The choice in brief
A foreign group building a capability centre in India has to decide two things early: who owns the Indian entity, and who employs the people. The three common models answer those questions differently.
| GCC as a Service | Build–operate–transfer (BOT) | Managed teams | |
|---|---|---|---|
| Who owns the Indian entity | The group, from day one | The provider during the build and operate phases; the group after transfer | The provider (or a third-party employer) |
| Who employs the staff | The group’s Indian subsidiary | The provider, then the group after transfer | The provider |
| Group’s day-one commitment | Highest: own entity, capital, lease, payroll | Moderate: contractual commitment, ownership later | Lowest: a services contract |
| Typical fit | Long-term commitment | First-time entrants | Speed and flexibility |
| Strategic direction | Group | Group, with provider running operations until transfer | Group |
| Exit or scale-down | Wind-down of an Indian company | Before transfer, under the contract terms | Under the contract terms |
IMC’s stated timeline for these models is “typically operational in 90 to 120 days, subject to approvals”. Actual timing depends on approvals, office readiness and hiring.
GCC as a Service: owned from day one
The group owns its Indian subsidiary from the start and a provider handles the set-up and operating complexity around it. The scope usually covers:
- feasibility, return-on-investment modelling and site selection;
- entity incorporation and ongoing corporate compliance;
- recruitment, HR and payroll;
- operating procedures, KPIs and governance.
Who it suits. Groups that have already decided on a long-term presence and want control of the entity, its intellectual property, its data and its people from the outset. It is also the model that most directly qualifies for state GCC incentives, which are generally granted to the operating unit that registers with the state and meets job and investment thresholds.
What to watch. The group carries the full compliance load of an Indian company (FEMA reporting, transfer pricing, Labour Codes, DPDP) from day one. Any state incentive lock-in, such as Maharashtra’s 10-year minimum operating period, binds the group’s own entity.
Build–operate–transfer
A provider builds the centre and runs it for an agreed period, then transfers full ownership to the group. The scope usually covers:
- a phased build, operate and transfer plan;
- day-to-day operations and payroll during the operate phase;
- performance management and stabilisation;
- structured knowledge transfer before handover.
Who it suits. First-time entrants that want to test delivery in India before taking on an entity, and groups without in-house India set-up experience. Engineering and product teams are a common use.
What to watch. The contract should fix the transfer trigger, how the transfer is effected (share purchase or business transfer), the treatment of employees and accrued benefits such as gratuity, and the transfer price. Once the group acquires the entity, the FEMA and land-border rules for foreign investment apply to that acquisition. Agree the post-transfer transfer-pricing model before handover.
Managed teams
A provider recruits and employs a team that works as an extension of the group’s organisation. The scope usually covers:
- recruitment to the group’s specification;
- payroll, benefits and HR compliance;
- day-to-day team management;
- strategic direction retained by the group.
Who it suits. Groups that need capacity quickly, want flexibility to scale up or down, or are not yet ready to form an entity. It is close to the “no entity yet” route of engaging staff through a third-party employer of record.
What to watch. Permanent establishment. In Hyatt International (25 July 2025) the Supreme Court found a fixed place PE where the foreign group controlled Indian operations. Where the group directs a provider-employed team closely, document decision rights, reporting lines and any secondee roles, and review whether the arrangement creates a taxable presence. A foreign company’s PE income is taxed at 35% plus surcharge and cess (36.40–38.22% effective), against 25.168% for an Indian subsidiary under the concessional regime.
Legal vehicles behind the models
| Vehicle | Use for a GCC | Key point |
|---|---|---|
| Wholly owned private limited company | The usual vehicle for an owned GCC | At least 2 shareholders and 2 directors, one meeting the 182-day residence test; no approval on the automatic route without a land-border owner |
| LLP | Possible where the sector is fully open under the automatic route | At least 2 designated partners, one resident; LLP agreement filed within 30 days |
| Branch office | Consultancy and research on behalf of the parent are permitted activities | Opened through the AD bank; taxed as a foreign company at 36.40–38.22% effective |
| Liaison office | Not suitable for delivery work | May not carry on business; valid generally for three years |
| GIFT IFSC Global In-House Centre | Group financial-services operations | IFSCA registration under the 2025 GIC Regulations; IFSC unit deduction of 100% for 20 of 25 years |
| No entity (employer of record or managed team) | Early-stage capacity | No approval needed; PE exposure must be managed |
See entry vehicles for the full comparison.
Choosing a model
- Control and IP. If the work involves core product IP, sensitive data or regulated processes, ownership from day one or a short BOT path keeps control in the group.
- Incentives. State payroll, rent and capital support generally needs a registered unit meeting job and investment thresholds; managed teams are unlikely to qualify in the group’s name.
- Tax. An owned subsidiary can elect the 15.5% safe harbour or seek an APA; a managed team shifts the pricing question to the provider contract but raises PE questions.
- Commitment. Lock-in periods (Maharashtra’s 10 years) and job-creation targets (Tamil Nadu’s 200 direct jobs) suit a long-term owned centre.
What to check next
- Confirm that no shareholder or beneficial owner triggers the land-border rule, since it affects both an owned entity and a later BOT transfer.
- For BOT, agree the transfer mechanism, price formula, employee transfer terms and gratuity treatment in the initial contract.
- For managed teams, review decision rights and secondee arrangements against the Hyatt PE finding before work starts.
- Check whether the target state’s GCC incentive requires the group’s own registered unit and how long it must operate.
- Model the cost-plus charge and decide between the safe harbour and an APA before signing the inter-company agreement.