diff --git a/cloud/scope/machinepool.go b/cloud/scope/machinepool.go
index 57932c745..faf7b9d0a 100644
--- a/cloud/scope/machinepool.go
+++ b/cloud/scope/machinepool.go
@@ -538,6 +538,16 @@ func (m *MachinePoolScope) InstanceServiceAccountsSpec() *compute.ServiceAccount
 
 // InstanceGroupBuilder returns an instance group manager spec.
 func (m *MachinePoolScope) InstanceGroupBuilder(instanceTemplateName string) *compute.InstanceGroupManager {
+	return &compute.InstanceGroupManager{
+		Name:             m.GCPMachinePool.Name,
+		BaseInstanceName: m.GCPMachinePool.Name,
+		InstanceTemplate: path.Join("projects", m.ClusterGetter.Project(), "global", "instanceTemplates", instanceTemplateName),
+		TargetSize:       int64(m.DesiredReplicas()),
+	}
+}
+
+// InstanceGroupUpdate returns an instance group manager spec.
+func (m *MachinePoolScope) InstanceGroupUpdate(instanceTemplateName string) *compute.InstanceGroupManager {
 	return &compute.InstanceGroupManager{
 		Name:             m.GCPMachinePool.Name,
 		BaseInstanceName: m.GCPMachinePool.Name,
diff --git a/cloud/services/compute/instancegroups/instancegroups.go b/cloud/services/compute/instancegroups/instancegroups.go
index 92f3b8229..b0f01ef64 100644
--- a/cloud/services/compute/instancegroups/instancegroups.go
+++ b/cloud/services/compute/instancegroups/instancegroups.go
@@ -204,7 +204,7 @@ func (s *Service) patchInstanceGroup(ctx context.Context, instanceTemplateName s
 	if fetchedInstanceTemplateName != instanceTemplateName {
 		log.Info("Instance group is not using the latest instance template, setting instance template", "instance group", instanceGroup.InstanceTemplate, "instance template", instanceTemplateName)
 		// Set instance template.
-		setInstanceTemplateOperation, err := s.Client.SetInstanceGroupTemplate(ctx, s.scope.Project(), s.scope.GCPMachinePool.Spec.Zone, s.scope.InstanceGroupBuilder(instanceTemplateName))
+		setInstanceTemplateOperation, err := s.Client.SetInstanceGroupTemplate(ctx, s.scope.Project(), s.scope.GCPMachinePool.Spec.Zone, s.scope.InstanceGroupUpdate(instanceTemplateName))
 		if err != nil {
 			log.Error(err, "Error setting instance group template")
 			return false, err