Indian IT Layoffs 2025: GCCs and AI Reshape the Techscape!

Introduction to GCCs and AI's Impact on Indian IT

Global Capability Centres (GCCs) and the impact of artificial intelligence (AI) are profoundly reshaping India's IT sector. The traditional outsourcing model long dominated by giants like TCS and Infosys is being challenged by the rise of GCCs—tech hubs established by multinational corporations within India. According to The Times of India, these centres offer strategic advantages by internalizing technology operations, thus reducing reliance on Indian IT service providers.

The trend towards insourcing, facilitated by GCCs, is causing a paradigm shift in how technology services are managed globally. Companies are opting for in-house development of IT capabilities rather than outsourcing, thereby gaining better control and greater cost efficiencies. This structural shift, as noted in a 2025 report, is leading to significant layoffs in Indian IT firms as demand for traditional services dwindles.

AI's influence in the Indian IT industry cannot be understated. It accelerates the automation of routine tasks, particularly affecting mid-level roles. However, as highlighted in the Times of India article, the establishment of GCCs presents an even more formidable challenge. By automating and refining internal processes, GCCs reduce the dependency on external vendors for these roles.

As GCCs expand, they create a "double whammy" effect alongside AI, as described in the Times of India. The GCCs' rise not only automates jobs but pulls away massive contracts from Indian firms, fundamentally altering the outsourcing landscape. This dual impact is pushing Indian companies to reevaluate their roles as service providers and evolve towards becoming strategic partners capable of supporting GCCs rather than competing against them.

For the Indian IT industry, this evolution involves embracing AI and other cutting-edge technologies to offer more value-driven services. Companies must pivot towards integrating AI solutions and enhancing skillsets in order to remain competitive in a market increasingly dominated by GCCs and AI innovations. The need for strategic reassessment is clear: Indian IT firms must adapt or face continued challenges as the landscape of global technology operations continues to evolve.

How GCCs are Transforming the Outsourcing Model

Global Capability Centres (GCCs) are pivotal in redefining the outsourcing model traditionally embraced by Indian IT firms. These centres, which are in-house technology hubs managed by multinational corporations, offer strategic advantages that significantly deviate from the earlier outsourcing norms. Unlike conventional outsourcing where tasks were delegated to third-party firms such as Infosys or TCS, GCCs allow these corporations to perform critical tasks internally by leveraging India's vast pool of skilled professionals and favorable economic conditions. As reported by the Times of India, this shift not only challenges the traditional IT giants but also transforms client relationships by emphasizing direct control and cost efficiency.

The accelerating growth of GCCs is fundamentally transforming how multinational corporations manage their technology operations. Traditionally, companies outsourced IT functions to save on costs and focus on their core business objectives. However, GCCs are altering this dynamic by allowing companies to insource these functions and maintain a closer grip on their technological processes. This has been particularly impactful in India, where these centres are thriving due to the country's conducive business environment and availability of tech talent, as outlined in recent analyses. The resulting pressure on IT outsourcing firms is significant, pushing them to innovate and find new ways to engage with clients.

GCCs are not only taking over tasks that were previously outsourced but are also strategically significant for companies looking to optimize their operations in a rapidly digitalizing world. They enable firms to implement strategic frameworks that ensure innovation and agility in tackling market demands. This evolution is causing a substantial shift in the global IT landscape, reducing the reliance on traditional service models and thereby driving a profound change in the operational structures of large corporations. The insight from industry experts confirms that these centers are now being viewed as integral components of multinational companies' strategic arsenal, rather than merely operational outposts.

The implications of this shift toward GCCs are far-reaching, as they dramatically alter the landscape of IT outsourcing and staffing. The traditional 'pyramid' model of IT staffing, which relies heavily on a large base of mid-level employees, is being dismantled. With GCCs automating routine and managerial tasks internally, and using AI for others, the demand for these middle-tier roles is decreasing. This shift presents challenges but also opportunities for Indian IT firms to reposition themselves strategically by embracing new technological paradigms and exploring collaborations with these centres. As noted in the article, firms must realign their business models and workforce strategies to thrive amid these transformations.

The Double Whammy: AI and GCCs Driving Layoffs

The layoffs in the Indian IT industry are not only driven by AI-driven automation but also significantly fueled by the strategic shift towards Global Capability Centres (GCCs). These in-house tech hubs represent a profound change in how multinational corporations handle their technology operations, allowing greater control and cost efficiency. Unlike traditional outsourcing to IT firms like TCS and Infosys, GCCs internalize and automate numerous functions, leading to a reduced demand for outsourcing services.

For years, Indian IT companies thrived on a large pyramid model, relying heavily on mid-level jobs to support vast client undertakings. However, the rise of GCCs has dismantled this model. As companies like UBS and Citibank establish their own tech centres in India, they reduce the scope of work that would previously have been outsourced. This trend forces Indian IT companies to navigate a challenging new landscape where client-driven automation through GCCs and AI coincides with traditional outsourcing practices.

The rapid expansion of GCCs in India underscores how multinationals are choosing insourcing over outsourcing to better manage their global processes. With about 1,700 centres employing nearly 2 million people, GCCs do not only internalize tasks but optimize them by integrating advanced automation. This dual evolution of internal tech capabilities and cost-effective management leaves Indian IT firms grappling with a diminished role, calling into question their traditional business models.

Industry experts often describe the situation as a 'double whammy.' On one hand, AI accelerates layoffs by automating repetitive mid-level roles; on the other, GCCs steadily erode India’s traditional IT outsourcing base. While technology streamlines operations and trims operational fat, it simultaneously threatens the livelihood of numerous IT professionals accustomed to the outsourcing-dependent pyramid structure.

This structural shift necessitates a reevaluation of strategies among Indian IT companies. To remain competitive, firms must pivot towards offering higher value through specialized AI/ML services and reposition themselves from service providers to strategic solution partners. Collaborating with GCCs or transforming existing services into valuable insights and outcomes is essential for future survival.

The consequence of these layoffs stretches beyond economic factors. It challenges the social fabric and career aspirations of millions relying on mid-level IT jobs for upward mobility. As the IT sector accounts for a significant portion of India’s GDP and job creation, policymakers are pushed to consider interventions that support reskilling and innovation, ensuring that the workforce adapts to the evolving demands of the tech industry.

Case Studies: TCS and Infosys' Response to GCC Growth

TCS (Tata Consultancy Services) and Infosys, two of India's largest IT firms, have been grappling with a seismic shift in client outsourcing strategies due to the growth of Global Capability Centres (GCCs). Traditionally, both companies relied heavily on a pyramid staffing model, characterized by a large base of mid-level workers supporting outsourced client operations. However, the advent of GCCs has disrupted this model. These client-owned centers enable multinational companies to exercise greater control over their tech operations by bringing them in-house, thereby reducing reliance on external IT services. As such, TCS and Infosys are facing a reduction in demand for mid-tier roles among their workforce, contributing to significant layoffs as reported.

In response to the rise of GCCs, TCS and Infosys have been re-evaluating their business strategies to mitigate the negative impacts on their workforce and financial performance. TCS, for instance, is shifting its focus towards enhancing its capabilities in newer technologies like Artificial Intelligence (AI), Machine Learning (ML), and automation to differentiate its offerings. The company aims to engage clients with outcome-based models that emphasize strategic partnership rather than mere service provision .

Infosys, on the other hand, has experienced contrasting fortunes in its initial attempts to navigate the GCC trend. Although the company had previously invested in efforts to enable global clients to establish GCCs in India, it later rolled back these investments. This underscores the company's late recognition of the strategic shift and its attempts at recalibrating focus on core strengths, such as AI, to remain competitive . The need to reassess strategies is pressing, as both companies aim to align their services with the evolving demands of clients who are increasingly favoring internal tech hubs over outsourcers.

Strategic Missteps by Indian IT Firms

Indian IT firms have encountered significant strategic challenges in recent years, primarily due to the rise of Global Capability Centres (GCCs). These centres, established by multinational corporations to manage their technology operations internally, present a compelling alternative to outsourcing, thereby eroding the market share of traditional Indian IT service providers.

The strategic missteps of leading Indian IT firms, such as TCS and Infosys, have exacerbated their vulnerabilities in the face of the GCC trend. Instead of leveraging early insights on the implications of GCCs, companies like Infosys initially invested in partnerships with firms like ANSR to assist in building these centers but later retreated from these investments. This oversight highlighted a critical misjudgment of the strategic impact and growth potential of GCCs in India.

Additionally, the reliance on the traditional outsourcing pyramid model, characterized by a vast number of mid-level managers and employees, has left Indian IT firms exposed to the dual pressures of insourcing by GCCs and AI-driven automation. This model is rapidly becoming obsolete as GCCs prefer to internalize tech functions and AI takes on routine tasks, necessitating a comprehensive strategic and structural overhaul by Indian IT giants.

As the GCC model continues to expand, Indian IT service providers are facing a watershed moment. They must transition from traditional outsourcing methodologies to innovative approaches that align more closely with client demands for control, customization, and rapid technological progression. This means not just reacting to change but proactively reshaping their core strategies to survive and thrive in the evolving landscape.

The situation necessitates that Indian IT companies not only adapt to the growing preference for in-house technology hubs but also redefine their value propositions. By focusing on advanced technologies such as AI and machine learning, and delivering value-rich, customized solutions rather than volume-based services, these firms can maintain relevance and remain competitive in the global market.

Evolving Industry: Transitioning to High-Skill Roles

The Indian IT sector is undergoing a remarkable transformation, necessitating a transition towards high-skill roles due to the evolving industry dynamics. The emergence of Global Capability Centres (GCCs) has revolutionized how technology operations are managed by multinational corporations in India. These in-house tech hubs provide strategic control and cost efficiencies that were traditionally the purview of third-party IT vendors in the region. According to the Times of India, while AI automation has accelerated the decline of mid-level roles, GCCs are the real disruptors, compelling Indian IT firms to rethink their business models and workforce strategies.

The traditional pyramid staffing model of the Indian IT services sector, dominated by mid-level employees supporting global clients, is challenged significantly by GCCs' rise and advancements in AI. This development indicates not only a shift in job roles but also an overall structural change in the IT sector's operational landscape. The extensive internalization of routine and mid-level tasks by GCCs translates to fewer outsourcing opportunities, prompting a need for Indian IT companies to upskill and offer specialized, value-driven services. As reported by Economic Times, over 1,700 GCCs employing nearly 2 million people are now significant players in this domain, reflecting their rapid growth and influence.

This paradigm shift calls for a strategic reevaluation wherein Indian IT firms must not only adapt to technological advancements but also the strategic inclinations of their multinational clients. Indian IT leaders are urged to focus on integrating AI and machine learning capabilities into their service offerings, ensuring they remain relevant amidst the shifting landscape. For instance, Infosys, one of the country's largest IT firms, initially invested in firms facilitating the GCC model but later withdrew, potentially underestimating the depth of this trend as noted in OpenTools News. This demonstrates the need for more proactive, forward-thinking strategies in engaging with client demands.

Furthermore, there is an undeniable shift towards high-skill roles as AI and machine learning begin to dominate the sector, spurring growth in areas like data science, cloud computing, and cybersecurity. This transition is particularly evident in tier-2 cities in India, which are currently experiencing a surge in hiring for such advanced roles. As detailed in Jobspikr, the overall direction for Indian IT companies should focus on shifting towards high-value engagements, promoting innovation, and embracing new business models that align with global clients' strategic needs and technological aspirations.

Public Opinions on Indian IT Industry Shifts

The seismic shift occurring within the Indian IT industry has sparked diverse public opinions, predominantly surrounding the dual forces of AI and the burgeoning Global Capability Centres (GCCs). Many individuals recognize the transformative disruption these GCCs present, fundamentally altering the traditional outsourcing models that predominant Indian IT firms employed for decades. As multinational companies opt to establish these in-house tech hubs in India, observers note that the core outsourcing framework, especially regarding mid-tier technical roles, is being eroded. This sentiment is not limited to industry experts; public discourse across platforms such as LinkedIn and Twitter frequently refer to this as a 'double whammy' where both AI and GCCs jointly compound employment challenges in the sector .

The dialogue among IT professionals and industry veterans reflects concern about the Indian IT firm's strategic responses to these upheavals. Critiques often focus on the perceived slow adaptation pace and a traditional dependency on the outsourcing pyramid model. This critique is mirrored in public commentary suggesting that Indian firms need to pivot towards a future where they enable GCC operations, incorporating cutting-edge technologies and transitioning towards solution-oriented services. The failure of companies like Infosys to anticipate and adapt to the GCC trend has been a point of discussion, urging a need for enhanced strategic foresight .

Despite the grim undertones of layoffs, there is a narrative of evolution within the industry, which underscores a transition towards roles demanding higher skill sets, particularly in AI and machine learning domains. Public forums often highlight that while current workforce reductions are substantial, they simultaneously pave the way for new employment opportunities in tech hubs located in Tier-2 cities and beyond. This direction is seen as both inevitable and necessary as the industry recalibrates itself to meet futuristic demands, favoring more specialized and higher-value roles over traditional ones .

Public sentiment also reveals calls for more robust government interventions to aid displaced workers through retraining programs and to support the burgeoning technology sectors. Suggestions on platforms such as Reddit and industry commentary emphasize the importance of nurturing talent redistribution and fostering innovation hubs that align with the growth of GCCs and AI-led automation. Ultimately, the consensus seems to call for a strategic pivot in policy frameworks that accommodate gig economies and flexible work arrangements amidst traditional employment models .

Expert Insights: Rethinking Strategies Amid Layoffs

As the landscape of the Indian IT industry undergoes significant transformations, expert opinions are increasingly focusing on strategies needed to navigate the rise of Global Capability Centres (GCCs) amid widespread layoffs. According to experts from Times of India, the rapid expansion of GCCs represents a profound structural shift that challenges traditional outsourcing models. This shift demands a reevaluation of business strategies as companies like TCS and Infosys face workforce reductions not just due to AI advancements but because clients increasingly favor insourcing over outsourcing. This evolution necessitates a fresh approach to maintain relevance in this changing environment.

In the face of these challenges, industry leaders urge Indian IT firms to pivot strategically, focusing on high-value skill sets and innovative technologies. The transition towards GCCs, as highlighted by The Economic Times, has dismantled the conventional staffing model, prompting firms to embrace new roles in AI, machine learning, and strategic client partnerships. The necessity for this strategic shift is underscored by the "double whammy" effect, where AI and GCC growth concurrently diminish traditional outsourcing methods, urging firms to rethink their operational and talent deployment strategies.

Experts also recommend a focus on fostering strategic collaborations with GCCs to adapt and thrive in the new market reality. Adapting to this dual disruption—automation and GCC expansion—requires Indian IT firms to not only restructure their service delivery models but also re-skill their workforce. As stated in a report by Open Tools AI, firms need to build capabilities in advanced digital solutions, transform their business operations to focus on outcomes rather than processes, and enhance value propositions through innovation and deeper client engagement. This comprehensive strategic reassessment is crucial for Indian IT firms to maintain competitiveness in a rapidly shifting industry landscape.

Future of Indian IT: Adapting to GCC and AI Changes

The future of the Indian IT industry is being profoundly reshaped by the concurrent rise of Global Capability Centres (GCCs) and the widespread adoption of AI technologies. As multinational companies increasingly opt to establish in-house tech hubs in India, traditional Indian IT firms like TCS and Infosys face dwindling demand for their services. According to a report from the Times of India, these GCCs are a structural shift in how technology operations are managed, providing strategic advantages and cost efficiencies for multinational corporations. Consequently, the traditional outsourcing model is under severe pressure to evolve or risk becoming obsolete.

AI's role, while significant, acts more as an accelerator of automation in routine IT processes. The more profound impact stems from GCCs, which reduce the amount of work outsourced to Indian vendors by internalizing these functions. GCCs' rapid expansion has already led to significant employment shifts, as evidenced by the nearly 1,700 centers operating across India, as highlighted in recent studies. As these centers automate and manage routine tasks internally, the demand for mid-tier IT roles traditionally fulfilled by outsourcing firms decreases markedly.

In adapting to these transformative changes, Indian IT companies must pivot towards high-value technology services that leverage AI and machine learning (ML). This transition requires a comprehensive reassessment of their traditional business models. Firms could find new growth avenues by deepening expertise in emerging technologies and creating strategic partnerships with clients, which enable more integrated collaborations that align closely with client business objectives. The focus must shift from providing low-cost labor to delivering innovation and strategic value in a rapidly evolving tech landscape.

The implications for Indian IT are manifold and significant. Socially, the new hiring trends could impact India's traditionally robust pathway for new engineering graduates looking to make their mark in IT. The sector’s transformation may see a geographical shift in employment patterns, with potential growth in Tier-2 cities as firms look to expand their talent pool. Politically, there is likely to be increased pressure on policymakers to create supportive frameworks that encourage skill development in AI and other emerging areas, ensuring that the workforce can transition into new roles that offer security and growth.

In summary, while the immediate impacts may seem daunting with layoffs and restructuring, the potential for long-term growth in the Indian IT sector remains robust if companies can successfully navigate towards this new paradigm of GCC-driven employment models and AI-enhanced service delivery. Adaptation through strategic innovation, skill development, and alignment with client needs could redefine the industry's global competitiveness and secure its future relevance in the tech world.