How to Set Up a GCC in India: 2026 Step-by-Step Guide | A2 Consultants

By Nagavarapu Sudheer, M.Com., F.C.S., L.L.B., Partner, A2 Consultants

India now hosts 2,117 Global Capability Centres (GCCs) operating across 3,728 units, employing roughly 2.36 million professionals and generating about US$98.4 billion in revenue, according to the Zinnov-Nasscom India GCC Landscape Report 2026. Those numbers explain why "how to set up a GCC in India" has become one of the most common questions we hear from boards and CFOs abroad.

The harder question is not whether to build a capability centre in India, but how to do it without stalling in the first year. This guide walks through the decisions that matter, in the order you will face them.

What is a Global Capability Centre?

A GCC, also called a captive centre, is an offshore unit owned by a multinational that performs engineering, analytics, finance, HR, technology or other functions for the parent group. A decade ago most were cost-arbitrage back offices. Today the Zinnov-Nasscom data shows 39% of centres operate as "portfolio hubs" with end-to-end ownership of processes, and 5% are "transformation hubs" running AI-led operations. Your design should match the maturity you want to reach, not only the one you are starting at.

Step 1: Define the mandate before the location

A GCC is an operating decision before it is a real-estate or hiring decision. Write down which functions will move, what headcount you expect in years one to three, which decisions the India team will own, and how success will be measured. Companies that skip this step usually discover later that their structure, hiring plan and governance do not fit what the centre was actually asked to do.

Step 2: Choose your entry model

Direct subsidiary

You incorporate an Indian private limited company (a wholly owned subsidiary, where the sector permits 100% foreign ownership under the automatic route), hire directly and carry all setup risk. This gives maximum control and a clean long-term asset, but you need a leadership team, a compliance function and real estate decisions in place early.

Build-operate-transfer (BOT)

A BOT partner stands up and runs the centre on your behalf, handling recruitment, premises, payroll and compliance, and transfers the entity or operations to you after an agreed period. BOT suits companies new to India, those wanting a faster start, or those testing a smaller "micro-GCC". The trade-off is a service fee and the need to define transfer terms clearly up front.

Employer-of-record as a bridge

Some companies hire a first cohort through an employer-of-record arrangement while the subsidiary is incorporated. It can shorten time to first hire, but note that it does not replace a proper structure for a permanent centre.

Step 3: Pick the city on talent, not on headlines

Bengaluru, Hyderabad, Pune, Chennai and the NCR attract most centres, and for good reason: deep talent pools and mature vendor ecosystems. But competition for senior talent is intense, and attrition and salary inflation follow. Evaluate shortlisted cities against the specific skills you need, the presence of peer GCCs competing for them, commute and infrastructure realities, state incentives, and your ability to attract a credible site leader. Smaller cities can make sense for operations-heavy functions but rarely for scarce senior engineering roles.

Step 4: Structure the entity and FDI compliance correctly

Incorporating is only the start. You will need to route capital through authorised dealer banks, make timely filings with the RBI for foreign inward remittances and share allotments, and keep the entity aligned with FEMA reporting. Missed or late filings are common and can lead to compounding penalties and delayed approvals later, so build a compliance calendar from day one.

Equally important is how the GCC will be paid. Most centres operate on a cost-plus service model with the parent. Your transfer pricing policy, GST treatment of services exported to the parent, and the potential permanent establishment exposure for the parent all hinge on how the intercompany agreement is written. Getting this wrong is far more expensive to fix than to design.

Step 5: Plan people, premises and payroll

Recruiting the first leaders usually drives the timeline. Plan for a site head, finance and HR leads, and a core technical team before scaling. For premises, serviced or managed offices can reduce lead time while you determine your long-term footprint. Remember that India's labour codes have changed compliance obligations for employers, and the practical position can vary by state, so confirm payroll, social security and employment-contract practices with your advisors before offers go out.

Step 6: Understand cost drivers and the timeline

Costs rise or fall primarily with headcount ramp, seniority mix, city, premises choice and the level of outsourced support. Savings are real, but they should be modelled over three to five years, including setup costs, attrition, management time and compliance, rather than on salary arbitrage alone. As a rough planning view, many companies see weeks, not days, to incorporate and open bank accounts, and several months from decision to first operational capacity. Your actual timeline depends on entry model and leadership hiring.

Common mistakes to avoid

• Treating India as a cost centre only. Centres without a clear value mandate struggle to retain talent and executive attention.

• Under-investing in local leadership. A strong site head is the single biggest determinant of success.

• Ignoring tax design. Transfer pricing, GST and PE issues should be settled before the first invoice.

• No exit or transfer plan. Whether BOT or subsidiary, document how control, IP and employees move.

A practical checklist

• Approve mandate, functions and three-year headcount plan.

• Select entry model (subsidiary, BOT or hybrid).

• Shortlist two or three cities and test talent availability.

• Incorporate the entity and open bank accounts; complete FEMA/RBI filings.

• Sign intercompany service agreement and transfer pricing policy.

• Hire site leadership; sign premises; set up payroll and statutory registrations.

• Build a compliance calendar and governance reporting to headquarters.

Talk to A2 Consultants

Setting up a GCC is a structuring decision as much as a hiring one. A2 Consultants advises global companies on entity design, FDI and FEMA compliance, international tax and BOT-model GCC setup, so that your India centre is built correctly from the first day.

Book a free 30-minute consultation with A2 Consultants at www.a2consultants.in or write to us through the contact page. We will review your plans and tell you, plainly, which structure and sequence fit your business.