Karnataka bets big on AI and GCCs to lead India’s tech future

Karnataka is emerging as a global AI hub with GCCs, AI startups, and digital talent fueling India’s tech ambitions across sectors and regions.

May 16, 2025 - 15:16

Karnataka bets big on AI and GCCs to lead India’s tech future

Karnataka’s capital, Bengaluru, is now home to more than 40% of India’s Global Capability Centers (GCCs), according to government data. These centers, once focused primarily on operations, have evolved into hubs for research, AI development, and enterprise innovation across sectors including finance, mobility, retail, and healthcare.

Companies like Microsoft, SAP, and Mercedes-Benz are leading this transformation through their Bengaluru-based tech centers, developing AI solutions ranging from virtual assistants for educators to predictive maintenance tools in automotive R&D.

AI startups drive innovation

Bengaluru’s status as a startup capital continues to grow. With more than 18,000 startups—40% of India’s total unicorns—located in the city, many are now focused on AI-driven products and platforms. Areas of innovation include natural language processing, computer vision, and industry-specific analytics.

These startups are supported by government initiatives such as Startup Karnataka and K-Tech Innovation Hubs, alongside private incubators and academic collaborations.

Building a skilled AI workforce

Karnataka accounts for over a quarter of India’s digital talent pool and more than two million software engineers. The state’s educational institutions, including IISc, IIIT-B, and NIT Karnataka, continue to supply a steady stream of graduates in AI and allied fields.

Government and industry-led skilling programs, including those by NASSCOM and the Karnataka Digital Economy Mission, are helping equip professionals with skills in machine learning, cloud computing, and data science.

Expansion beyond Bengaluru

Efforts are also underway to spread innovation across the state. The Local Economy Accelerator Programme (LEAP) and recent incubation center launches in Tier-2 cities like Kalaburagi aim to create a more distributed and inclusive startup ecosystem.

Cities such as Mysuru, Hubballi, and Mangaluru are being positioned as emerging tech clusters, offering a cost-effective environment and access to regional talent pools.

Challenges in Scaling AI

While Karnataka is making progress, scaling AI adoption presents certain challenges. These include limited access to high-quality datasets, infrastructure gaps outside metro areas, and the need for upskilling mid-career professionals. However, state-led initiatives and targeted investment are aiming to address these barriers.