It is evident that Global Capability Centers, or GCCs, saw nearly 40 per cent revenue growth in 2024, coinciding with a noticeable slowdown in Indian IT services revenues. According to industry experts, two major changes are reshaping the business landscape for top Indian IT firms like Tata Consultancy Services, Infosys and HCL Technologies. These are the rise of GCCs and the rapid adoption of Artificial Intelligence.
GCCs are increasingly becoming direct competitors to IT vendors. Reports indicate that around 65 per cent of enterprises are moving at least 10 per cent of their vendor work to GCCs, especially in high-value areas such as research and development, digital transformation and AI-driven projects. One expert notes, “It is hard to imagine that a near 40 per cent growth in GCCs revenues in 2024 did not cause a rather sharp slowdown in IT Services revenue growth in the same year.” When global banks or enterprises outsource work to India, the volume is now often split between their in-house GCC and external vendors.
Artificial Intelligence is another significant challenge. Generative AI is already showing 10 to 50 per cent productivity gains in coding, making the marginal cost of writing software close to zero. This could lead to commoditised pricing and stagnating revenues for IT vendors. While optimists suggest lower costs could increase demand and unlock new use cases, experts are cautious, highlighting that falling prices may not align with rising demand.
Experts also suggest that the IT sector may be near peak employment levels. AI can disrupt entire workflows quickly. “For every legal AI model, scores of legal firms will be impacted. For every animated AI model, the business model of production studios will be impacted, and so on. The main point I want to make is that over the next few quarters, we are likely to witness a sudden 20 per cent drop in prices of sectors or companies that are being disrupted,” one analyst said.
Looking at the numbers, before the pandemic, top IT firms grew at around 10 per cent constant currency revenue CAGR. Post-pandemic, the growth rate slightly improved to 10.5 per cent, while rupee revenues rose faster at 14.5 per cent due to a weaker currency. However, over 2024 to 2025, growth slowed sharply. Constant currency revenues grew just 3 to 4 per cent, and operating profit increased only in mid-single digits.
This slowdown occurred even as global GDP, especially in the US, grew steadily. Experts argue that the slowdown cannot be attributed only to macroeconomic factors. The main drivers are GCC insourcing and AI disruption.
Also read: Viksit Workforce for a Viksit Bharat
Do Follow: The Mainstream formerly known as CIO News LinkedIn Account | The Mainstream formerly known as CIO News Facebook | The Mainstream formerly known as CIO News Youtube | The Mainstream formerly known as CIO News Twitter |The Mainstream formerly known as CIO News Whatsapp Channel | The Mainstream formerly known as CIO News Instagram
About us:
The Mainstream formerly known as CIO News is a premier platform dedicated to delivering latest news, updates, and insights from the tech industry. With its strong foundation of intellectual property and thought leadership, the platform is well-positioned to stay ahead of the curve and lead conversations about how technology shapes our world. From its early days as CIO News to its rebranding as The Mainstream on November 28, 2024, it has been expanding its global reach, targeting key markets in the Middle East & Africa, ASEAN, the USA, and the UK. The Mainstream is a vision to put technology at the center of every conversation, inspiring professionals and organizations to embrace the future of tech.
