AI talent gap of 40% emerges as biggest constraint on GCC growth, replacement hiring surges

AI talent gap of nearly 40% emerges as biggest bottleneck for GCC growth: Quess report - The Economic Times

India's Global Capability Centre (GCC) ecosystem is facing a widening shortage of specialised AI and data talent. The gap now stands at 38-42%, making it the biggest constraint to growth, according to the fourth quarter financial year (FY)26 report by Quess Corp. The report says this is a structural issue, not a short-term one. The biggest gaps are in advanced skills. These include generative AI, machine learning operations (MLOps), AI observability, and large language model (LLM) fine-tuning. MLOps refers to deploying and managing AI models in real-world systems. AI observability focuses on tracking how well these models perform over time. "There are roughly 400,000 core AI professionals in India -- what we call AI builders. But demand is far higher. For every 10 open roles, there are only about six candidates available," said Kapil Joshi, chief executive of IT staffing and recruitment. He added that the gap is widening. "Quarter after quarter, we are seeing this mismatch increase. This is not temporary. It needs a long-term fix," Joshi said. The shortage goes beyond core AI roles. Companies are also struggling to hire talent in cloud, cybersecurity and platform engineering. These skills are needed to build and run AI systems, said the report. Hiring demand is also shifting fast. About 60% of tech hiring now comes from AI, data, cloud and cybersecurity roles. This is up from around 30% two years ago. The report further added that GCC hiring grew 12-14% in the quarter. IT services (18-22%) and BFSI (15-18%) were the top sources of talent. But shortages are pushing up salaries. In BFSI GCCs, the AI talent gap is about 42%. Companies are offering 1.5-2.5 times higher pay than traditional IT roles. Most hiring is still in Tier-1 cities like Bengaluru and Hyderabad, which account for 88-90% of GCC recruitment. Tier-2 cities have grown to 10-12%, but lack advanced AI talent. As a result, nearly half of complex roles are moved back to metro cities, said the report. Companies are also changing how they hire. About 25% of roles are now contractual. Firms are using this to access niche skills quickly. The contract-to-hire (C2H) model is becoming popular. It helps companies onboard faster and improves retention in specialised roles. On the sector side, professional and shared services grew 16%, while real estate and infrastructure grew 18%. BFSI saw a 10% rise, showing renewed momentum, the report said. Attrition remains a concern. Replacement hiring now makes up about 40% of total recruitment. This is driven by shorter job tenures, especially among younger employees, said the report. The report further added that the GCC workforce is expected to reach 2.5-2.7 million by 2030, with over 2,200 centres in operation.

India's GCC Sees Rise in Replacement Hiring as Gen Z Tenure Drops Below 24 Months: Report India's GCC Hiring Growth Sees Rise in Replacement Hiring as Gen Z Tenure Drops Below 24 Months, Reveals Quess Report

BFSI GCCs Offer Up to 2.5x Salaries to Bridge Critical AI Talent Gaps India's GCC ecosystem posted a 12-14% quarter-on-quarter growth in the in the fourth quarter of FY 2026, marking a shift from the selective optimisation seen in the earlier quarter. This signifies a broader, recovery-led expansion, which was also seen in a significant rise in replacement hiring, which now accounts for 40% of all recruitment activity, says a new report. The report released today by Quess Corp titled "India's GCC Tech Talent Landscape Q4 FY26" further noted that the hiring trend was being driven by shifting workforce dynamics, specifically a decline in Gen Z tenure expectations to under 24 months. These evolving cycles are forcing GCCs to balance aggressive expansion with the need for organizational continuity. While demand remains anchored in AI-driven capabilities, platform engineering, and infrastructure modernization, persistent talent shortages continue to throttle the pace of scaling. Notably, the BFSI sector is grappling with a 42% skill gap in AI and data roles, prompting organizations to offer 1.5x-2.5x salary premiums to attract specialized experts. Commenting on the findings, Kapil Joshi, CEO of IT Staffing stated,"Q4 FY26 reflects a clear recovery in India's GCC ecosystem, with momentum gaining across diverse sectors. However, we are witnessing a structural shift: a higher volume of recruitment is being diverted to replacement roles as tenure cycles shorten." This is prompting organizations to rethink how they build depth in their talent pools. As GCCs evolve into strategic global hubs, the focus must shift toward balancing rapid scale with long-term capability building to ensure sustained growth, he said. Some of the key findings of the report are listed below: * Broad-Based Expansion Signals Market Recovery: Hiring grew by 12-14% QoQ in Q4, a sharp rise from the 4-6% growth recorded in the previous quarter. This expansion was supported by an increased active GCC footprint, signaling renewed enterprise confidence. Following a conservative start to the quarter, momentum rebounded strongly toward the fiscal year-end. * The Rise of Replacement Hiring: With 40% of hiring attributed to backfilling roles, organizations are increasingly focused on maintaining workforce stability. This shift suggests that the "hiring" headline is no longer just about net-new jobs, but about managing the higher churn inherent in the current talent market. * Gen Z Tenure Drops Below 24 Months: The workforce landscape is changing as Gen Z employees average fewer than two years per role. These shorter employment cycles are influencing how GCCs approach retention and engagement, particularly in high-value specialized functions where deep institutional knowledge is a competitive advantage. * Critical Talent Gaps in Advanced Digital Skills: Despite high demand, significant talent shortages persist: * Tier-1 Cities Anchor High-Complexity Mandates: Tier-1 cities continue to dominate, accounting for 88-90% of GCC hiring, led by Bengaluru and Hyderabad. While Tier-2 cities grew their share to 10-12%, nearly half of all complex technical mandates remain in Tier-1 hubs. This reinforces a "hub-and-spoke" model, where Tier-1 locations drive innovation while Tier-2 cities focus on execution and operational scale.