Karnataka is accelerating its digital economy by nurturing talent, creating business-friendly policies, attracting key investments, building a competitive market, and more. Lately, it is also strengthening long-standing relationships with deep-tech startups and Global Capability Centres (GCCs).

In Bengaluru, GCCs are moving beyond traditional IT and support roles to become hubs for advanced R&D in deep-tech fields such as artificial intelligence (AI), machine learning (ML), blockchain, cybersecurity, quantum computing, and advanced analytics.

For example, Carrier Digital Hub India, based in Bengaluru and Hyderabad, is at the forefront of deep-tech innovation. The hub uses AI, ML, big data, cybersecurity, and IoT to develop intelligent climate solutions.

Speaking at AIM’s flagship Happy Llama event, Sanjeev Kumar Gupta, CEO of the Karnataka Digital Economy Mission (KDEM), said the state has become a stronghold for deep tech and AI. “The larger corporations that are leveraging AI in their businesses are creating experiments, innovations, product lines, and solutions from here,” he said.

GCCs are also partnering with startups to boost their operations and deliver more value to parent companies, creating a win-win relationship. They are leveraging startups’ innovative solutions to address complex challenges.

Deep-tech startups often lack costly R&D facilities. But today, GCCs fill that gap and offer them access to labs for prototyping and small-batch production, saving startups the cost of building their own infrastructure.

Gupta also noted that many startup founders are choosing Karnataka to establish AI-driven businesses and operations.

For instance, Sarvam AI, which was recently selected under the IndiaAI Mission to develop India’s sovereign Large Language Model (LLM), is based in Bengaluru. Other notable startups include CoRover.ai, Soket AI Labs, and Krutrim.

These AI startups are well-positioned to help GCCs drive innovation and operational excellence. Besides, the state is also leveraging its manufacturing capabilities and aiding these startups and GCCs.

In a separate interaction with AIM at the Bharat Intelligence Summit on April 26, Gupta shared an example of how AI is being used in manufacturing. He pointed out that Foxconn’s operations in Bangalore are achieving a 99.95% quality accuracy rate, all driven by AI. 

“It’s a strong demonstration of how AI, along with IoT, is transforming manufacturing,” he said, adding that such examples are becoming more common in the industry.

Startup Connect

Karnataka has about 875 GCCs, the highest in the country. The state framed GCC Policy 2024-2029, aiming to add 500 new centres and create 350,000 jobs by 2029. “Karnataka has been the capital of GCCs in India. We have almost 40% of market share, and we’re targeting to become 50%,” Gupta said. 

Gupta elaborated on the Co-Innovate Program, to connect GCCs and startups, and how they are leveraging the talent pool available in the startup ecosystem.  

The program encourages collaboration between corporates and startups to co-develop solutions, helping both sides accelerate innovation. Speaking about the competition between GCCs and startups for talent, Gupta said that the competition is healthy. “Some students join startups, some join big companies. Both sides learn from each other.”

However, he further added that GCCs are seen as critical to Karnataka’s AI ambitions, adding that GCCs are now significant contributors to the digital economy and are driving global innovation from India. 

“If we are not prepared to support them by enhancing more centres of excellence, bringing the right quality talent, and encouraging startups, the attraction power of the GCCs will go down,” Gupta said. 

Indian IT, in the recent quarterly results, highlighted that GCCs are a threat to its business and talent pool, even as the attrition rate ranged between 10-15% average. However, experts believe otherwise. 

Besides, industry experts believe Indian startups are also in a fierce competition for talent, often going head-to-head with Global Capability Centers (GCCs) and big tech companies that offer more financial security, higher salaries, and established brand reputations. 

But not everyone sees GCCs and startups as being at odds. Speaking to AIM, S Sadagopan, former director of IIITB, said that GCCs and startups are not competing against each other. “Don’t say one is against the other. You need all kinds of flowers. Not everyone has to be a rose — you need roses, jasmines, and tulips.”

Karnataka’s Talent Pool

According to Gupta, Karnataka currently holds the second-largest AI talent pool in the world, next only to the US. He shared that over the last two years, “we have trained around 50,000 AI talent here itself,” and through partnerships with corporates, an additional 25,000 people are being trained. 

Initiatives like the Centre for Applied AI for Tech Solutions (CATS) and ARTPark are examples of how the state is strengthening its digital ecosystem. “We are creating an ecosystem of startups, larger corporates participating in that program, and providing a skills development program for the development of AI talent,” Gupta added.

He shared that the government has allocated a significant sum for AI initiatives in the 2025-26 Budget.

The state has set aside ₹300 crore for a Fund-of-Funds and ₹100 crore for a corpus fund to support the development of deep-tech. In addition, ₹50 crore has been allocated over the next five years for CATS.

This isn’t limited to Bengaluru. The Mission Beyond Bengaluru initiative is developing clusters in Mysuru, Mangaluru, Hubballi-Dharwad, Kalaburagi, Tumakuru, and Shivamogga. These clusters are being developed based on local strengths, capabilities, and talent pools.

Sadagopan explained that deep-tech innovation is the result of years, often decades, of sustained research, not by a single individual, but through the collective effort of many, including institutions like the Indian Institute of Science (IISc) and the Indian Institute of Management (IIM). 

Sadagopan emphasised that deep-tech expertise isn’t something that can be built overnight. “It takes decades of effort,” he said, “and that foundation is already available here.”

Gupta, on the other hand, spoke about how AI is steadily making its way into governance. From healthcare and education to traffic management, he highlighted real-world use cases where AI is helping address some of the state’s most pressing urban issues.

Addressing concerns about infrastructure and urban challenges in Bengaluru, Gupta said, “These problems are a problem of urbanisation everywhere around the world.” He stressed that Karnataka is focusing on using innovation to solve these challenges. Referring to a project involving AI-powered traffic signal systems, Gupta said, “We saw the pilot, 18% of the traffic congestion went down.”

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