Global firms bring more work in-house at India hubs as AI reshapes workflows and hiring

Global Firms Bring More Work In-House as AI Transforms India's Hubs

Global capability centers in India are undergoing a fundamental transformation as artificial intelligence enables multinational companies to bring more work in-house while dramatically slowing hiring. Executives at a Reuters summit in Bengaluru revealed that AI adoption in India is allowing firms to handle significantly more work internally without proportional headcount increases, marking a shift from the cost-focused outsourcing model that defined the sector for two decades 1

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At Daimler Truck's Bengaluru hub, the company is bringing development of core software and performance-critical algorithms in-house, prioritizing internal control over areas that provide a competitive edge, according to Radhakrishnan Kodakkal, head of its innovation center 1

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. U.S. retailer Target, which employs more than 5,000 people in India, already does the vast majority of its tech work in-house, with external partners mostly providing flexibility 1

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Hiring Slowdown as AI Boosts Productivity Without Adding Headcount

Lalit Ahuja, CEO and founder of ANSR, which helps firms build and run global centers, told Reuters that hiring is being slashed by 30% to 50%, with some firms that had planned global capability centers with more than 5,000 employees scaling those ambitions back to about 2,000 2

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. This hiring slowdown in India reflects growing caution about geopolitical uncertainties and the impact of AI on workforce requirements.

At IBM, automation has allowed the company "to do a lot more with the same complementary people," according to India head Sandip Patel 1

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. Epsilon India Managing Director Pratik Nath echoed this sentiment: "Essentially, we are able to do significantly more with the same set of people that we have because of the power that AI brings in" 1

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GCCs Switching to Smart Workflows as AI Eliminates Procedural Grunt Work

India's nearly $100-billion global capability center industry is experiencing what experts call "portfolio hollowing," where artificial intelligence is compressing repetitive functions across customer support, finance, human resources, analytics, and software operations 3

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. Early industry estimates suggest nearly 18% of India's GCC work still sits in commoditized, process-heavy functions that are increasingly being automated or embedded into AI-driven workflows 3

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The shift is most visible in finance and HR operations. Invoice processing cycle times have fallen from seven days to one day, financial closing processes from 12 days to five days, and headcount requirements for these functions by 75%. HR self-service now resolves 70-80% of queries without human intervention, while in software development, output per developer has improved 40-80% 3

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India's Global Corporate Hubs Deploy AI Across Critical Functions

Global firms are deploying AI across diverse functions at their India operations. Novo Nordisk's Bengaluru center is playing a growing role in global drug launches, handling preparatory work including for its recently launched oral obesity pill in the United States. "A good proportion of the work for any market (launch) would be done out of the India center. There's probably not a medicine launched anywhere in the world that hasn't had a thumbprint of Bengaluru on it," said John Dawber, managing director for global business services 1

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Workday said its India teams are increasingly responsible for end-to-end product delivery rather than supporting individual modules, signaling a move away from fragmented, outsourced work models 1

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. Kimberly-Clark is using AI to speed up marketing processes, including an internal tool that helps identify and evaluate social media influencers to promote its products 4

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Talent Shortage and Wage Inflation Threaten India's Cost Advantage

As global capability centers move up the value chain, rising costs and talent shortages are testing India's traditional advantages. Demand for AI and machine learning skills is outstripping supply, fueling wage inflation. Novo Nordisk executive John Dawber said salaries in some tech roles are rising 40% to 50% annually, threatening to erode India's cost advantage 5

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Target executive Andrea Zimmerman described the battle for talent as "unreal" 5

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. Companies are responding with reskilling workers and shifting employees into higher-value roles as hiring slows. Some are also hedging risk through an "India plus" strategy, expanding into Poland, the Philippines, Brazil, and Costa Rica 5

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In-Sourcing Becomes the New Strategic Priority

The trend toward in-sourcing reflects a structural change in how multinationals use their India operations, moving beyond cost-focused support roles to centers that own core functions such as engineering, product development, and analytics 1

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. Instead of long-term outsourcing contracts, partners are increasingly engaged for specialized skills or faster execution, while strategic ownership remains internal.

Companies setting up new GCCs today are planning for 20-40% fewer employees than they would have three years ago, while expecting more output 3

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. India is home to more than 2,100 centers employing 2.36 million people and generating nearly $100 billion in revenue, according to a Nasscom-Zinnov report 5

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Lalit Ahuja of ANSR noted that companies are building a core workforce alongside a larger flexible pool that can be scaled up or down based on business needs, reflecting growing fatigue with a "wait-and-watch" approach 2

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. "In six to 12 months, we are nearing that inflection point," Ahuja said, pointing to the rapid pace of AI-driven transformation 5

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