GCCs Could Pose a Potential Threat to Indian IT
Since last year, tech giants like Infosys, Wipro, and Tech Mahindra have been actively teaming up with multinational companies to help them set up their global capability centres (GCCs) in India. What once felt like a competitive threat turned out to be a strategic win for these IT giants. Now, however, the tables have turned. Indian IT isn’t too pleased about losing top talent to the very GCCs they helped establish. Cognizant, for example, has raised concerns about potential risks stemming from GCCs operated by its clients in its 2024 annual report. The concern is that these centres could overshadow the outsourcing work that the Indian IT firms do in India. The concern is particularly significant, considering Cognizant has around three-fourths of its employees in India. “Competition for skilled labour is intense and, in some jurisdictions in which we operate and in key AI and digital areas, there are more open positions than qualified persons to fill these positions. We compete for employees not only with other companies in our industry but also with companies in other industries, such as software services, engineering services and financial services companies, as well as our clients’ GCCs,” the report read. The report also noted that Cognizant sees competition from clients’ in-house technology resources, such as GCCs, which could provide a lower-cost alternative to its services. It further mentioned that it is not only competing with peers in the industry, but also with companies in other sectors such as software services, engineering services and financial services companies, as well as GCCs operated by its own clients. This suggests that Indian IT firms are now treating GCCs as competitors for resources, especially when it comes to talent. Ironically, these are the centres that they once happily helped set up their offices in the country. So, rather than just competing among themselves, Indian IT firms now find themselves up against global giants. Moreover, GCCs, once seen as extensions of multinational operations, have now become an integral part of the Indian tech ecosystem. A spokesperson from Cognizant informed Mint that GCCs help companies maximise long-term value in the business transformation landscape, particularly with the help of AI, and that the firm has established deals with about 10 such centres so far. Infosys Joins In Apart from Cognizant, Infosys has also subtly acknowledged this competition. During the company’s Q4 FY25 results last week, Infosys CFO Jayesh Sanghrajka, was asked about the increased attrition rate and if the firm is losing on middle management because of GCCs. While he didn’t completely deny it, Sanghrajka pointed out that although the overall headcount has increased, attrition could be high because of increased competition, including from GCCs. “Attrition is across multiple factors and multiple opportunities that people get outside. It could be GCC, it could be competition, it could be employees going for further studies,” he said. This phenomenon, observed last year, remains prevalent today. Indian IT firms continue to forge partnerships with universities to train students in practical, job-ready skills, while GCCs try to attract experienced professionals and target niche skill sets directly. According to projections, by 2030, the country is likely to have over 2,400 GCCs, creating over 4.5 million jobs and boosting the market size from $45 billion to $110 billion. However, the talent pool might not be enough for both industries in the coming years. Delivering 4.5 million jobs over the next five years for GCCs alone seems inadequate, as it risks leaving little to no skilled workforce for the Indian IT sector. What’s Actually In It for Indian IT? But not everyone believes this is bad news. Viswanathan KS, independent digital transformation advisor and former vice-president at Nasscom, told AIM that it is not as if the GCCs are pulling businesses back in-house. According to him, GCCs continue to work with the service providers as an existing partner for the existing tasks. “In the past, GCCs used to retain the core tasks themselves and completely outsource only the non-core tasks [to Indian IT firms],” he added. “Now they are saying—why not carry out some of those core functions in India [through their GCCs] as well? At least a portion of them.” Viswanathan added that if Infosys, for example, helps a GCC set up in India for the next five years, it is going to help the GCC establish its brand locally. Later, once the multinational sets up its GCC and becomes independent, other firms are likely to come in and take Infosys’ help to set up their own GCCs. “The good news is that enterprises are trusting more in Indian capabilities,” he explained. When it comes to poaching and talent, the industry transitions are all natural. “It is not poaching. It’s a cycle, the talent pool. Even if these Indian IT firms now say that they are going to compete with software and cloud providers, I think overall it’s better for India,” Viswanathan added. In an interview with AIM, Dhanya Rajeswaran, global VP and managing director at Fluence India, highlighted this trend. “We are hiring from IIT and NIT, but we are also looking for people with PhDs, MTechs, and specialisations in our kind of work.” Since 2017, professionals from companies like Cognizant and Accenture have transitioned to roles at Google’s GCC, showcasing the appeal of GCC roles. GCCs attract top talent from Indian IT companies by offering competitive compensation and international exposure. According to a recent TeamLease Digital report, GCCs pay 12%-20% higher salaries than IT services for comparable tech roles, driven by investments in AI, machine learning, and cybersecurity. Neeti Sharma, CEO of TeamLease Digital, in a conversation with AIM, acknowledged the presence of some struggle between IT and GCCs. “Most of the GCCs had been working with the IT companies for many years. Over the last few years, the parent companies have been moving to their independent centres.” According to Sharma, the reason behind this trend is that multinational companies have direct control of resources, infrastructure, and operations with lower costs over a longer time period. Even though IT firms have been helping GCCs set up, “they know they can’t ignore the growth of GCCs”. While there’s a growing interest in how GCCs are reshaping the talent landscape, ANSR believes that IT services firms and GCCs are not in competition. Instead, they are a part of a broader, evolving ecosystem. Vikram Ahuja, co-founder of ANSR and CEO 1Wrk, told AIM that Indian IT and GCCs play a distinct and complementary role. “GCCs enable global enterprises to build in-house strategic capabilities and long-term talent pipelines, while IT services firms continue to offer scale, flexibility, and specialised project delivery,” Ahuja said. “As India’s tech economy matures, both models will increasingly coexist, collaborate, and contribute to a thriving innovation ecosystem.” GCCs have seen exponential growth by leveraging career advancement opportunities and competitive hiring practices. From 5,000 global leaders in Indian GCCs in 2022, projections suggest this figure will surpass 30,000 by 2030, growing at a compound annual rate of 25.1%. Entry-level salaries at GCCs are also up to 30% higher than the average across sectors. They emphasise innovation, particularly in AI, cloud computing, and cybersecurity, positioning themselves as leaders in tech transformation. In an earlier interaction with AIM, Mohandas Pai, former CFO of Infosys, said, “Some of them will move from IT companies to GCCs because the latter pay better. But on the downside, work at many of these GCCs would not be as exciting and diverse as the IT companies.” Pai added that there are going to be a lot of instances of poaching as well. However, it might not be more than around 1,000 people on a monthly basis. “GCCs are becoming more and more specialised because the parent company is focusing on critical and concrete things.” He stressed that there has always been competition between MNCs and Indian IT companies for the last 25 years, and this competition is going to continue. He believes that parent companies of GCCs would also want to own a part of the technology instead of completely outsourcing everything to IT. While TCS, Wipro, and HCLTech dismissed any claims of GCCs poaching talent last quarter, this time, the struggle is real.
Cognizant and Infosys have called out competition from GCCs in India.
Indian IT isn’t too pleased about losing top talent to the very GCCs they helped establish. Coginzant and Infosys have called it out.
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Mohit writes about AI in simple, explainable, and often funny words. He's especially passionate about chatting with those building AI for Bharat, with the occasional detour into AGI.