AI-driven GCC surge reshapes India’s $280Bn outsourcing industry
UTTAR PRADESH, INDIA — The rapid rise of Global Capability Centers (GCCs) in India is disrupting the country’s once-dominant IT outsourcing sector, triggering mass layoffs and sluggish growth for traditional firms.
A report from The Economic Times notes that with multinationals in-sourcing high-value technology labor and AI taking mid-level work, digital experts predict that the $280 billion Indian IT sector finds itself in an apocalyptic situation.
GCC growth outpaces traditional IT
In fiscal year 2024, GCCs grew at 40%, while India’s top five IT companies reported negative to sub-5% growth—a trend expected to continue in 2025. These in-house centers, now numbering 1,700, employ nearly 2 million professionals, adding over 100,000 jobs.
Meanwhile, traditional IT firms are shrinking. Tata Consultancy Services (TCS), India’s software exporter, recently announced layoffs of 12,200 employees amid declining demand.
With GCC revenue hitting $64.6 billion in fiscal year 2024—nearly a quarter of India’s total IT sector earnings—the outsourcing model faces irreversible decline.
Accelerating job cuts and workforce demand
Artificial intelligence is dismantling the traditional IT workforce pyramid, automating mid-tier coding jobs while GCCs and AI absorb higher-value roles.
Saurabh Gupta, President at U.S.-based technology research and consultancy firm HFS Research, notes, “The pyramid is collapsing. GCCs are rising. AI is automating the middle. Pricing is shifting from effort to outcomes, and that means a full-stack transformation—not just of how services are delivered, but how they’re sold, priced, and measured.”
This shift has left Indian IT firms struggling to justify their labor-heavy models, with net headcount growth plunging to just 13,500 in fiscal year 2025 after a loss of 64,000 jobs the previous year.
GCCs, once back-office hubs, now drive innovation, leveraging AI for research and development (R&D) and decision-making. Ramkumar Ramamoorthy, a partner of Catalincs, warns that IT firms clinging to outdated time-and-material contracts risk obsolescence.
“If they don’t act now, we risk looking back in regret for having missed a generational opportunity,” he says. With AI enabling higher productivity per employee, both GCCs and IT giants like TCS are optimizing headcounts, signaling more layoffs ahead.
BFSI sector shift deepens crisis for Indian IT providers
Banking and financial services (BFSI), which contribute 30% to 50% of revenue for Indian IT firms, are rapidly moving operations to GCCs. Firms like JPMorgan Chase and Wells Fargo now employ over 50,000 staff in India, rivaling mid-tier IT companies.
ANSR data reveals that 50 banking GCCs operate over 90 centers, employing 180,000 professionals, which is eroding outsourcing demand.
Yugal Joshi of Everest Group confirms GCCs are siphoning net demand from IT providers, particularly in BFSI. As multinationals prioritize owning core tech capabilities, Indian IT’s reliance on low-value maintenance contracts looks increasingly unsustainable.
With GCCs projected to maintain double-digit growth, the outsourcing sector’s decline may only accelerate—unless firms pivot to high-margin services like cybersecurity and AI-driven platforms.
