Building AI Capability Through India GCCs: Strategic and Legal Considerations

In this piece, authors Sonia Baldia (Kilpatrick Townsend & Stockton LLP) & Vishal Vijay (GCCBase) discuss why India is emerging as a leading destination for U.S. companies seeking to build AI capabilities through Global Capability Centers (GCCs). They highlight the country’s mature GCC ecosystem, deep AI talent pool, and increasingly clear regulatory framework, arguing that India is evolving from an outsourcing hub into a strategic center for AI innovation and product development.

The authors explain that the strongest business case for establishing an India-based GCC extends beyond cost savings. Companies can gain faster access to AI engineers, data scientists, and machine learning specialists while retaining greater control over intellectual property, data, and long-term operational capabilities. They also compare different operating models, including wholly owned subsidiaries, managed services, and build-operate-transfer structures, emphasizing that the choice should align with the organization’s strategic objectives.

The article also examines the legal and regulatory considerations involved in establishing an AI-focused GCC. The authors stress the importance of designing an appropriate corporate structure, addressing tax and transfer pricing issues, protecting intellectual property, planning cross-border data access, and ensuring contracts clearly define ownership of AI models, datasets, software, and other business assets from the outset.

Finally, the authors argue that robust governance is essential for long-term success. They recommend implementing practical AI governance frameworks covering data provenance, human oversight, model testing, security, and vendor management while preparing for future regulatory developments. They conclude that companies that align their operating model, legal structure, and governance strategy with their long-term AI ambitions will be best positioned to realize the full value of India’s expanding technology ecosystem…

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