India’s Global Capability Centers (GCCs) are facing not just one, but two policy storms. The hubs powering thousands of tech and engineering jobs in the country are facing significant headwinds from new policy changes in the US. In the first place, the proposed HIRE Act brings a 25% outsourcing tax for US companies using foreign contractors. Secondly, eye-watering increases in H-1B visa fees are being introduced by the Trump administration. Together, will these shake the foundation of India’s GCCs?
India is home to 1,700 GCCs, or more than half the global tally. GCCs in India have become backbone hubs for multinational firms. According to Colliers’ latest report, “GCCs in India: Building the Future of Global Enterprises,” since 2021, GCCs have leased around 100 million square feet of office space across the top seven cities in India, driving record-breaking transaction volumes across most cities. Over the past few years, GCC demand has gained strong momentum, with leasing activity by global corporates estimated to reach 28 million square feet in 2025, nearly double the levels seen in 2021.
But the recently proposed US bill known as the HIRE Act threatens to upend that. If passed in its current form, it could impose a 25% tax on US companies that outsource work overseas, including GCCs, and disallow those outsourcing payments as deductible expenses. That’s not a small tweak. It strikes at the heart of India’s cost advantage in tech services and outsourcing.
“If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks,” said Senator Bernie Moreno when he introduced the Act.
There is also a possibility that US based startups like Groww move back to India, as the opportunity back home becomes more attractive.
However, not everyone is alarmed. The proposed HIRE Act may look like a headwind on paper, Ranjit Tinaikar, CEO of Ness, told The Tech Panda, but for India’s GCC operations, the conversation is less about cost arbitrage and more about value creation.
“Over the past decade, India has moved far beyond being a low-cost outsourcing hub to becoming a global center for digital engineering, product innovation, and enterprise transformation.” — Ranjit Tinaikar, CEO of Ness
“Over the past decade, India has moved far beyond being a low-cost outsourcing hub to becoming a global center for digital engineering, product innovation, and enterprise transformation,” he says.
He emphasizes that while a tax of this magnitude will force US enterprises to re-examine their models, the reality is that talent scarcity, speed of execution, and access to scale cannot be solved through local hiring alone.
“Pulling capability back onshore would come at a much higher opportunity cost than any imposed tax,” he states.
In fact, he says that this will likely accelerate two trends, firstly, a shift from arbitrage-led GCCs to innovation-led GCCs, where the focus is on co-creating digital products and platforms. Secondly, the rise of hybrid delivery models, with nearshore centers in LATAM or Eastern Europe complementing India to give enterprises flexibility across geographies, time zones, and regulatory contexts.
“So, while the HIRE Act poses a cost question, the bigger strategic question is: can enterprises afford to slow down innovation velocity in today’s market? For most, the answer will be no, which is why India’s GCC story remains not just resilient, but essential,” he says.
Meanwhile, back home, the share of GCCs in overall office leasing, which had dipped to less than 30% in 2022, has been rebounding sharply to nearly 40% in 2025. This growth trajectory is expected to sustain, with GCC leasing projected at 60–65 million square feet during 2026–2027, a 15-20% growth compared to the preceding two-year period.
“In the next two years alone, GCCs are likely to lease 60-65 million square feet of Grade A space across the top 7 cities, —unlocking significant real estate opportunities, fueling demand for high-quality spaces, and cementing their role as the critical growth engine of India’s office market,” says Arpit Mehrotra, Managing Director, Office Services, Colliers India.
Will India Lose to Nearshore Markets?
Could India lose business to nearshore markets, like Mexico, Canada, and Eastern Europe? After all, enterprises will look to diversify, which means nearshore markets will benefit. Again, Tinaikar says they will function not as replacements for India, but rather as complements in a hybrid delivery model.
“Proximity to the US or Europe offers regulatory comfort and real-time collaboration, but these centers cannot deliver India’s innovation velocity or engineering scale,” he states.
“Very few markets can match India’s depth of engineering skills at scale, especially in areas like AI, data, cloud, and platform engineering. This isn’t an “India versus nearshore” story. It’s an “India plus nearshore” story.”
He reiterates that India’s position as the global hub for GCCs is not under existential threat. The fundamentals that built India’s dominance i.e. talent density, scale, domain expertise, and a mature ecosystem of universities, startups, and service providers are not easily replicable.
“Very few markets can match India’s depth of engineering skills at scale, especially in areas like AI, data, cloud, and platform engineering. This isn’t an “India versus nearshore” story. It’s an “India plus nearshore” story. Enterprises will increasingly seek a balanced delivery footprint: India for innovation at scale and nearshore for time-zone alignment and risk mitigation,” he explains.
Global Capability Centers to Global Innovation Centers
According to NASSCOM, the long-term trajectory for India’s GCCs is set to evolve into Global Innovation Centers, which means end-to-end ownership, where teams in India not only execute but also design, build, and run digital platforms. Also, the ability to prototype, test, and scale new ideas will be faster than before.
Tinaikar reiterates that in the long term, India’s GCCs will definitely move from being “global capability centers” to “global innovation centers”. In fact, he argues that a shift is already underway.
“The term ‘Global Capability Center’ was born in the era of cost arbitrage and process outsourcing. But today, India is no longer just providing ‘capabilities’ but architecting products, driving AI adoption, and shaping new digital business models for Fortune 500 companies.”
“The term ‘Global Capability Center’ was born in the era of cost arbitrage and process outsourcing. But today, India is no longer just providing ‘capabilities’ but architecting products, driving AI adoption, and shaping new digital business models for Fortune 500 companies,” he says.
In fact, the most progressive enterprises are already treating their GCCs as engines of innovation by building them with a product mindset, embedding DevSecOps cultures, scaling high-caliber engineering squads across AI/ML, Data, Cloud, and UX, and benchmarking productivity and maturity with data-driven platforms.
“These shifts reflect a broader truth: India’s GCCs are no longer about cost savings but about creating competitive advantage,” he adds.
The Role of AI
How might automation, AI, or efficiency improvements in GCC operations help offset higher costs?
Higher costs, whether from policy or market dynamics, will only accelerate the adoption of automation, AI, and efficiency-driven engineering practices in GCC operations, says Tinaikar.
“So yes, automation and AI will help neutralize higher costs but more importantly, they’ll redefine the value of GCCs themselves. The question is no longer how cheaply we can deliver, but how intelligently we can engineer to stay ahead of disruption,”
“Enterprises can’t simply absorb a 25% cost impact. They need to reimagine how work gets done. This is where India’s GCCs are already evolving. Routine, transactional work that once justified offshoring is being automated, while engineering talent is moving up the value chain into product-centric, AI-native, innovation-driven roles,” he says.
As per EY, AI adoption within GCCs in India is speeding up, with nearly 70% of centres investing in GenAI.
“The next frontier for GCCs will be in integrating GenAI into their core business functions to create intelligent workflows, enhance decision-making processes, and offer more personalized customer experiences,” Arindam Sen, Partner and GCC Sector Leader – Technology, Media & Telecommunications, EY India, says.
GCCs are shifting from cost-improvement centers to productivity-improvement engines, from capacity providers to competency hubs, and from automation adopters to pioneers of autonomous solutions.
“So yes, automation and AI will help neutralize higher costs but more importantly, they’ll redefine the value of GCCs themselves. The question is no longer how cheaply we can deliver, but how intelligently we can engineer to stay ahead of disruption,” says Tinaikar.
How Will H-1B Visa Curbs Affect GCCs?
Another round about boost that India’s GCCs could receive is from Donald Trump’s H-1B visa curbs, which could push US firms to consider shifting more work to India. Industry experts expect US firms to choose to keep strategic functions in-house over outsourcing and hence shift high-end work tied to AI, product development, cybersecurity, and analytics to their India GCCs.
According to many, the Trump administration’s new visa fee has prompted high-level talks inside Silicon Valley about moving more jobs overseas, precisely the outcome the policy was meant to stop.
The HIRE Act and the rising costs of US visas pose serious threats to cost arbitrage models, but also open a door to an overdue transformation. India’s GCCs are already racing toward innovation, product engineering, AI-embedded value, and hybrid delivery footprints. For enterprises that embrace this shift, not just as defensive posture but as strategic opportunity, these policies may accelerate, not derail, India’s role as the world’s premier digital engineering and innovation hub.
