Global enterprises are increasingly shifting their global contracts with service providers from foreign currencies to local India-to-India (I2I) contracts in Indian rupees (INR), managed by their Global Capability Centers (GCCs) in India. What may look like a small operational change is proving to be a strategic lever, cutting hidden costs, improving governance, delivering savings, and giving GCC leaders more control.
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Why this shift matters
Traditionally, enterprises contracted service providers directly under global agreements (in currencies such as U.S. dollars (USD), British pounds (GBP), euros (EUR), Australian dollars (AUD), etc.). Weather managed via GBS or outside of GBS, these contracts worked well to achieve cost savings across IT and business processes outsourcing to offshore locations.
However, as more companies have built Global Capability Centers (GCCs; or GBS centers) in India (~2,000 GCCs in India now), these GCCs have evolved into strategic value creators Expanding scale and scope, regulatory clarity, and push for operational autonomy are changing the equation for how enterprises leverage GCCs.
Instead of making GCCs compete with service providers, enterprises are increasingly leveraging their GCCs to manage these relationships directly and own end to end delivery for enterprise functions. More GCCs are now contracting with providers in local currency (for example, Indian rupees (INR), Philippine pesos (PHP)), including sometimes shifting global contracts to India-to-India contracts via GCCs, extracting significant benefits.
How contracting via India GCCs creates financial benefits :
- Cost reduction: Eliminates forex volatility, hedging expenses, and remittance charges
- Better vendor pricing: Service providers pass on savings by avoiding forex risk and liability exposure in a competitive local market
- Tax efficiency: Enables seamless Goods and Services Tax (GST) and input tax credit claims
- Faster cash cycles: Local invoicing improves liquidity and reduces reliance on global treasury
Additional (non-financial) benefits for enterprises
- Stronger governance: consolidation of vendor contracts into single local framework simplifies governance, compliance and contract enforceability by leveraging GCC capabilities
- Operational control and agility: Tailored service level agreements (SLAs), local dispute resolution, and faster scale-up/scale-down
- Regulatory confidence: Simplifies compliances during audits and regulatory assessments
- Strategic positioning: Positions the GCC as a self-sustaining hub aligned with enterprise priorities and as a center of innovation and capability building
However, it’s not as easy as it sounds. Here are some potential downsides to watch out for:
- FX exposure to GCC: The local currency contracts and foreign currency intercompany recoveries from the parent organization means increase in forex risk for GCC
- Intellectual property(IP) / data localization risk: Local contracts with data-residency and IP-ownership clauses can complicate consistency with global data and IP policies
- Higher dependency on GCC: Greater organizational dependence on the GCC and reduced autonomy for business units to choose alternatives if GCC underperform. However, we don’t see this as a risk, rather something to avoid by building strong sourcing and vendor governance capability in the GCC
Examples of Local Contracting
GCCs managing local service-provider contracts is not new and is prevalent across enterprises, especially among mature GCCs. For example, a U.S.-headquartered global insurer uses its large GCC to manage multiple vendor relationships across IT applications, digital, insurance back office, and enterprise business processes. What has changed now is several companies re-contracting via their India entity.
We also see many other companies making the move now to drive savings via this channel. For example: we recently advised a pharma major on transitioning to India-to-India contracts. By shifting to INR-based contracting, the GCC achieved 15–30% savings in global rate cards, while strengthening compliance and governance. The move not only unlocked cost efficiency but also gave the leadership team greater agility in managing local vendors and operations.
Final thoughts
If you are an enterprise process leader or a GCC leader, moving to local contracts is no longer a tactical detail. It is a structural change that delivers both critical cost benefits and unlocks long-term strategic benefits.
Enterprises that adopt this model early will be better equipped to manage cost pressures, regulatory scrutiny, and innovation demands in the years ahead.
Curious about how India-to-India contracts could transform your GCC? please reach out to our team: Saurabh Gautam; Rahul Barwe; Amanpreet Manchanda; or Rohitashwa Aggarwal
