Key Points:
- Global Capability Centres (GCCs) are taking work in-house, cutting demand for outsourcing.
- Over 1,700 GCCs now employ 2M people and contribute 23% of India’s IT exports.
- Indian IT giants missed the GCC shift and now face structural job losses.
GCCs Reshape India’s IT Landscape
Artificial Intelligence often takes the spotlight in conversations about job cuts in India’s technology sector. Yet, a deeper disruption is unfolding: the rapid growth of Global Capability Centres (GCCs).
GCCs are in-house technology hubs established by multinational corporations to run their own IT, analytics, cybersecurity, and R&D functions in India. By bypassing traditional outsourcing giants such as TCS, Infosys, and Wipro, these centres give companies greater control, faster integration, and long-term cost efficiency.
From Back Office to Innovation Hubs
Initially focused on support services in the early 2000s, GCCs have since moved into higher-value, innovation-driven work. India is now home to more than 1,700 GCCs employing nearly 2 million professionals. Their revenues have grown at an 11 percent compound annual growth rate (CAGR) since 2015, outpacing the 8 percent growth of traditional IT services, and they now account for 23 percent of India’s IT exports.
Major banks such as UBS and Bank of America, along with global consumer firms like Procter & Gamble, began shifting to this model years ago. Even Citibank, which once sold its captive units to Indian IT companies, is now rebuilding its own centres in the country.
AI and GCCs Create a Double Impact
The timing of the GCC boom has overlapped with the adoption of AI, leading to a compounded impact on outsourcing. AI is taking over mid-level tasks such as software testing, infrastructure management, and project supervision. Meanwhile, GCCs are reducing the need for outsourced staff.
The combination is shrinking contracts, draining talent from IT services providers, and weakening the traditional pyramid workforce model that Indian IT firms relied upon for decades.
A Missed Opportunity for Indian IT
Some industry leaders had foreseen this shift. In 2015, then-Infosys CEO Vishal Sikka invested in ANSR, a company that supported multinationals in setting up GCCs. The broader industry, however, overlooked the trend. Infosys later exited the investment at a loss.
With remote work becoming mainstream and digital transformation accelerating, GCCs have scaled quickly while traditional IT providers now struggle to reposition.
What Comes Next for IT Services?
For Indian IT firms, the challenge is clear. Competing with GCCs will require moving beyond cost-driven outsourcing to focus on niche expertise, proprietary platforms, and AI-led solutions that in-house teams cannot easily replicate.
Unless firms adapt, the layoffs seen today may signal not just a cyclical downturn but a long-term structural shift in India’s IT industry.
