By Vikrant rana and Apalka Bareja
Introduction
For many years, India’s appeal as a destination for Global Capability Centers (GCCs) was viewed primarily through the lens of cost arbitrage. Multinational corporations initially established operations in India to access a large, English-speaking workforce at competitive costs and to support back-office, IT support and shared-services functions. Over time, however, the value proposition has changed significantly. Today, India’s GCC ecosystem is powered less by labour-cost advantages and more by the availability of highly skilled talent at scale, deep technology capabilities, mature business ecosystems and increasing ownership of global products, platforms, data, cybersecurity and artificial intelligence initiatives. As GCCs evolve from delivery centers into strategic enterprise hubs, governance and compliance expectations have evolved alongside them.
India’s Global Capability Centre (“GCC”) ecosystem has moved decisively beyond its original mandate as a low-cost delivery arm for multinational parent organisations. GCCs today are being entrusted with product ownership, platform management and enterprise-wide decision-making, which brings with it a corresponding shift in what “governance” means for these entities in India. Statutory compliance under the Companies Act, 2013, tax law and labour legislation remains the baseline, but is no longer the full picture.
This alert examines the governance and compliance administration considerations relevant to entities setting up or scaling GCC operations in India, and the areas in which in-house legal, company secretarial and compliance functions are increasingly expected to engage.
The Scale of India’s GCC Ecosystem
According to the GCC Value Orbit: From Delivery Engine to Enterprise Nerve Centre report released by Nasscom in collaboration with Zinnov (FY2026), India now hosts approximately 2,117 GCCs, operating across roughly 3,728 units and employing close to 2.36 million professionals.[1] The ecosystem’s aggregate revenue is estimated at USD 98.4 billion, with the number of centres having grown by around 32% since FY2021. The report also notes that an estimated 506 Forbes Global 2000 companies now run GCC operations out of India.
A significant driver of this expansion is the deepening integration of artificial intelligence into GCC mandates — the Nasscom-Zinnov report records that more than 1,200 centres have already embedded AI and machine learning capabilities, and that nearly half of all GCCs established since FY2021 were designed with AI as a core function from inception. This shift is material for governance purposes: as GCCs take on product and platform ownership rather than pure delivery functions, the scope of what falls within their compliance and risk perimeter widens accordingly.
Historically, governance oversight of GCCs was comparatively straightforward because critical business decisions remained concentrated within the multinational parent organisation. Indian operations largely functioned as execution centres, implementing processes and strategies developed elsewhere. Consequently, governance risks were often perceived to be operational rather than strategic in nature.
That assumption is increasingly outdated. Modern GCCs are involved in activities that may directly impact enterprise value, customer experience, data security, business continuity and regulatory compliance across multiple jurisdictions. As GCCs take ownership of products, platforms, cybersecurity operations, AI initiatives and global support functions, governance failures within the Indian entity can create consequences extending far beyond local operations.
Accordingly, multinational boards and senior leadership teams are increasingly viewing GCCs not merely as support centres, but as critical governance nodes within the broader enterprise. This increased strategic importance places greater emphasis on accountability structures, risk management frameworks, escalation protocols and effective compliance oversight within the Indian entity itself.
Governance Beyond Statutory Compliance
A GCC’s statutory obligations under Indian company law — board constitution, filings with the Registrar of Companies, secretarial audits, related-party transaction approvals — form only the outer layer of governance expectations. In practice, four areas tend to demand the most sustained attention from governance and compliance teams supporting GCC operations:
- Cross-Border Governance Alignment
Most GCCs operate under a dual reporting structure — statutory compliance to Indian regulators and the Indian board, alongside functional and performance reporting to the global parent. Reconciling global policy frameworks (on matters such as delegation of authority, anti-bribery, and internal financial controls) with Indian statutory requirements requires governance documentation that is coherent across both layers, rather than a duplicated or conflicting set of policies. - Liability and Officer Accountability
As GCCs assume decision-making authority historically retained at the parent, questions of director and officer liability in India become more consequential. Site leaders who combine functional global responsibilities with statutory director or key managerial personnel roles in the Indian entity need clarity on where personal liability under Indian law attaches, particularly in relation to statutory compliance defaults, related-party dealings and, where applicable, sector-specific regulatory obligations. - Data Security and Cross-Border Data Transfer
GCCs handling global data — including personal data of the parent’s customers or employees — must navigate the Digital Personal Data Protection Act, 2023 together with the Digital Personal Data Protection Rules, 2025 which bring provisions on the Data Protection Board into immediate effect alongside sector-specific requirements (such as those under RBI or SEBI frameworks, where applicable) and the data protection regimes of the jurisdictions the parent organisation itself answers to. Where a GCC processes data on behalf of an overseas principal, contractual data processing terms, cross-border transfer mechanisms and breach-notification protocols each need to be mapped against Indian requirements specifically, rather than assumed to be satisfied by the parent’s global privacy programme. - Relationship and Vendor Governance
GCCs increasingly interface directly with external vendors, technology partners and, in some structures, customers of the parent — a departure from the traditional captive-delivery model. This brings ordinary commercial governance considerations (contract risk, IP ownership in jointly developed work product, and vendor due diligence) squarely within the GCC’s own compliance remit, rather than being managed centrally by the parent. Work product created by GCC personnel does not automatically vest in the global parent under Indian law: employee IP-assignment and confidentiality clauses, and contractor work-for-hire terms consistent with the Copyright Act, 1957 and the Patents Act, 1970, are needed to secure the transfer, rather than relying on template employment contracts drafted for other jurisdictions. - AI Governance and Responsible Innovation
Artificial intelligence has emerged as a defining feature of the next generation of GCCs. Indian centres are increasingly responsible for developing, testing, deploying and monitoring AI-driven tools that support business operations across multiple jurisdictions and business functions. In many enterprises, GCCs are no longer merely consumers of AI solutions but active participants in their development and governance.
This shift introduces governance considerations that extend beyond traditional data protection and cybersecurity frameworks. Organisations must consider issues relating to transparency, accountability, model oversight, data provenance, intellectual property ownership, bias mitigation and compliance with evolving regulatory expectations surrounding AI systems. Internal governance mechanisms should therefore establish clear responsibility for oversight of AI initiatives, approval processes for deployment of high-impact systems and procedures for monitoring risks associated with automated decision-making.
As regulatory scrutiny of AI continues to increase globally, governance and compliance teams supporting GCC operations will likely play a central role in ensuring that innovation objectives are balanced with legal, ethical and enterprise risk considerations.
State-Level Momentum: The Kerala Example
GCC growth in India is no longer concentrated solely in the traditional hubs of Bengaluru, Hyderabad, Pune and the National Capital Region. State governments are actively competing for GCC investment through dedicated policy frameworks. Kerala is a notable example: the state’s IT Vision and GCC Playbook documents set out an ambition to grow from an estimated 40 GCCs to 120 by 2030, with Kochi and Thiruvananthapuram positioned as the principal hubs, supported by incentives including SGST reimbursement, stamp duty exemptions and rent subsidies for qualifying centres.
For entities evaluating a GCC location strategy, state-level incentive frameworks of this kind add a further governance dimension: eligibility conditions, minimum investment thresholds and reporting obligations attached to state incentives must be tracked separately from central-level compliance, and often carry their own clawback or compliance-linked continuation conditions that need to be built into the entity’s ongoing compliance calendar.
Practical Considerations for Compliance Functions
- Map the compliance calendar across three layers — central statutory (Companies Act, tax, labour), sector-specific (where applicable), and any state-level incentive conditions — rather than treating these as a single undifferentiated checklist.
- Build data flow maps between the Indian entity and the global parent early, so that DPDP Act obligations and cross-border transfer requirements are addressed at the point data flows are designed, not retrofitted.
- Clarify, in writing, the scope of authority and corresponding liability of dual-role site leaders under Indian law, distinct from their global functional mandate.
- Where the GCC engages external vendors or customers directly, ensure IP ownership, confidentiality and liability terms are addressed under Indian contract law rather than assumed to flow from the parent’s master agreements.
- Track state-incentive compliance conditions (where availed) with the same rigour as statutory filings, given that incentive continuation is often conditional on performance and reporting benchmarks.
- GCC leadership may consider asking the following few non exhaustive questions:
- Are local governance policies aligned with group-wide compliance and risk management frameworks?
- Is there clarity regarding the roles, responsibilities and potential liabilities of directors and senior officers?
- Have cross-border data flows been documented and assessed from a regulatory perspective?
- Are AI governance and oversight mechanisms in place for technology-driven operations?
- Are third-party vendors subject to appropriate due diligence and ongoing monitoring?
- Are whistleblower, investigation and escalation procedures appropriately localised for Indian operations?
This can serve as a useful governance maturity assessment tool for organisations establishing or expanding GCC operations in India.
Conclusion
The next phase of GCC growth is likely to be characterised by increased ownership of global business processes, technology platforms, cybersecurity functions, artificial intelligence initiatives and enterprise-wide risk management activities. As GCCs continue to move closer to core business operations, they will increasingly be expected to operate as strategic control centres rather than delivery organisations.
In this environment, governance success will depend on more than maintaining statutory compliance. Organisations will need integrated governance frameworks that align local legal requirements with global enterprise expectations, while simultaneously addressing emerging risks relating to AI, data protection, cyber resilience, third-party management and cross-border accountability.
For many multinational organisations, the question is no longer whether Indian GCCs will play a strategic role in global operations, but whether governance frameworks have evolved sufficiently to support that role.
As GCCs in India move from being cost-efficient delivery centres to owners of products, platforms and business outcomes, the governance and compliance function within these entities is being asked to do considerably more than maintain statutory good standing. Organisations setting up or scaling GCC operations in India would do well to build governance frameworks that anticipate this shift — addressing cross-border alignment, officer liability, data governance and vendor relationships as core compliance concerns from the outset, rather than as matters to be resolved once operational scale makes them unavoidable.
[1] https://zinnov.com/centers-of-excellence/zinnov-nasscom-india-gcc-landscape-2026-report/