US tariffs, AI play spoilers in India’s GCC boom

Bengaluru: Already home to 1,700 global capability centres (GCCs), employing 1.9 million professionals (as per commercial realty solutions provider - Vestian), India has been scripting a major success story of turning into a hub for the sector. However, Donald Trump’s tariff escapade seems to have stolen some of the thunder, with potential entrants dithering over moving in, given the uncertainties clouding the horizon. Agentic AI has also put a spoke to the wheels that was just gathering pace, say analysts.

“As tariff uncertainty looms over GCCs in India, real estate requirements have witnessed a momentary pause. However, companies have not abandoned plans for establishing new offices or expanding existing ones. Currently, they are recalibrating their strategies to optimise operational costs,” observed Shrinivas Rao, CEO, Vestian.

“There were at least eight conversations we had with new GCCs who were on the verge of making decisions but have gone back and said they need more time. The cycle from starting conversations to getting a go-ahead to contracting is increasing, and decision-making is becoming slower,” stated Roop Kaistha, regional managing director, APAC, at talent acquisitions solutions firm, AMS.

Such responses are specific to US-based GCCs, remarked analysts, which make up the majority of India’s GCCs.

“Some US-based MNCs are hitting pause on new tech GCCs or expansions, not because of tariffs on services but because tariffs on their core businesses (say, retail or semiconductors) tighten budgets. The duration of these delays varies, but projections suggest a range of 6 to 18 months. Estimates suggest that about 20-30% of planned GCCs, roughly 100-150 out of the 500 plus in the pipeline for 2025-26, are experiencing delays,” explained Sandeep Agarwal, India MD and Global CTO, Visionet Systems.

Across sectors, GCCs are taking a temporary “wait and watch” approach and trying to optimise operational costs as supply chains shift, as per experts. Tariff-sensitive sectors such as automotives, semiconductors and electronics, manufacturing, banking and financial services, and pharmaceuticals are seeing the most impact.

In the face of agentic AI

Besides the tariff hitch, GCCs are having to rethink their operations as agentic AI (that require not human interventions) are taking over some of their jobs. “Suddenly, GCCs are getting asked by their headquarters as to what they are doing with so much happening on the AI side. This is especially because many capabilities where agentic AI could play a role now sit in GCCs. What’s more is that, in the ecosystem with third-party vendors, startups, and other players, GCCs are trying to make sure that they are ahead of the curve so that they continue to drive these discussions as well as decisions within the organisation,” observed Gaurav Gupta, Partner and GCC Industry Leader, Deloitte India.

India’s rising strategic advantage beyond the cost factor, is also driving these shifts, say industry insiders. GCCs are also being pushed by their parent companies to go up the value chain. Due to these developments, observers are convinced that leadership changes can be expected, as demand switches to high-impact roles while companies incorporate agentic AI.

These roles include cybersecurity, cloud computing, R&D (research and development), data science, and other niche skills. Meanwhile, recruitment for positions such as mid-office operations and coders is decreasing.

While downsizing has not been observed, hiring going forward is expected to reflect this.

“Our banking clients used to hire, at their peak, about 14-16,000 annually. But the projection for 2025 has come down almost to one third. In fact, attrition rates have also dropped since April from late teens to 11-13%. Attrition levels slowing down means that hiring overall might, in the next few quarters, slow down by 3-5% especially if we continue to see bigger changes in new GCCs,” highlighted Kaistha.

Though long-term outlook stays positive, as GCCs expand and new ones enter, they are likely to look slightly different in their operations, according to analysts.

For agentic AI, real usage will only start after 3-5 quarters as companies are currently in their experimentation and minimum viable product (MPV) mode. Companies are experiencing barriers such as doing this ethically, regulatory (particularly in highly regulated industries like banking, financial services, pharmaceutical as well as aerospace), and data security which require huge upfront investments, Kaistha emphasised.

New destinations

Agarwal said, “Major cities like Bengaluru and Hyderabad are approaching saturation, prompting companies to consider tier-II cities, which require additional investments in infrastructure and connectivity.”

“In certain hotspots, particularly like Bengaluru and Hyderabad, there is a war for talent because there have been so many new GCCs established. The best way that they want to get talent is by poaching from one another. That continues to be a challenge,” added Kaistha.