GCCs struggle to go beyond cost arbitrage in AI era, shows data

India's GCC sector faces a structural reset as AI and automation expose centres focused on routine work, forcing companies to shift towards innovation and strategic ownership

India’s global capability centre (GCC) boom is also producing a growing list of casualties. More than 25 GCCs were shut down in 2025, and the numbers are likely to double this year as enterprises reassess the value of a centre where a lot of jobs can be automated, said data from Neovay.

 

A significant number of In­dia’s GCCs have failed to become strategic hubs for their parent companies even after years of operations, leading to stagnation, layoffs, and aggressive bids from information technology se­rvices providers who view th­em as a lucrative source of revenue.

 

“Many of these GCCs have historically done only commoditised work, which involve very basic processes. They now need to prove their value to their parent organisations and customers and without reinvention, (they) risk losing relevance and getting exposed in the artificial intelligence (AI) world,” said Praveen Bhadada, managing director and chief executive officer (MD & CEO) of management consulting firm Neovay Global.

 

Some of the GCCs that have shut down include Opendoor, the San Francisco-based online home-buying platform which laid off 250 people across Bengaluru and Chennai, and US grocery retailer Hy-Vee. Wells Fargo shut its centre in Chennai last year, which led to a few hundred people losing their jobs. Other examples include the massive layoffs in Oracle, Walmart Global Tech India, Aumovio Ford, and Fidelity Investments as companies downsize and make more investments in AI to improve productivity and efficiency.

 

HCLTech is also buying US-based Guardian Life’s GCC for $10.5 million.

 

The reasons are multifarious, from a change in corporate sponsorships and the perception of the department as a cost centre, to a lack of strong local leadership and workforce growth without a corresponding increase in specialist skills.

 

This has led analysts and industry executives to ask for a structural reset of India’s latest growth engine of the services se­ctor, which has about 2,100 GCCs contributing about $100 billion in annual revenue, acco­rding to latest figures from Nasscom.

 

The strategic reset includes shifting the focus from product delivery to ownership, transitioning the operating model to outcome-driven execution, prioritising niche talent over headcount, and consolidating fragmented systems onto a scalable tech and data platform.

 

“⁠Over 50 per cent of GCCs in India are sub-scale. The skillset is easily replaceable, they exist only because of cost reasons, have not produced any reusable assets, lack ownership across engineering, product or P&L. This is the addressable market for service providers to make a proactive pitch on,” explained Bhadada.

 

A starker data point is from Embark and UnearthIQ that says 30 per cent of the GCCs set up since 2021 have plateaued, which translates to about 150 GCCs in the last five years, and more than 500 centres that are not fully realising their potential.

 

Such a situation has also ca­ught the attention of service providers who, over the last few ye­ars, lost a chunk of business to the GCCs as work got insourced, but are now looking to buy those units as they believe they can run them more efficiently and with service level agreement adherence.

 

While GCCs employ about 2.36 million people, experts estimate 1.1-1.3 million are engaged in repeatable work built on tickets, documents, and reports. With an attrition of about 13 per cent, these roles are not being backfilled but shared between existing employees and agents. Some of the early warning signs of a plateauing GCC include lack of product and platform ownership, rising friction in execution, higher exits in niche and high-demand roles, and high volume of pilots with limited production deployment.

 

Sameer Dhanrajani, CEO of advisory and cons­u­lting firm AIQrate, also highlights the lack of strong leadership in the current GCCs which, according to him, is a deterrent. “It is not as strong as it used to be. An operations leader is not always an AI leader. The earlier GCCs were all about scale and headcount. With AI replacing it with impact, current leaders are struggling to show it in 12-18 months unlike earlier times when they usually had about a 30-month time period,” he said.

 

Data from ISG show that while 40 per cent of Indian GCC leaders prioritise innovation, it is the least priority for the executives in the headquarters with 17 percent, creating an instant mismatch of objectives. For most companies (70 percent), reducing staff cost through a GCC is still the priority.

 

 “The immediate problem facing enterprises (and GCCs) is that GCCs often have a dual mandate: to drive innovation but to do so at a price point that balances out the risk inherent in innovation,” ISG said.

 

Indian GCCs have limited leadership presence in the cou­ntry, barring the financial services ones, which is a roadblock towards greater maturity and ability to strategically influence decision-making for the parent organisation, an annual survey by EY showed last year.

 

Out of the GCCs surveyed, 80 per cent reported less than 10 per cent of leadership roles based locally underscoring the need to accelerate leadership localisation for greater strategic infl­uence. Only 7 per cent reported senior leadership roles of 25-50 per cent being based out of India. 

Capacity corrosion

 

Leading reasons:

• Change in corporate sponsorships
• Perception of the department as a cost centre
• Lack of strong local leadership
• Workforce growth without corresponding increase in specialist skills

 

Faced shut down:

• Opendoor
• Hy-Vee
• Wells Fargo  

Massive layoffs witnessed in:

• Oracle
• Walmart Global Tech India
• Aumovio Ford
• Fidelity Investments