Global Capability Centres (GCCs) have become a significant contributor to India’s IT industry’s share of GDP, according to Neelkanth Mishra, Member of the Economic Advisory Council to the Prime Minister and Executive Director-Designate at the World Bank.
Speaking at an Internet and Mobile Association of India (IAMAI) event, he highlighted the growing importance of services exports and the evolving impact of AI on the technology sector.
Mishra noted that services exports grew by 15% in dollar terms in April, outpacing the country’s GDP growth. He added that over the past year, services exports accounted for nearly 20% of India’s incremental GDP.
Discussing the impact of artificial intelligence on the IT industry, he said, “Over the past year, services exports have been nearly 20% of India’s incremental GDP. So, the issue is that the organisational boundary itself may be shifting because of AI.”
He explained that AI is reversing earlier outsourcing trends, with some companies bringing work back in-house instead of outsourcing it. While acknowledging the challenges, Mishra said IT services companies will need to invest significantly in reskilling their workforce to adapt to these organizational changes.
“Does that mean that there is no risk going forward? No, there is significant risk. There is a significant amount of transition that all of these IT services companies need to go through in terms of reskilling of people,” he said, adding that the industry’s workforce transition is still underway.
Mishra also pointed to the Jevons paradox, explaining that while AI may reduce the cost of software development, it is likely to increase the overall volume of software being created, sustaining demand for software engineers over the long term.
He said, “On the whole, it does seem to me that the Jevons paradox. If XYZ company spending $100 million on writing software can do it in $70 million and fire some people, that is their business plan. But if the amount of software written goes up 3-4 times, the number of software engineers in the ecosystem will not change.”
Speaking in his capacity as a World Bank official, Mishra also emphasized the importance of leveraging the institution’s expertise in areas such as education, healthcare, and agriculture to help India’s less-developed states strengthen governance and accelerate economic growth.
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