Global Capability Centres are Reshaping Indian Office Real Estate - But the Runway isn’t Risk-Free

For years, Global Capability Centres (GCCs) - the in-house delivery, engineering, and innovation arms that multinationals set up in India instead of outsourcing to third-party vendors - were treated as one demand driver among several in the country’s office market, alongside IT-BPM, BFSI, manufacturing and flexible-workspace operators. That framing no longer holds. GCCs have become the single largest and fastest-growing source of Grade A office demand in the country, and leasing data pertaining to the last 5 years confirms that this is a structural shift rather than a cyclical bump. GCCs are no longer a segment, they are the market!

Picture this: in the pre-COVID era, GCCs were not considered as a distinct category among demand drivers of office space in India; they were clubbed with the IT/ITeS segment. However, there was an abrupt change - GCCs became an independent demand driver post COVID. The increasing growth trajectory in the last 4-5 years has attracted significant attention from real estate analysts. Share of GCCs in overall office space leasing in the top 7-8 cities increased from 25%-27% in 2022 to more than 40% today. In terms of stock footprint in the top cities in India, they are occupying 270-275 million square feet of office space, which turns out to be ~35% of Grade A occupied stock.

GCCs are not just renting space, they are reshaping what work means in India - they have basically turned India into the world’s R&D department.

Why this is a structural shift, not a spike

Three things distinguish the current GCC wave from earlier growth cycles - the BPO era of the 2000s and the analytics/shared-services phase of the 2010s.

First, the mandate has moved up the value chain. GCCs in India are not just executing plans made elsewhere, they are making the plans. Today, they are not cost-arbitrage back offices; they are increasingly the site of core engineering, R&D, AI/ML model development, cybersecurity, and finance functions. More than half of India’s captive centres are now engaged in R&D activity, and multinationals are explicitly choosing captive operations over third-party vendors because in-house control over intellectual property, proprietary data, and AI systems is harder to delegate externally. This is qualitatively a different demand: it comes with longer lease tenures, higher fit-out specifications (Grade A/A+, green-certified, tech-enabled buildings), and stickier real estate commitments than transactional BPO leasing ever generated.

Second, the base of companies setting up centres is still shallow relative to the addressable universe. Less than 35% of Global 500 companies currently operate a GCC in India. This implies more than 65% have not fully leveraged the India opportunity yet. There is substantial headroom simply from first-time entrants, as well as from existing centres expanding further. To give a perspective of the potential growth in number of new GCCs, 200 of them have entered the country in the last 2 years; today the country has more than 2,100 GCCs comprising close to 4,000 individual units. India’s proven credentials have helped our economy graduate from ‘promising emerging market’ to ‘indispensable global partner’. Credibility with global firms, credibility with capital and credibility with talent - all signals point towards a strong pipeline of demand for office space, going forward.

Third, vacancy is tightening even as new supply comes online, which is usually a sign of demand outrunning the market’s ability to absorb it comfortably rather than a sign of oversupply-driven softness. In India, the hybrid work culture has evolved into a strong office-first approach. It does not mean five days a week, it means the office is still the anchor for collaboration, learning, culture and leadership visibility - the prerequisites for GCCs to set up operations. So, the office remains strategically central even as flexibility remains operationally real. Quality of office building becomes non-negotiable for the global companies and sustainability is not ‘nice to have’ anymore - it is the entry ticket. The ‘flight to quality’ in office space demand is putting significant pressure on occupancy in existing institutional-grade buildings, while driving high pre-commitments in under-construction projects.

When the above three drivers work in tandem, they can propel GCC office demand towards a ‘perfect growth tide’ - not a projection, but a flywheel already in motion.

Will the GCC office space demand share keep rising over the next five years?

The base case scenario is a ‘yes’. In the top Indian cities, GCCs will not just sustain their current more than 40% share in gross leasing volume but will likely push towards the 50% mark within the next one to two years and hold or extend that share through 2030, assuming no major disruption to the underlying demand drivers. With this leasing trend, the occupied stock by GCCs is likely to cross 300 million square feet within a couple of years. Another important aspect to note is that GCCs now comprise half of active space requirements (RFPs) in the top Indian cities and hence they are widely expected to be the single largest claimant on incremental supply.

A second, related trend reinforcing this trajectory is geographic diversification into Tier-II cities. While more than 90% of GCC operations remain concentrated in six major metros today, there is a 25-35% rise in Tier-II GCC demand, with cities such as Jaipur, Kochi, Coimbatore, Indore, Chandigarh, Ahmedabad, and Lucknow benefiting from cost arbitrage of 15-30% versus metro rents. This broadens the base of office absorption tied to the GCC theme beyond just Bengaluru, Hyderabad, Chennai, Pune, NCR, and Mumbai, and reduces the risk that GCC growth may stall purely because of supply or talent bottlenecks in a handful of saturated metros.

Structurally, the shift towards managed/flex office space as the default delivery model for GCC setups is also worth noting: flex workspace has grown by over 20% CAGR since 2020 and permits GCCs - particularly first-time entrants and mid-sized centres - to scale up or down faster than a traditional lease-and-fit-out model would allow. This lowers the entry barrier for smaller enterprises to set up India centres, which should keep adding to the base of demand even if a handful of very large GCCs pause expansion in any given year.

The downside risks: five things that could slow or disrupt the trajectory

The growth trajectory of GCCs should not be construed as guaranteed or linear. A number of credible downside risks warrant attention, ranging from those already evident in the data to others that remain speculative but are drawing increasing analyst scrutiny.

US policy shifts targeting the offshoring/outsourcing corridor

The most immediate and concrete risk is regulatory, originating in Washington rather than India. Two US policy signals, in particular, have unsettled the sector: a proposed steep increase in the H-1B visa petition fee, which would sharply raise the cost of moving India-based staff onsite to the US, and the proposed HIRE Act, which would impose a 25% tax on US firms’ payments to foreign service providers while denying expense deductibility for such payments. There are two plausible net effects: one, this could ironically accelerate GCC formation, since it becomes cheaper for a multinational to build a captive team in India than to route the same work through an onsite visa-dependent model or a third-party outsourcing vendor. Two, the tax specifically targets “offshore contracting,” and if applied broadly, it could raise the effective cost of any India-linked service delivery, GCC or otherwise, and introduce genuine uncertainty into multi-year real estate commitments. However, the proposed steep rise in the H-1B visa petition fee has been judicially blocked since June 2026 and is unenforceable pending further appeal; similarly, implementation of the HIRE Act is still pending, not enacted. But these are live and evolving policy risks that occupiers and landlords are actively pricing into decision-making, and any escalation (or a broader US-India trade/tariff dispute) could cause hesitation in the pace, if not the direction, of new centre announcements.

AI-driven automation compressing headcount-linked real estate demand

A more structural risk is that generative AI and agentic automation could shrink the number of employees, and therefore the floor space needed to deliver a given volume of GCC output. India’s offshore technology sector has been described as ‘splitting in two’: capital and premium space are flowing towards GCCs and product-engineering teams that own data, IP, and upstream workflows, while traditional outsourcing and BPO-style delivery faces margin and headcount pressure as routine, process-heavy work gets automated. For GCC-linked office demand specifically, the picture is more nuanced. Centres are taking on higher-value R&D and AI-development mandates, which should support continued leasing, but the ‘seats needed per unit of output’ could still decline over a five-year horizon as AI tools lift engineer productivity.

Grade A supply and cost inflation in the most sought-after micro-markets

Ironically, the biggest threat to sustained GCC share growth may be ‘success’ itself. Headline vacancy across the top seven cities has already tightened to less than 15% from a high level of 18%, within a span of 3-4 years. Premium micro-markets have single-digit vacancy levels and as a result they are witnessing sharp rental escalation in recent times - high double digit, sub-twenty - the highest in over five years. Should Grade A and institutional-grade office space supply fail to keep pace with GCC-driven demand in the specific micro-markets occupiers favour, rising rentals could erode part of India’s traditional real estate cost-arbitrage advantage over rival GCC destinations such as the Philippines, Poland, Mexico, and Vietnam - potentially diverting future expansion decisions elsewhere, or pushing the shift to lower-cost Tier-II cities faster than local infrastructure and talent pipelines are ready to absorb.

Talent cost inflation and competition for skilled engineers

As GCCs increasingly compete with each other as well as with traditional IT-services firms for the same pool of senior AI, data, and product-engineering talent, wage inflation in these specialised roles has been outpacing that of standard IT positions. Traditional Indian IT services firms are reportedly losing business and talent alike to GCCs, which can offer materially higher compensation. Over a five-year horizon, sustained talent-cost inflation - particularly in saturated hubs like Bengaluru - could erode the economics that make India attractive relative to other GCC geographies, especially if comparable talent becomes available more cheaply in emerging alternative hubs.

Global macro and sector-specific slowdown risk

GCC expansion is ultimately a function of parent-company capital allocation decisions made in the US, UK, and Europe. A global recession, a slowdown in specific verticals that are heavy GCC users (BFSI, technology, pharma/life sciences), or a pullback in enterprise IT and R&D budgets would directly translate into slower new-centre formation and delayed expansion of existing ones.

Concluding remarks

GCCs have moved from being one demand driver among several to being the demand driver in India’s Grade A office market, and the forces behind that shift - deepening mandates, a still-shallow base of Global 500 entrants, and vacancy tightening on the back of a genuine flight to quality - point to a structural trend rather than a transient cycle. On the base case, GCCs’ share of gross leasing volume across India’s top cities pushes towards 50% over the next one to two years and holds through 2030, with occupied stock crossing 300 million square feet and growth increasingly broadening into Tier-II hubs such as Jaipur, Kochi and Indore.

None of the above GCC growth drivers makes the runway risk-free. The proposed US policy shifts on offshoring, AI-driven compression of seats-per-unit-of-output, rental inflation in supply-constrained micro-markets, talent cost escalation, and a global capex slowdown are five distinct pressure points that could individually or collectively slow the pace of expansion, but are unlikely to reverse its direction. For developers, investors and occupiers, the practical takeaway is to price in this risk explicitly - favouring Grade A/A+ and sustainability-certified assets across both established metros and emerging Tier-II cities - while staying alert to how quickly today’s tailwinds of talent availability, cost arbitrage and policy certainty could shift. GCCs are set to remain India’s most consequential office demand story for the rest of this decade, but the path there is more likely to be one of sustained growth punctuated by episodic volatility than an uninterrupted straight line.