India’s Karnataka state IT vision: The race to 500 GCCs and a $50 billion future

Karnataka’s IT services industry has faced several challenges, including talent retention, infrastructure bottlenecks, traffic congestion, and global economic slowdowns impacting IT demand. The high cost of operations and real estate pressures in Bengaluru have also pushed companies to explore alternative hubs. Additionally, policy uncertainty and regulatory shifts have raised concerns among global investors. While Karnataka remains India’s IT leader, sustaining its dominance requires aggressive infrastructure upgrades, policy stability, and workforce upskilling to meet evolving enterprise demands.

Karnataka, particularly Bengaluru, has long been India’s technology powerhouse, leading in IT exports, research, and innovation. With a bold vision to attract 500 new global capability centers (GCC) by 2029 and push IT exports to $50 billion, the state is doubling down on its strengths to cement its global knowledge and skill capital position. But how does it compare to the rest of India? What’s fueling this massive growth? And can it sustain its ambitions amid increasing competition and infrastructure challenges?

The HFS Research Summit, “India’s Innovation Arbitrage Revolution: The Pivotal Role of GCCs,” took place on February 13, 2025, at Leela Palace in Bengaluru. Honorable Priyank Kharge, the Cabinet Minister for Rural Development, Panchayat Raj, and IT & BT, Government of Karnataka, delivered the keynote address. He shared his vision for the future of the state’s IT industry and clarified the prospects for IT/ITeS and GCC leaders present at the event.

Priyank Kharge, Cabinet Minister for Rural Development, Panchayat Raj, IT & BT Government of Karnataka

Karnataka’s economic growth is outpacing the national average

Karnataka’s economy isn’t just keeping pace with India’s—it’s outpacing it. Its gross state domestic product (GSDP) is projected to grow 8.5% annually until 2035, exceeding India’s estimated growth rate of about 6.5%. Karnataka posted a robust 10.2% growth in the last financial year, significantly higher than the national average of 8.2%.

Despite facing extreme weather conditions and global IT slowdowns, Karnataka continues to dominate in technology and exports. Bengaluru is at the heart of this growth, and the state contributes 40% of India’s IT exports. No other Indian state comes close to matching its scale, talent pool, and ecosystem. While Indian states Telangana and Tamil Nadu are often cited as emerging challengers, Karnataka remains ahead by a considerable margin, with its closest competitor, Delhi, lagging by 400 GCCs.

The secret to this success is a strategic combination of policy-driven governance, investment in research and development, and an unparalleled concentration of talent. Karnataka is home to 34% of India’s national talent pool, making it the country’s leading hub for high-skilled professionals.

Saurabh Gupta, president, research and advisory services at HFS Research, with Priyank Kharge during the Q&A session.

GCCs, startups, and IT exports: The growth stories shaping Karnataka

Karnataka has 875 GCC units, hosting 750 multinational companies. These centers are not just outsourcing hubs; they drive global innovation from Bengaluru. With 21% annual growth in IT exports, the state’s ambitions are clear—dominate the IT and technology landscape while expanding its influence in AI, cybersecurity, and emerging technologies.

Beyond GCCs, Karnataka has established itself as a global startup hub, ranking eighth worldwide. The government aims to push the ecosystem into the top four in the coming years. Bengaluru’s innovation-driven environment has fostered a culture where startups can thrive, backed by leading incubators, research institutions, and state policies designed to accelerate commercialization.

Global IT giants continue to bet on Karnataka. For instance, Accenture has committed to training 100,000 professionals from Karnataka under the Nipuna Karnataka initiative, which aims to equip 300,000 young people with global-ready skills. This program, backed by corporate funds, CSR initiatives, and government support, is designed to ensure Karnataka remains the world’s skill capital.

500 GCCs by 2029: Building the IT ecosystem of the future

To sustain its momentum, Karnataka has set an ambitious goal: 500 new GCCs by 2029. This expansion is expected to bring massive investments and create thousands of high-value jobs. But the state isn’t stopping at attracting new centers to the capital—it’s also expanding beyond Bengaluru.

Karnataka is developing Nano GCC centers—plug-and-play facilities designed for companies to test the waters in emerging IT hubs such as Mangaluru, Hubli, Dharwad, Belagavi, and Kalaburagi . This decentralization will ensure that the entire state benefits from the IT boom rather than keeping it confined to Bengaluru.

Infrastructure, however, remains a challenge. Bengaluru’s traffic congestion and urban stress are well-known concerns. To address these issues, the government and industry leaders have formed a dedicated committee to improve connectivity, optimize existing IT parks, and invest in transportation networks. The strategy is to enhance infrastructure while maintaining the state’s attractiveness for businesses and talent.

The Bottom Line: Karnataka has proven that it thrives on ambitious targets. From pioneering India’s first IT policy to leading in AI adoption, the state has set Indian benchmarks. Sustaining this rapid growth will require continuous investment in infrastructure, talent retention, and policy innovation.

Karnataka presents a compelling opportunity for enterprise leaders—a market with deep talent pools, an innovation-driven ecosystem, and a government that actively supports growth. The challenge will be ensuring that its infrastructure keeps pace with its ambitions.

If Karnataka succeeds, it will not only be India’s IT capital but also the world’s undisputed leader in technology and innovation. The next five years will determine whether it can transform its bold vision into a global reality.