Despite ramping up hiring aggressively, Global Capability Centers (GCCs) have recently seen some marked recent instances of layoffs in India like Oracle which fired thousands and German automotive firm Aumovio which cut around 1,000 employees. Data from EIIRTend showed that last year upto 6,000 GCC employees had been given pink slips across sectors including engineering, automotive, aerospace and retail, even as the surge in hiring was generous, adding more than 1,50,000 jobs.
Capability Hubs
Analysts have said that the layoffs say less about India specifically and more about the structural shift that GCCs generally are undergoing. “AI is compressing the amount of human effort needed for many engineering and support activities, and that’s starting to show up in workforce decisions. For GCCs, this absolutely has impact, but not in the way people fear. It’s not about mass job loss, it’s about role reconfiguration. The GCC model is evolving from labor arbitrage to capability hubs that own products, platforms, and increasingly AI-driven operations,” Phil Fersht, founder and CEO of HFS Research said. The real risk isn’t around job cuts but about India failing to move up the value chain fast enough, he added saying, “The layoffs will be in limited pockets.”
A study from Zinnov has shared that 55% of GCC portfolios in India fall under displacement pressure, mostly in execution-heavy work. The pivot will have to be towards owning AI-led products and decisions that are even more strategic. The layoffs are an early signalling that AI is forcing large enterprises to redraw their org chart. “AI-led code generation is already enabling companies to build more software with smaller teams, and that matters because a significant share of this work sits within GCCs. The implication is not a collapse in demand, but a repricing of routine work.,” Karthik Padmanabhan, Managing Partner at Zinnov said. “So, the shift is not ‘less India’, but ‘different India’. Fewer roles built around repetitive execution, and more built around architecture, product thinking, and AI-led innovation,” he added.
Great Repricing
However, even though demand for hiring from GCCs across all sectors including tech has steadily grown, there are some declining trends appearing. “Most GCCs have confirmed a 30-40% gain in productivity due to AI tools and it hasn’t necessarily resulted in layoffs, I believe. But hiring has definitely slowed down. Since the emergence of AI coding tools in the past couple of years, the demand for coders has fallen. Last year, demand had fallen by 16% for coders as are testing job roles. There’s also a declining trend for L1, L2 roles in infrastructure and remote support and maintenance as well as standardized integration,” Kapil Joshi, CEO of staffing firm Quess Corp said.
He also observed that demand in GCCs was now skewed mainly towards emerging technologies like AI, data, cloud and cybersecurity. “A couple of years ago this made up 30% of total demand but has now reached almost 60%. Additionally, openings are much higher for mid-management hiring so we don’t see a big fresher intake and entry-levels jobs are quite limited,” he noted.
In contrast, roles that are anchored in system design, architecture and research will remain more resilient. Padmanabhan said that engineers who can work across systems, are able to apply domain context and can frame problems will see more demand. He said that India is relatively in an advantageous position to handle the transition. “Its GCC portfolio has matured significantly over the last decade and now has a much higher share of expertise-driven and engineering-heavy work. This makes the shift more manageable compared to locations with higher exposure to pure commodity work,” he stated. Eventually, GCCs will move away from their old ways of hiring in volume as they focus on hiring more pointedly for roles like product engineers, AI specialists, architects and T-shaped talent that combines technical depth understanding.