AI real threat to GCCs handling low-cost, repetitive work: CEA Nageswaran

Even as artificial intelligence (AI) poses a "real threat" to global capability centres (GCCs) that are built around routine, repetitive work, India should use the technology to move these centres up the value chain, Chief Economic Adviser (CEA) V Anantha Nageswaran said on Thursday.

 

"If a centre's value rests only on doing simple tasks at low cost, then that value is under real threat. We should not pretend otherwise," Nageswaran said at the Confederation of Indian Industry's GCC Summit 2026.

 

The centres that fail to adapt would suffer, while those moving up the value chain would thrive, the CEA said. "The risk is real, but it is not destiny," he cautioned.

 

 

"A country that treats a powerful technology as fate will be shaped by it. A country that treats it as a tool will shape it instead. India must be firmly in the second group," Nageswaran said. "Not passive recipients of what the technology does to us, but active authors of what we do with it."

 

Highlighting the evolution of India's GCC ecosystem, the CEA said multinational companies initially came to India for lower costs but stayed because of the country's capabilities.

 

"What began as support became engineering. What began as engineering became product. What began as a back office became, in many firms, the place where global decisions are now made," he said.

 

India, which had only a handful of back offices two decades ago, now hosts more than 2,000 GCCs employing over 2 million professionals, generating over $64 billion in revenue and contributing around 2 per cent to the country's gross domestic product (GDP), he said. Around half of the world's GCCs are now located in India, he added.

 

Nageswaran also underscored the growing sophistication of work being undertaken in these centres, ranging from semiconductor design and clinical analytics to enterprise AI and digital product development.

 

More than 1,200 GCCs are now engaged in AI and machine learning, while India has emerged as the world's second-largest base of enterprise AI talent, he said. Senior leadership roles based in India are also projected to increase five-fold by 2030.

 

On the policy front, the CEA said this year's Budget has addressed a long-standing industry demand by simplifying and expanding the transfer-pricing safe harbour regime for GCCs, making tax treatment more predictable.

 

The government has also recently launched a national framework aimed at expanding GCCs beyond the six major metropolitan cities into tier-II and tier-III locations.

 

However, the CEA cautioned that government support alone would not sustain India's competitive edge.

 

"Government can build the runway. It cannot fly the plane," Nageswaran said, adding that India continues to face a significant employability challenge despite producing a large number of graduates every year.

 

According to the CEA, fewer than half of graduates are job-ready on the day they enter the workforce. There is a need for closer collaboration between universities, industry and government on skilling.

 

The CEA also warned against complacency, saying India's current advantage could erode as competing countries replicate its GCC model and domestic costs continue to rise.

 

"Success can breed complacency. The advantage we hold today was built. It can also erode," he said, adding that India would have to earn its position as the preferred global GCC destination continuously.