GCC wave: Chennai must climb the GCC value chain

Sreeram Iyer

Back in the early 2000s, Tamil Nadu helped write the first chapter of India's GCC ascent. At that time, the boom began with Business Process Outsourcing, alongside Technology services. Today, with Agentic AI, the competitive map of BPOs has shifted fundamentally. For good reasons, other cities like Bengaluru and Hyderabad have claimed the strategic high ground. As India’s broader BPO and GCC story continues to march ahead in this AI era, a mere legacy reputation for steadiness will not turn the direction for Tamil Nadu. This article examines the challenge and sets out four priorities for action.

Firstly, India's GCC engine is structural, not cyclical. India’s Global Capability Centre (GCC) ecosystem is now a core export and employment engine, but to move from “cost arbitration centres” to a “strategic headquarters of global work”, it needs aligned national policy, access to global talent, and an easier ability to scale in Tier-2/3 locations. With the right impetus, our GCCs can become true centres of AI Excellence and IP-creation for the whole world.

India's Global Capability Centre story is no longer a subplot; it has become one of the central engines of the country's growth in technology, exports and high-skill employment. Nasscom–Zinnov data shows India now hosts 2,117 GCCs, employing around 2.3 million professionals and generating approximately $98 billion in annual revenue in FY26. By 2030, projections point to 2,500 GCCs and 3.5 million employees.

Secondly, Chennai's position is solid but no longer strategic. For the metropolis, this is a double-edged moment. In the early 2000s, the city was one of the clearest proof points of India’s BPO promise. British banks, American and other multinationals scaled captive centres here because Chennai offered engineering depth, process discipline and reliable operations at attractive cost, backed by proactive state policy. Those decisions triggered a boom in Grade-A office inventory, white-collar employment and the broader services ecosystem.

That legacy remains intact but at risk. CBRE’s 2024 analysis places Chennai on firm ground, with the metrics below. GCCs alone are projected to lease 3.0 million sq ft of space in 2025, pushing total office stock beyond 100 million sq ft by 2026.

Thirdly, there is the shifting definition of a GCC. The first generation of BPOs and GCCs was largely about cost arbitrage and efficient execution of defined sub-processes. With capabilities around AI, the current opportunity in such offshore centres is about a greater ambition on truly influencing HQ for decision-rights, for authority, for investment dollars and for end-to-end value creation backed by strong leadership roles.

AI must be framed carefully in any serious discussion of Tamil Nadu’s GCC future. The negative narrative focuses on job losses, while the optimistic one focuses on revenue and growth. AI will automate repetitive tasks and drive productivity, but Nasscom’s own assessments confirm that demand for AI and advanced data roles is rising sharply despite material talent shortages. For Tamil Nadu and Chennai, this should be read as an invitation. AI can turn current strengths into more strategic mandates rather than fewer jobs, provided policy and industry act deliberately.

A cautionary signal comes from Wells Fargo's decision to wind down its Chennai GCC and relocate roles to other cities — a visible marker of the changing competitive landscape. Chennai's risk is not exclusion from the GCC boom, but remaining concentrated at the lower end of the value chain.

Fourthly, there are priorities for a second-generation GCC strategy. What might a second-generation BPO 2.0 strategy for Tamil Nadu look like? Four priorities stand out.

Reward value creation, not headcount: Provide a massive boost to our labour productivity within GCCs. Incentives linked to productivity and moving beyond mere cost arbitrage are a real opportunity. Incentives should lean toward centres that locate global product ownership, risk management, treasury, analytics, R&D and leadership roles in Tamil Nadu — not merely those that commit to large headcount numbers. In a world where AI will compress some categories of work, locally anchoring higher-order mandates is the real long-term hedge.

Close the leadership capability gap at scale: The next GCC contest will not be won only on coding skills; it will be won on leadership depth. Tamil Nadu should establish a GCC Leadership Academy in partnership with industry and leading universities, focused on GCC centre heads and cross-cultural enterprise managers. This includes international and global training, centred around the HQ’s needs and business strategy.

Launch a GCC leaders' Ghar-Wapsi programme: Build on existing “brain gain” and diaspora engagement concepts by funding a GCC leader’s Ghar-Wapsi programme that co-finances relocation expenses, schooling transition assistance, and spousal employment support for returnees joining GCCs. This could cover highly skilled returnees who take leadership roles in registered entities.

Reposition Chennai globally as a strategic GCC hub: The state's narrative needs to emphasise the role of AI in the BFSI, engineering, and industrial sectors as core strengths, backed by concrete examples of work done from Chennai, not generic slogans about the number of engineering colleges and cost.

Compete for value — or merely host it?

Chennai helped write the first chapter of India's BPO ascent. It can still shape the next chapter — but only if Tamil Nadu stops relying on a legacy reputation for steadiness and intentionally builds a new proposition around value, leadership and AI-era relevance.

High-value work tends to cluster. The best AI, product and platform mandates flow to locations that offer leadership depth, mid-career talent, trusted ecosystems, innovation linkages and influence with global headquarters. India’s GCC engine will continue to grow regardless. The real strategic question is where the next layer of value will land – and whether Chennai chooses to compete for it.