Common Challenges in Setting Up a Global Capability Center

India has emerged as one of the world’s largest talent hubs for IT, engineering, management, analytics, and AI-driven business operations. Every year, India produces millions of graduates in computer science, engineering, finance, business management, and digital technologies. technologies, creating a vast and highly adaptable workforce. Indian professionals are globally recognized for their technical expertise, problem-solving ability, creativity, and capacity to manage complex global operations at scale. India’s IT and management sectors have evolved far beyond traditional outsourcing. Today, Indian talent powers advanced work in artificial intelligence, cloud computing, cybersecurity, semiconductor design, fintech, automation, robotics, and enterprise transformation. Indian professionals are also increasingly leading global innovation centres, shared service centres (SSCs), and global capability centres (GCCs) for multinational corporations. The country’s startup ecosystem, digital economy, and strong English-language capability further enhance workforce competitiveness. Combined with rapid AI adoption and continuous upskilling, India offers companies a highly skilled, agile, and future-ready talent ecosystem capable of driving global innovation and digital transformation.

Key challenges include the following:

• Differences in work culture and communication styles
• Variations in decision-making authority
• Misalignment between headquarters and GCC teams
• Limited overlap due to time zone differences

A strategy that serves an organization well within its home environment may not be easily applicable in another geographic location. Norms of work, modes of communication, level of decision-making, and feedback mechanisms vary from one geographic location to another. Ignoring such differences leads to conflicts between the head office and the GCC team, which slows delivery and raises coordination costs.

The gap in time zones makes matters worse. The team in Bengaluru working on a nine-to-five work pattern has about two to four hours of overlap with its headquarters in Europe. Without an established process for communication in an asynchronous environment and a clear escalation path, decision-making gets affected.

Companies that are successful at this develop their governance models before even opening their center. They decide what functions are fully owned by the GCC, what functions need the headquarters’ approval, and how to measure the performance. Having an onboarding process for new employees, where they are taught about corporate procedures, helps avoid early employee turnover.

Key considerations include the following:

• Office location and real estate decisions
• IT systems and cloud architecture
• Data security and cybersecurity readiness
• Business continuity planning

A GCC must make decisions about real estate, IT architecture, data security, and business continuity to set up its physical and digital infrastructure. The amount of office space leased by GCCs in India increased to 29.2 million square feet in 2024, indicating the extent of their expansion efforts. Both operating costs and talent availability are impacted by the choice of location within that market.  

Cybersecurity is a growing concern. In 2025, India’s CERT-In issued 390 vulnerability notes and 1,530 alerts in response to roughly 29.44 lakh cyber events. Compliance with India’s Digital Personal Data Protection Rules 2025 adds another level of infrastructure and operational requirements for GCCs managing cross-border data flows.

Cloud architecture reduces some infrastructure complexity by enabling remote access and scalability without proportional increases in physical assets. Adoption of cloud computing does not, however, eliminate the requirement for on-site governance of incident response procedures, access controls, and data classification. Before operations start in earnest, both must be set up. 

Key challenges include:

• Rising operational costs in major cities
• Underestimation of setup expenses
• Managing one-time and ongoing investments
• Maintaining expected cost advantages

In support of the GCC, one can begin by looking at savings, with estimates of 30-50% cost reduction compared to similar operations in Western countries. This is true, but not unchanging. The cost of doing business in first-tier cities such as Bengaluru and Hyderabad has gone up, along with the increase in real estate costs, pay scales, and infrastructure investments that coincide with GCC operations.

Over-budget during startup operations occurs frequently as firms underestimate their one-time costs: forming legal entities, obtaining licenses, hiring people, training employees, and implementing technology are not free operations, and knowledge of the marketplace helps with managing these costs.

The build-operate-transfer model addresses this directly. Under this arrangement, the parent organization takes over all operational responsibility once an experienced local provider establishes and runs the center for a predetermined amount of time. This lowers the possibility of first-year cost overruns and enables the parent business to learn about the area before assuming full management responsibilities. This strategy has been utilized by financial services and manufacturing firms to set up centers in India with more predictable cost trajectories. 

Key challenges include the following:

• Scaling operations beyond initial team size
• Expanding infrastructure and systems
• Access to talent and vendor availability
• Planning long-term growth capacity
  

A good center running well with 100 people does not guarantee that there will be no disturbance when expanding to 500 people. Documentation, management capacity, information technology systems, and physical space will all need to expand along with the increase in numbers. It is common for organizations planning only for the starting number to encounter problems in the future.

According to Inductus research, 364,000 GCC-based jobs are forecasted for India in 2025. Given the intensity of business activity, the availability of real estate, senior personnel, and specialized vendors may be an issue at times. By planning growth phase-by-phase to take into consideration the relationship between the number of hires required and existing facilities, infrastructure, and staffing resources, companies can grow while maintaining their current model of doing business.

These cities are becoming more relevant to the discussion. In early 2026, Coimbatore, Kochi, and Ahmedabad contributed to the recruitment of GCC employees at 12%. This was achieved through various state-level policies, such as the Maharashtra GCC Policy 2025. The attrition rate in these cities is lower by 10% to 15% compared to Tier-1 cities.

Key challenges include the following:

• Developing capable local leadership
• Reducing dependency on headquarters
• Ensuring continuity and succession planning
• Aligning leadership with global strategy

The quality of leadership within a global capability center will dictate if it operates as an extension of the headquarters or if it acquires the ability to take ownership of some sections of the business. The two outcomes carry different long-term values.

According to Inductus’ analysis using the secondary sources, more than 6,500 positions have been created globally in India’s GBCs up to 2024. This also includes over 1,100 women in various leadership positions internationally. This indicates a change in the perspective of organizations regarding the capability of the GCC. Research done by Gartner in 2025 found out that 13 Fortune 500 firms currently derive more than 25% of all their patents globally from India Centers.

This degree of involvement necessitates local leadership that is aware of the parent company’s plan and has the power to implement it without waiting for guidance from elsewhere. Businesses that achieve this through succession planning frameworks, cross-posting between headquarters and the GCC, and organized mentorship report improved continuity and less reliance on a small number of key personnel.

In this situation, leadership development is not a typical HR endeavor. How much of the organization’s operational authority and intellectual output the GCC will eventually own is a structural choice. 

These difficulties that are described in this manual are not exclusive to any particular industry or region; however, their significance depends greatly on how prepared the company was before setting up its foreign office. The issues associated with expanding internationally will not be automatically solved by having a legal entity or signing a lease agreement.

There are certain traits common among high-performing GCCs across technology companies, BFSI companies, manufacturers, and healthcare providers; one such trait is their approach towards the creation of the center, which is more strategic in nature and not simply based on the idea of cutting costs, as it is viewed more as a long-term operational strategy.