Why GCCs Pay Poorly in Tier-2, 3 Cities

Global capability centres (GCCs) in India are making waves for their salaries, often trumping traditional IT jobs by a significant margin. According to AIM Research, GCCs pay 20-25% more on average than non-GCC roles. 

However, there’s a noticeable salary gap between tier-1 cities like Bangalore and Hyderabad and tier-2 and tier-3 cities such as Kochi or Coimbatore.

“Innovation and engineering activities are predominantly concentrated in tier-1 cities due to a limited talent pool in tier-2 regions. However, GCCs are now exploring the latter as potential hubs for operations and technology, driven by cost savings of up to 30% on talent and real estate together,” said Ankur Goel, founder of gatewAI, who has been in the space of talent management for over two decades. 

According to AIM Research, salaries are significantly higher in tier-1 cities such as Mumbai, Bangalore, and Hyderabad. Mumbai leads at ₹20 lakhs per annum (LPA). Bangalore comes close with ₹19.5 LPA, while Hyderabad and Delhi NCR also offer competitive salaries of ₹18 LPA and ₹18.5 LPA, respectively. 

In contrast, tier-2 cities like Jaipur, Coimbatore, and Indore report much lower median salaries, with figures like ₹10.2 LPA, ₹10.7 LPA, and ₹12.3 LPA. 

AIM Research also notes that senior-level professionals across most GenAI roles in tier-1 cities, such as generative AI engineers (₹40.5 LPA), Gen-AI research scientists (₹40.5 LPA), and synthetic data engineers (₹40.2 LPA), command some of the highest salaries in GCCs. 

What’s driving this disparity? And yet, why does it look like a fair bargain?

Cost of Living and Competition

A significant reason for the disparity is the cost of living. As Bhargab Dutta, chief digital officer at Century Plyboards, explains, “The cost of living is accounted for in tier-2, 3 cities, which has a direct impact on the salary offerings.” 

Cities like Bengaluru demand higher pay due to expensive housing, food, and transportation, whereas smaller cities allow companies to offer compensation in accordance with the local living expenses.

Additionally, competition for talent plays a role. Bengaluru and Hyderabad, as tech hubs, have plenty of companies eyeing the same pool of skilled professionals, driving salaries up. Meanwhile, Kochi and Coimbatore, with fewer competing organisations, offer lower pay.

Retention and Work-Life Balance

Smaller cities have other advantages. Dutta highlights that retention rates are often better in tier-2, 3 cities. “The sense of community connection and proximity to family environments make employees less likely to switch jobs,” he notes.

Arun Divakaran, client partner at IBM Consulting, echoes this sentiment: “Many professionals who initially moved to tier-1 cities are now looking to return to their hometowns for better work-life balance. GCCs in smaller cities can attract such talent by offering challenging roles without the downsides of the metro life.”

This perspective resonates with professionals as well. A Reddit user shared, “Relatively less crowded, less traffic, less pollution… Most amenities are still there, and you can afford better housing. Life feels easier [in smaller cities] compared to metros.”

Talking about the influx of nano GCCs in tier-2, 3 cities, Suchita Vishnoi, cofounder and CMO at gatewAI, said, “With a wealth of skilled professionals graduating from regional universities, nano GCCs can tap into available talent, providing opportunities closer to home and reducing brain drain to metropolitan areas.” 

She further explained that nano GCCs provide their employees exposure through collaboration across teams and clients globally, ensuring their careers are future-ready without needing to relocate.

Generational shifts also play a part here. With more Gen Z and soon Gen Alpha professionals entering the workforce, priorities are changing. 

“Work-life balance is crucial for these generations,” said Dutta. Thanks to better infrastructure and services, tier-2/3 cities increasingly offer the balance that younger professionals seek.

Innovation and Future Trends

GCCs are no longer just back offices. They are driving innovation. Sunny Parwani, founder at Kaam.work, points out that these roles tackle problems at the global scale. “A developer in Pune is creating solutions used by millions worldwide, and a data scientist in Bangalore is shaping billion-dollar decisions.”

However, there are others who hold a different opinion on this. Ankit Mittal, release train manager at Natwest, argues that the higher salaries in GCCs may be more about cost advantages than genuinely “higher value” work.

The Way Forward

The expansion of GCCs into smaller cities is a growing trend. Karthik Padmanabhan of Zinnov highlights that GCC talent has grown by 24% since FY 2019, with export revenues hitting $64.6 billion in FY24. As more companies establish nano GCCs in tier-2 cities, salaries might gradually rise due to increased competition for skilled talent.

A Reddit user summarised the opportunity in cities like Kochi well: “Salary levels aren’t as high as Bangalore, but with remote work becoming more common, corrections may happen soon.”

Ultimately, while tier-2, 3 cities may offer lower salaries today, the trade-off includes better living conditions, work-life balance, and increasing opportunities for skilled professionals. For many, that’s a compelling deal.