US-Iran war slows global capability center expansion in India
What's the story
Global geopolitical tensions are slowing the pace of new technology center openings in India. A report by UnearthIQ, a part of market researcher UnearthInsight, shows that 63 global capability centers (GCCs) were opened in the March quarter. This is a decline from 74 GCCs opened during the same period last year. The rise of greenfield GCCs has also been affected by these developments.
Project impact
Brownfield activity dropped 30% in Q1 2026
The onset of the Iran war has led to a slowdown in project discussions. UnearthInsight's founder Gaurav Vasu said, "Brownfield activity dropped 30% in Q1 2026 as macro uncertainty pushed existing GCCs to hold back on expansion." However, he also noted that if geopolitical uncertainties ease, the number of greenfield GCCs could reach up to 100 by 2026, nearly unchanged from last year.
Growth forecast
GCC ecosystem expected to grow despite geopolitical challenges
Despite the macro uncertainties, TeamLease Digital has projected an annual growth of 18-22% for India's GCC ecosystem. NASSCOM had estimated GCC revenues in India at $64.6 billion in FY24. Although updated figures for FY25 or FY26 are yet to be published, industry estimates suggest that the market likely crossed $80 billion last fiscal year. The overall IT industry growth is estimated at around 6% in FY26.
Market dynamics
GCCs are taking share from IT service providers
The GCC boom has created a dual-pronged redistribution structure instead of outright displacement of IT services firms. Pareekh Jain, CEO at EIIR Trends, said "GCCs are creating new demand and also taking share from IT service providers." Industry estimates show that 30-50% of work moving into new GCCs would have gone to IT services vendors. However, 40-60% of GCC growth is driven by entirely new capabilities in AI, product engineering, and digital platforms.
Contract reversal
Contracts flowing back to IT services firms
Contracts are also flowing back to IT services firms. Wipro acquired Olam's GCC, Infosys acquired Danske Bank's GCC, HCLTech took over HPE Communication Group, and Virtusa acquired Wiley's GCC. Jain highlighted the case of Danske Bank to emphasize the two-way relationship between GCCs and IT vendors. He said "This is a cyclical trend," adding that companies alternate between these models based on specific or industry-wide situations.
Work distribution
Enterprises are retaining core, IP-led work in-house
Vikram Ahuja, co-founder at ANSR, said the major change is not about the scale of work being moved but its scope. He said "Enterprises are retaining core, IP-led work in-house, while relying on partners for scale, speed and specialized capabilities." Industry estimates show that 40-60% of GCC growth comes from new capability creation rather than vendor substitution. Ahuja stressed areas like AI, product engineering, and digital platforms drive most expansion.
Future prospects
Value increasingly defined by ownership and intellectual property
Despite the current challenges, Vasu expects greenfield GCC expansions to continue as more firms leverage India for technology, R&D, and AI capability centers. Pankaj Vyas, MD and CEO at Siemens Technology and Services, said GCCs have moved beyond cost-driven models. He added that they are now focused on product engineering and AI-led innovation with value increasingly defined by ownership and intellectual property rather than execution scale.