelines from day one. For instance, factor in transfer pricing studies and GST filings as recurring costs, not surprises later. Many US firms underestimate compliance and face delays in fund repatriation.

Step 7: Recruit and Retain the Right Talent

India’s talent pool is your GCC’s biggest asset, but hiring without a strategy can lead to high attrition and skill gaps. Focus on building a strong employer brand, creating a balanced workforce, and investing in culture to make your GCC a destination for top professionals.

Action points:

• Employer Branding: Market your GCC as a premium workplace in India.
• Targeted Recruitment: Blend senior leadership with mid-level managers and fresh graduates.
• Compensation Benchmarking: Offer attractive but sustainable salary packages.
• Training & Culture: Develop onboarding programs that align employees with the US headquarters.

Example: A US-based fintech firm in Gurugram hires Indian chartered accountants for compliance reporting, supporting US clients overnight while cutting costs.

Pro Tip: Avoid over-reliance on one recruitment channel. Use a mix of agencies, job portals, and campus placements to diversify hiring.

Step 8: Set Up Governance and Operations

Once your team and infrastructure are in place, the challenge is ensuring consistent performance. Strong governance, clearly defined workflows, and measurable KPIs transform your GCC from a cost center into a strategic partner for your US headquarters.

Best practices for smooth operations:

• Define roles, workflows, and escalation paths early.
• Create a governance model that ties the GCC to global leadership.
• Track KPIs (e.g., cost per project, turnaround time, error rates).
• Use regular audits to maintain compliance and quality.

Pro Tip: Don’t wait until problems show up to design governance. Set quarterly review cadences with joint leadership committees (India + US) from the start. This ensures your GCC isn’t sidelined into low-value work but contributes directly to global goals.

Once you understand the step-by-step process of setting up a GCC, the next decision is choosing the right operating model. Let’s find out more.

Key Models for US Companies to Set Up a Global Capability Center in India

When establishing a GCC in India, you can typically choose from three operating models. The choice depends on your intended level of control, available resources, and comfort with local compliance.

1. DIY Model (Do-It-Yourself)

In this model, you directly set up and manage the GCC. You retain complete ownership and operational control of the entity. Local tasks, such as payroll, compliance filings, or legal documentation, may be outsourced to specialists, but the overall responsibility rests with you.

• Best for: US businesses with prior experience managing overseas operations or strong in-house expertise.
• Advantage: Maximum control over governance, processes, and intellectual property.

2. BOT Model (Build–Operate–Transfer)

Here, a third-party partner establishes and runs the GCC on your behalf in the initial phase. Once the center reaches stability and compliance maturity, they transfer back ownership and control to you.

• Best for: US SMEs or startups looking to simplify their entry into India while maintaining long-term control.
• Advantage: Faster setup with lower upfront risk, as the service provider manages hiring, infrastructure, and regulatory compliance during the early stages.

Example:

A US-based fintech startup looking to expand into India opts for the BOT model. A local partner sets up its GCC in Gurugram, hires 60 finance professionals, and manages compliance for the first two years. 

Once the startup is confident in the GCC’s performance and compliance readiness, ownership is fully transferred to the US parent company. This reduces risk during the early stages while still allowing for long-term control.

3. Hybrid BOT Models

You may also adopt a middle ground by blending elements of the DIY and BOT approaches. Common hybrid variations include:

• Joint Venture Model: The service provider building the GCC retains a small equity stake in the unit even after transfer.
• Virtual Captive Model: The GCC operates as a “virtual” extension of your business, providing IT or business services, while being managed by a partner until you are ready to expand and take complete control.

While the right model gives you a strong foundation, setting up a GCC in India also comes with its share of challenges. Let’s explore them.

Key Challenges for US Businesses Starting a Global Capability Center in India

From cultural hurdles to talent retention, understanding the key risks upfront can help you plan better and avoid costly missteps. Here are the most common challenges to plan for:

1. Hiring and Retaining Talent

• Competition: You have to compete with global tech giants like Google, Accenture, and Infosys for the same pool of engineers, analysts, and accountants.
• Attrition: High turnover in hubs like Bengaluru and Hyderabad can disrupt operations and increase rehiring costs.
• Compensation Pressure: Salary inflation in Tier-1 cities makes budgeting difficult.
• Employer Branding: Without a strong brand presence in India, attracting top-tier talent is harder.

2. Cultural Gaps

• Communication Gaps: Time zone differences and varied communication styles create misalignment.
• Work Culture Differences: Expectations around hierarchy, feedback, and collaboration can cause friction.

3. Managing Costs

• Setup Costs: Real estate, technology infrastructure, recruitment, and training demand heavy upfront investment.
• Ongoing Costs: Rising salaries, employee benefits, and compliance overheads can eat into projected savings.
• Overruns: Underestimating costs during feasibility studies often leads to budget overruns.
• ROI Pressure: GCCs are expected to deliver cost savings within 2–3 years, which requires careful planning.

4. Scaling for Growth

• Rigid Systems: Legacy IT or office setups can block future growth.
• Headcount Expansion: Hiring speed may not keep pace with the parent company’s demand.
• New Service Lines: Adding functions like R&D or compliance may require major redesigns if scalability isn’t built in early.
• Market Shifts: GCCs must adapt quickly to changes in technology and regulatory environments.

5. Misalignment with Leadership

• Strategic Disconnect: US leadership may view the GCC as a cost center, while local teams aim for broader roles.
• Unclear Governance: The lack of defined workflows, escalation paths, and accountability often hinders effective decision-making.
• Reporting Issues: Inconsistent KPIs and unclear success metrics weaken performance tracking.
• Integration Gaps: If GCCs are not tied into the global roadmap, they risk delivering low-value tasks rather than strategic outcomes.

Struggling with these challenges while setting up your GCC in India? VJM Global handles company registration, FEMA/RBI rules, GST, MCA, and local hiring, ensuring your GCC can succeed without setbacks.

Also Read: How Can Business Advisory Services Help Foreign Investors with Business Setup in India?

How VJM Global Supports US Firms in Setting Up a Global Capability Center in India

Launching a GCC in India is about building an operating model that’s compliant, scalable, and aligned with your US business objectives. For entrepreneurs, SMEs, startups, and professional service firms, the challenge lies in handling infrastructure, compliance, and workforce planning without draining resources.

With a strong base in India, VJM Global supports you throughout the lifecycle of your GCC. Here’s how we make the setup process structured, risk-free, and built for long-term success:

• Legal Entity Setup and Registration: Choosing the proper structure (WOS, PLC, LLP, or Branch Office) is critical. We guide you through entity selection, MCA registration, and FEMA/RBI approvals, enabling your GCC to hire employees, hold assets, and transact compliantly from day one.
• Compliance-Ready GCC Framework: We build a custom compliance roadmap covering transfer pricing, intercompany transactions, labor laws, GST, and data protection. This helps you avoid costly disputes and ensure smooth cross-border reporting.
• Vendor and Infrastructure Setup Support: From office leasing to IT infrastructure procurement, we help you evaluate, negotiate, and onboard local vendors. Our team ensures contracts align with Indian law and include safeguards on service levels, data protection, and exit terms.
• Workforce Structuring and HR Advisory: Hiring in India is also about designing the proper HR framework. We support you with payroll setup, ESOP structuring, employee contracts, and HR policy design so your GCC attracts and retains top professionals.
• Governance and Reporting Alignment: We help you define governance structures, reporting lines, and internal controls that tie directly back to US headquarters. This means your GCC doesn’t drift into low-value tasks.
• Ongoing Risk Monitoring: Our role doesn’t stop after setup. We continue to monitor regulatory updates, review intercompany pricing, and assess operational risks so your GCC remains agile and compliant as regulations or market conditions change.

Concerned about compliance gaps, vendor risks, or a GCC that doesn't align with US objectives? VJM Global helps you establish GCCs in India that are compliant, scalable, and built for growth. Book a strategy call to discuss your setup plan today.

FAQs

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1. What is the future outlook for GCCs in India?

By 2030, GCCs in India will grow into strategic hubs, expanding beyond cost savings to drive global operations, digital transformation, and large-scale employment.

2. What are the tax benefits of starting a global capability center in India?

A global capability center setup in an SEZ can access significant tax benefits: 100% tax holiday on export profits for 5 years, 50% for the next 5, plus incentives on reinvested profits.

3. How do sustainability and CSR impact a global capability center setup in India for US firms?

Integrating energy efficiency, renewable resources, and community initiatives into a GCC setup in India helps US businesses enhance brand reputation, stay aligned with ESG compliance, and engage employees. It also builds stronger ties with local communities for long-term growth.

4. What types of global capability centers can US companies set up in India?

India supports diverse GCC models for US firms, including technology and innovation centers, shared services, global operations hubs, and R&D facilities. Companies can also launch specialized centers in areas like AI, data security, and industry-specific functions.

5. What is the difference between a GIC and a GCC?

A GIC (Global In-house Center) and a GCC (Global Capability Center) are often used interchangeably. However, typically, GICs are viewed as cost-saving back offices, while GCCs now represent strategic hubs driving innovation, digital transformation, and core global operations.

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