The Powerhouse Under Pressure
Global Capability Centers (GCCs) are one of the quiet successes of the Indian economy. These are not outsourced call centers, but in-house technology and operations hubs for multinational giants. India is home to roughly half of the world's GCCs, with
over 2,000 centers employing more than two million people. With revenues heading towards $100 billion, the sector contributes nearly 2% to India's GDP. For decades, these centers thrived on a simple premise: they came for the cost savings but stayed for the capability. Indian talent moved from back-office support to engineering, product development, and even strategic decision-making. But now, the very foundation of this model is being shaken by the rise of Artificial Intelligence.
The AI Threat is Real
Chief Economic Adviser Nageswaran did not mince words. He stated that any GCC whose value rests solely on performing simple, repetitive, and rule-bound tasks is under a “real threat”. This is precisely the kind of work that AI can automate easily and cheaply. The warning is clear: business models built on low-cost execution are no longer sustainable in the age of AI. The centers that fail to adapt and stand still will suffer, while those that evolve will thrive. This isn't a distant problem; it's an immediate strategic challenge that requires a fundamental rethinking of how GCCs operate and create value.
From Survival to Upgradation
The message, however, was not one of doom, but of opportunity. Nageswaran's call to action is for “upgradation.” This means moving up the value chain from cost-based execution to capability-driven innovation. The future of GCCs lies not in having people work like machines, but in freeing them to do what machines cannot: reason, decide, take responsibility, and exercise wisdom. In a well-run center, AI should not replace employees, but raise the value of each person who works there. The focus must shift from bulk hiring to building leaner, high-impact teams skilled in advanced AI roles. India, Nageswaran argued, must choose to be an active author of what it does with technology, not a passive recipient of its effects.
The Human-in-the-Loop Imperative
A crucial part of the upgradation strategy is recognising that AI is a tool, not a replacement for human judgment. “Artificial intelligence does not build, deploy or govern itself,” Nageswaran explained. Humans are required to design, train, test, correct, and hold these powerful systems to account. This creates a new, expanding area of work where India is already well-positioned. With over 1,200 GCCs engaged in serious AI and machine learning work, India is the world's second-largest base for enterprise AI talent. The goal is to leverage this expertise, transforming GCCs from cost centers into strategic innovation hubs that shape the future of their global parent companies.
A Shared Responsibility
Nageswaran emphasised that this transformation is a shared responsibility. The government has taken steps to provide policy support, including tax certainty and a framework to encourage GCCs to expand into Tier-II and Tier-III cities. However, he was clear that the government can only “build the runway”; it is up to the industry to “fly the plane”. This requires a concerted effort from companies to invest in skilling, from universities to produce industry-ready graduates, and from individuals to embrace continuous learning. Complacency is the enemy, as rising costs in India and competition from other nations mean that its leadership position is not guaranteed.
