India's GCC model shifts from cost to capability as AI, talent strains bite

BFor two decades, India's dominance in global capability centres rested on a simple formula: skilled ​talent at scale, at low cost.

India is ​now the world's largest GCC hub, with more than 2,100 centres employing 2.36 million people ​and generating nearly $100 billion in revenue, a 2026 Nasscom-Zinnov report said, adding the "workforce remains India's greatest strength."

Executives at the Reuters summit in Bengaluru echoed that view, saying global firms continue to expand in the world's most populous nation because its depth of talent is hard ‌to match.


"There are ⁠not too ⁠many alternatives for companies," said Lalit Ahuja, the CEO of ANSR, which helps global firms build and run GCCs.

But the model is shifting.

Executives say ​GCCs are no longer back-office support units but integrated hubs that mirror their parent companies. They manage various functions ranging from ​technology to product support and analytics to corporate affairs, and are increasingly judged on outcomes rather than cost.

At several firms, Indian centres now lead global programmes and handle end-to-end work, from product development to complex commercial and R&D processes. ​In some cases, work once anchored at headquarters is now owned and executed ⁠from India.

Microsoft ‌India head Puneet Chandok said the country's edge rests on its massive digital public infrastructure, a talent pool of 27 million developers on GitHub, and policy openness that allows firms to scale quickly.

Target ⁠operates in Bengaluru as an "integrated headquarters" aligned with its global strategy, while ​IBM describes its India operations as a "macrocosm" of the enterprise.

COST PRESSURES AND TALENT STRAIN

As ​GCCs move up the value chain, rising costs and talent shortages are testing the model.

Bengaluru, where most of the GCCs are located, faces civic constraints such as congestion and higher costs, as well as intense competition for talent.

Target executive Andrea Zimmerman described the battle for talent as "unreal".

Demand for AI and machine learning skills is outstripping supply, fuelling wage inflation.

Danish drugmaker Novo Nordisk executive John Dawber said salaries in some tech roles are rising 40% to 50% annually, ‌threatening to erode India's cost advantage.

"If costs go out of control, we start to lose one edge of the triangle of your value proposition," he said.

Companies are also hedging risk.

Kimberly-Clark executive ​Deena Dayalan pointed to ​an "India plus" strategy, with firms ⁠expanding into Poland, the Philippines, Brazil and Costa Rica.

INFLECTION POINT

AI is reshaping work, enabling more output without adding headcount and weakening the link between growth and hiring, even as adoption lags behind its rapid advances.

"In six to 12 months, ​we are nearing that inflection point," Ahuja said.

Many firms are shifting workers into higher-value roles and investing in re-skilling as hiring slows, though gaps in data, governance, infrastructure and employee readiness continue to delay adoption.

For India's GCC sector, this marks a turning point, with AI-first centres accelerating while older ones are forced to adapt. The country's scale remains an advantage, but its edge will hinge on how quickly it adjusts to rising costs, infrastructure constraints and global competition.