India’s global capability centres (GCCs) are growing beyond conventional locations, with initial tier-II cities like Mangalore, Bhopal, and Aurangabad serving as experimental sites for a new type of tech hub, influenced by cost, talent, and policy.

The expansion of GCCs into smaller cities like Coimbatore, Indore, and Lucknow is well recognized, with additional centres emerging as various states implement policies and develop infrastructure to draw these centres.

According to Sachin Alug, CEO of the talent solutions company NLB Services, Tier-2 cities currently account for 30-32percent of all newly listed job openings."

“Demand for tech and GCC positions in cities such as Mangalore, Ahmedabad, and Nagpur has significantly increased, fueled by the emergence of nano-GCCs,” he stated.

Nano-GCCs are compact, high-impact hubs consisting of 20 to 100 professionals concentrated on extensive R&D and AI-driven tasks instead of large back-office functions, with demand arising from BFSI, fintech, and AI-driven automation companies.

"Tier-2 and Tier-3 cities currently account for a smaller portion of new GCC activity, yet their share is increasing," stated Vikram Ahuja, co-founder of ANSR, a provider of GCC services.

The need for these locations has increased to almost 35percent of new assessments in FY25, compared to 14.9percent of actual GCC additions in FY24. Nevertheless, 85-88percent of new centers continue to be focused in metropolitan areas.

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According to ANSR, expenses for commercial real estate in smaller cities are as much as 50percent lower, and the cost of living is 25-35percent less expensive.

Additionally, the attrition rate is reduced to 10-14percent compared to 16-20percent in tier-1 cities.

“Compensations in tier-2 cities are generally 10-25percent less than in Bengaluru, yet reduced living expenses and enhanced quality of life balance out this difference,” stated Neeti Sharma, CEO of TeamLease Digital.

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This is encouraging professionals to move back to their hometowns, while new graduates are more willing to begin careers outside metropolitan areas, she noted.

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Support from policy is also crucial. In 2025, Madhya Pradesh became the initial state to execute a specific GCC policy.