5 Key Takeaways
- AI is not the sole reason for Indian IT layoffs; the rise of Global Capability Centres (GCCs) is a deeper structural issue.
- GCCs, set up by multinational companies in India, are replacing traditional outsourcing by offering better control, integration, and cost efficiency.
- GCCs have evolved from handling back-office tasks to leading roles in AI, cybersecurity, analytics, and R&D, now employing nearly 2 million people and contributing 23% to India’s IT exports.
- The combination of AI automation and the GCC model is reducing demand for traditional IT services, flattening company structures, and leading to significant job cuts at major firms like TCS and Infosys.
- To stay relevant, Indian IT firms need to reposition as GCC enablers, upskill for AI-integrated roles, and rethink their business models.
Why Indian IT Layoffs Aren’t Just About AI: The Hidden Impact of GCCs
If you’ve been following the news, you’ve probably heard that Artificial Intelligence (AI) is causing massive layoffs in India’s IT sector. But while AI is definitely shaking things up, there’s another, less talked-about reason behind these job cuts: the rise of Global Capability Centres (GCCs).
What Are GCCs, and Why Are They Important?
GCCs are basically in-house tech hubs set up by big multinational companies (think banks, consumer brands, and more) right here in India. Instead of hiring Indian IT giants like TCS, Infosys, or Wipro to handle their tech needs, these companies are now building their own teams in India. This gives them more control, better integration with their global operations, and, in the long run, saves them money.
A few years ago, GCCs were mostly doing basic back-office work like IT support or data entry. But now, they’re handling advanced stuff—AI, cybersecurity, analytics, and even research and development. There are now over 1,700 GCCs in India, employing nearly 2 million people! Their revenue is growing faster than that of traditional Indian IT firms, and they now make up almost a quarter of India’s IT exports.
The Double Whammy: GCCs and AI
AI is definitely making some jobs—especially mid-level roles in testing, infrastructure, and management—obsolete. But here’s the twist: GCCs are making things even tougher for traditional IT companies. Since these in-house centres can automate routine tasks themselves, they don’t need to outsource as much work. This means Indian IT firms are losing both business and talented employees to GCCs.
The old “pyramid” structure of Indian IT—lots of mid-level coders and managers—is being flattened. Companies like TCS and Infosys are cutting thousands of jobs, not just because of AI, but because their clients simply don’t need them like they used to.
Why Didn’t Indian IT See This Coming?
Back in 2015, Infosys’s then-CEO Vishal Sikka actually invested in a company that helped set up GCCs. But the industry didn’t pay much attention, and Infosys later sold its stake at a loss. Now, with remote work and digital transformation becoming the norm, GCCs are booming while traditional IT firms are scrambling to catch up.
What’s Next for Indian IT?
To survive, Indian IT companies need to adapt fast. They could help set up and run GCCs for clients (“GCC-as-a-service”), train their staff for AI-powered roles, and rethink their business models to stay relevant in a world where clients want more control.
In short: AI is a big deal, but the real game-changer for Indian IT might just be the quiet rise of GCCs. If the industry doesn’t adapt, more layoffs could be on the way.
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