How India's Global Capability Centres are Redefining the IT-Services Landscape

Up the value chain: Over 70% of GCCs in India are now actively driving digital transformation initiatives for their parent organisations.

28 JUNE 2025  /  4 min read

The traditional outsourcing model that built India’s IT services empire is facing its most significant challenge in decades. Global Capability Centers (GCCs) have evolved from back-office cost centers to strategic innovation hubs, reshaping the competitive dynamics for established players like Tata Consultancy Services (TCS), Infosys, and Wipro. 

The timing of this transformation becomes particularly relevant given the recent emphasis at TCS’s Annual General Meeting (AGM), where independent director Keki Mistry highlighted the imperative to “proactively explore collaboration with GCCs” and noted that “TCS’s clients continue to derive substantial value from their partnership with the company, which is exploring engagement models to collaborate with GCCs”. Recently, at Infosys’ 44th AGM, chairman and co-founder Nandan Nilekani echoed a similar sentiment, highlighting that GCCs are now critical clients rather than competitors. He emphasised that the current wave of GCCs is driven by innovation arbitrage rather than cost arbitrage.

The numbers tell a compelling story of transformation. India currently hosts approximately 1,800 GCCs employing over 2.1 million professionals, with the total market size having reached US$72-76 billion in early 2025. The most striking indicator of this transformation is the emergence of billion-dollar GCC powerhouses. About 24 GCCs crossed the US$1 billion export revenue milestone in FY 2023-24, up from just 12 five years earlier, collectively generating exports exceeding US$43.6 billion. GCCs are projected to create 4.25-4.5 lakh new jobs in 2025 alone, with the sector aiming for a 50% workforce increase by 2030. Perhaps most significantly for IT-services firms, 70% of Fortune 500 companies are expected to expand their presence in India by 2030, with over 500 centres now dedicated to AI and machine learning.

What makes the GCC revolution particularly disruptive is its fundamental departure from the traditional outsourcing model. While conventional IT services rely on third-party relationships, GCCs represent a strategic insourcing trend where multinational corporations are bringing critical functions in-house. Over 70% of GCCs in India are now actively driving digital transformation initiatives for their parent organisations, moving far beyond the cost-arbitrage model that originally defined the sector. The shift is particularly pronounced in high-value functions, with GCCs increasingly taking ownership of AI development, digital transformation, R&D activities, and product development areas that were traditionally the bread and butter of IT services companies.

 The Economic Reality of Transformation

Recognising the challenge, India's IT majors are pivoting from viewing GCCs as competitors to embracing them as collaboration partners. This strategic shift is already yielding tangible results. Infosys's India revenue grew 19.9% and 16% sequentially in the first and second quarters of fiscal 2025, whilst TCS saw a remarkable 95.2% expansion in revenue from the home market, which now accounts for 5.6% of total revenue.

However, despite signs of collaboration-driven success, the traditional IT services model is under pressure. Top-tier IT firms are dealing with sluggish growth, cautious forecasts, and cost-cutting measures—highlighting ongoing structural challenges in the sector.

The collaboration with GCCs takes multiple forms across the industry, but it comes at a cost. Infosys CEO and MD Salil Parekh outlined the company’s comprehensive GCC engagement strategy, describing how they work with GCCs during Build-Operate-Transfer transitions, help scale operations, assist with recruiting, and even work with clients when they exit GCC arrangements. This approach was demonstrated when Infosys acquired Danske Bank's GCC business in September, which had been operating in India for 10-15 years. Yet industry executives acknowledge that GCC business “is a little less profitable because sometimes the contracts are in rupees… the US business is usually more profitable”.

The scale of the transformation is evident in the geographic distribution of GCCs. As of December 2024, there are over 1,950 GCC units in the country, accounting for more than one-third of the occupied office space in India's top seven markets. Perhaps the most immediate challenge facing IT-services companies is the intensifying war for talent. GCCs remain top employers, thanks to their competitive compensation—often paying a 30% premium over IT companies—at a time when traditional firms are seeing a slowdown in workforce growth. The competition is particularly fierce in emerging technologies, with GCCs now employing over 120,000 AI professionals across centers of excellence in India, creating a significant talent pool that might otherwise have been available to traditional IT players.

Collaboration Over Competition

Today, GCCs are driving AI-powered research and development initiatives, building new products and solutions whilst ensuring continuous innovation. This represents a fundamental shift from the traditional IT-services model, where innovation was often secondary to execution efficiency. The convergence of GCCs with Generative AI is creating new possibilities for rapid prototyping, predictive analytics, and automation that enhance agility and responsiveness.

Despite initial concerns about revenue cannibalisation, industry leaders are increasingly viewing the GCC phenomenon as complementary rather than competitive. As ANSR co-founder Vikram Ahuja observed, there is a common misconception that GCCs and service providers compete with each other, when in reality, 85% of GCC customers also work with IT-services companies in some capacity. The emerging consensus suggests a hybrid ecosystem where GCCs will spearhead innovation, take charge of customer relationships, and lead product development, whilst IT service firms provide operational strength, cross-domain knowledge, and delivery capabilities.

For TCS, Infosys, Wipro, and other IT-services majors, this creates both unprecedented challenges and significant opportunities. The companies that successfully navigate this transition will be those that embrace collaboration over competition, invest in specialised capabilities over standardised services, and focus on value creation over cost reduction.

The future belongs to those who can orchestrate this new ecosystem, where the lines between insourcing and outsourcing are blurring, and success hinges on integrating the innovation capacity of GCCs with the execution strength of established IT-service providers. The GCC revolution represents more than a shift in outsourcing preferences – it signals a fundamental transformation in how global enterprises structure their technology and innovation capabilities.