Strategic Offshore Alternatives – GCC and BOT Models in India

Several factors contribute to why foreign investment in India has been tepid: bureaucratic red tape and perceived low labour productivity. The Indian corporate landscape is characterised by a challenging regulatory and bureaucratic framework. For new businesses, this complexity can lead to delays in launching operations to provide reliable CAD outsourcing services, architectural rendering, architectural drawing services, services involving generative AI technology, resulting in long-term inefficiencies. Furthermore, the legal structure, taxation, labour laws and compliance requirements in India are often complex.

Addressing Challenges in India’s Business Environment

India has long been viewed as a promising destination for offshore operations, thanks to its vast talent pool and competitive costs. However, many foreign businesses face significant hurdles, which can stifle growth and delay market entry.

In this context, businesses looking to set up operations in India are exploring alternative models to traditional outsourcing. Enter the Build-Operate-Transfer (BOT) and Global Capability Center (GCC) models – innovative approaches that provide a more structured, strategic path to success while promoting risk management in the construction industry.

What Are BOT and GCC Models?

The Build-Operate-Transfer (BOT) model offers businesses an attractive route to establish offshore operations, especially when navigating complex foreign jurisdictions. In this model, a third-party service provider is responsible for setting up and operating a Global Capability Center (GCC) on behalf of the business before eventually transferring it to the customer. The customer benefits from the expertise of the service provider during the setup phase, minimising risks and complexities.

A GCC, on the other hand, is an in-house hub for delivering services, often focused on IT, business processes or research and development. Companies establishing GCCs in India find them particularly valuable for scaling operations efficiently while maintaining control over service delivery.

Why Are Businesses Exploring BOT Models?

Pure outsourcing to offshore jurisdictions is still popular. However, with the increase of technologies facilitating automation and GenAI capabilities, some businesses are exploring ways in which they can quickly capture the benefits of offshore outsourcing, while retaining more control and ultimately having flexibility to take control of the services (for example, where the business feels the benefits are stagnating, or it wants to take its service delivery in another direction, perhaps utilising new technologies) while retaining its presence in the jurisdiction.

Savings in upfront cash investment costs assumed by the vendors along with a lower administrative burden on management in setting up a GCC are clear drivers. Beyond this, a BOT model allows businesses to have tighter control over their IP and to align their offshore teams to their organisational culture from the very beginning, which facilitates a seamless insourcing of the operation at the end of contract.

The BOT model also enables greater customisation of projects and flexibility in managing resource allocation, which can be hugely important for businesses wanting to respond to rapidly changing market needs and scale as needed.

The uptake of BOT models by businesses with mature offshore outsourcing models is likely to be lower than those looking to move service delivery offshore for the first time. Those with mature models will already have one or more trusted suppliers in the applicable jurisdiction, with potentially limited benefit of a material change in the structure of its contracting in relation to the services delivered by such suppliers.

However, the desire for such a change may occur where there is a strong business case for adjusting the level of control that the business has over its outsourced services, with some businesses looking to bake flexibility into their outsourcing agreements to convert the agreement into a BOT arrangement. This involves developing specific provisions in order to move to a BOT structure, including provisions regarding transfers of personnel and assets, ringfencing the applicable entity in order to effect a transfer, and the agreed commercial triggers to convert the arrangement.

The BOT model requires medium-term effort to realise a long-term vision of setting up a GCC. It is very important to evaluate the structures at the very start and identify the one that aligns with the businesses’ goals. A properly chosen contract can help the business achieve the full potential of the GCC project, de-risking the delivery, controlling operational costs and effecting a smooth exit for both parties at the end of the contract.

Key advantages include:

The Three Main BOT Structures

When deploying BOT models, businesses typically choose from three main structures:

Each structure presents its own contractual considerations, and businesses must carefully evaluate which model aligns best with their operational goals.

GCCs as Innovation Hubs: The Rise of GenAI in India

In recent years, India’s GCCs have evolved beyond cost arbitrage centers into strategic hubs of innovation. Companies are increasingly using their Indian GCCs to develop Proof of Concept (PoC) hubs for GenAI applications, thanks to the country’s robust talent pool, adaptability to emerging technologies and build scale. India’s GCCs are thus poised to become a global powerhouse for pioneering GenAI apps.

India’s GCCs have become fertile ground for testing and developing GenAI solutions, with their R&D centres automating documentation, improving operational efficiency and empowering teams to focus on high-value activities. From training AI systems for healthcare professionals to driving digital transformation across various industries, India’s GCCs are playing a critical role in advancing AI-driven innovation globally.

The Strategic Evolution of GCCs

As more businesses turn to India for their offshore operations, the role of GCCs has transformed significantly. They are no longer just execution partners but have evolved into centres of excellence, leading innovation and playing a strategic role in shaping the future of enterprises. The ability to quickly adapt to changing technological trends, such as cloud migration, data engineering and AI, has positioned Indian GCCs as global powerhouses.

By 2027, India is expected to host over 2,000 GCCs, generating billions in combined

revenue and solidifying the country’s position as a leader in the global offshore services market.

The work done in research and development (R&D) in India extends to automating documentation tasks within the quality, regulatory and internal operations realms. By employing various GenAI solutions, engineers seek to streamline workflow, reduce manual effort and mitigate error rates.

These tools are used extensively for data analysis, to enhance operational efficiency and empower teams to focus on higher-value activities, driving overall productivity and innovation. India R&D centres have teams that help train the AI systems that help radiologists and other health care professionals worldwide.