What’s Happening — and Why Now
For over two decades, India’s IT and business process management sector has powered the back-office and software needs of global enterprises—reaching revenues of $282.6 billion in FY2025 (NASSCOM). But 2025 marks the industry’s most profound shakeup since the early BPO boom, as two transformative forces converge:
- AI-driven automation is rapidly reducing the need for traditional coding, software testing, and low-complexity support roles.
- The rise of Global Capability Centres (GCCs): Multinational companies are building their own AI-first hubs in India, bypassing legacy outsourcing providers to bring innovation in-house.
This isn’t a slow-moving change—it’s a rapid, disruptive wave.
According to Gartner’s Q2 2025 IT Spending Forecast, global IT spending will reach $5.43 trillion (a 7.9% year-on-year increase), and AI-focused infrastructure spend (such as data centres) is expected to surge by 42.4% in 2025. However, growth in software and IT services is slowing, and legacy IT outsourcing spend in developed economies remains mostly stagnant.
This disruption in IT (see Digital India, Decoded) is exactly what’s pushing Indian enterprises toward the outcome-driven model I’ve described in detail.
The Problem Statement
1. Revenue Pressure — Current Reality
Growth continues to face pressure across India’s largest IT firms. For example, Infosys revised its FY26 revenue growth guidance upward to a range of 1% to 3% in constant currency, after a stronger-than-expected Q1 performance driven by large deal wins and AI-focused projects. This compares to its earlier FY26 guidance of 0–3% growth, reflecting cautious optimism amidst client budget shifts toward AI and digital transformation. Meanwhile, TCS expects muted growth, with some forecasts predicting a slight revenue decline of around 1% for FY26, impacted by softness in discretionary spending and delays in project ramp-ups.
Despite revenue challenges, companies are investing heavily in AI and cloud services, which promise to reshape the service portfolio and margins going forward.
2. Job Disruption — Reality vs. Forecast
Current Reality: In July 2025, Reuters confirmed that TCS will cut 12,180 jobs (about 2% of its workforce) — the largest layoff in its history. CEO K. Krithivasan cited “skill mismatches and automation-led efficiencies” as drivers.
A report by ServiceNow estimates that over 10 million jobs in India will be reshaped by AI by 2030, including automation of routine tasks in sectors like IT/BPO, manufacturing, retail, and education, pointing to very significant impact on low- and mid-skill roles in the IT/BPO sector specifically
An Ernst & Young (EY) report from 2025 forecasts AI will transform around 38 million jobs across India by 2030, with considerable productivity gains and task automation; IT/ITeS sectors are expected to see 19% productivity gains, reflecting automation of many routine tasks typical in low- and mid-skill IT jobs.
3. Job Creation Offsets — Forecast
Amid the churn, NASSCOM estimates the industry will create 1 million new AI-related roles by 2026, from AI engineering to risk governance and domain consulting. Specialized skills—not headcount—are the new currency
4. GCC Expansion — Current Reality
India houses over 1,900 Global Capability Centres, directly employing around 2 million people in FY2024, with GCC headcount growing at an 11.3% CAGR since 2015. The GCC market is set to reach $99–$105 billion by 2030 (NASSCOM/Zinnov), with nearly half of new GCCs focused primarily on AI, analytics, and digital product innovation. American and European industry leaders such as Best Buy and Chevron are ramping up tech hiring in their India hubs by 30–40%—a trend seen across large multinationals.
GCCs offer direct control over talent and innovation, faster decision cycles, and digital-first cultures—raising the bar for legacy outsourcers.
5. Margin Squeeze — Current Reality
Even with revenue growth, headcounts are falling.
Example: HCLTech’s services revenue grew 4.8% in FY2024, but its workforce shrank 1.8%, signalling a decoupling of revenue from manpower.
The Way Forward
The evidence points to reinvention, not just incremental change:
- AI-first service models — shifting from manpower-based billing to outcome-based AI-powered platforms.
- Deep vertical specialisation — e.g., BFSI regulatory onboarding, manufacturing predictive maintenance, logistics AI optimisation.
- Speed over scale — BFSI AI pilots now move from proof-of-concept to production in 6–10 weeks.
- Partnering with GCCs — offering niche capabilities they lack in-house, like compliance automation or AI model fine-tuning.
Reinvention in Action: In August 2025, Infosys acquired a 75% stake in Telstra’s Versent Group (valued at A$233.3 million / US$153 million), forming an AI-led cloud services JV in Australia. Combining Versent’s local digital expertise with Infosys’s AI platforms (Topaz, Cobalt) reflects how legacy firms are reconfiguring toward outcome-based, platform-driven delivery.
Global Context
India ranks 46th globally in Oxford Insights’ Government AI Readiness Index 2024—ahead of most developing peers but behind Singapore (1st) and UAE (12th).
The World Bank notes that countries like Vietnam and the Philippines are also weaving AI into their BPO strategies, but India’s talent scale and IT maturity give it both the largest upside and the greatest exposure to disruption.
The Opportunity for Specialist Firms
As giants like Infosys scale globally—evidenced by high-profile JVs like the Australian Versent deal—they still depend on nimble, domain-focused partners to execute transformation in verticals like BFSI, healthcare, and compliance control rooms. In this shifting landscape, small, niche AI-first consulting firms can thrive by targeting high-value segments:
- Agility — deploy pilots quickly without bureaucratic delays.
- Specialisation — own specific high-demand niches (e.g., AI-powered corporate payments reconciliation, KYC/AML onboarding automation, workflow orchestration).
- GCC Collaboration — act as a trusted execution partner, integrating into in-house AI strategies.
- ROI-Centric Approach — link every engagement to measurable metrics like fraud reduction, compliance turnaround, and reconciliation accuracy.
AI Opportunity–Risk Heat Map (Example for BFSI Focus)
| Offering | Opportunity Level | Risk Level | Key Strategic Action |
|---|---|---|---|
| Corporate Payments Reconciliation (AI-enhanced) | High | Low-Medium | Build BFSI AI case studies & measurable ROI examples |
| Pega-based Onboarding, KYC, Compliance | High | Low | Market as ‘AI-first compliance accelerator’, target GCCs |
| Contract Lifecycle Automation | Medium | Medium | Differentiate with domain-specific clauses, legal AI integrations |
| Invoice Automation & Processing | Medium-High | Medium | Highlight AI fraud detection, duplicate prevention in AP |
| Workflow Orchestration Platform | Medium | Medium-High | Integrate predictive analytics, pitch to mid-sized GCCs |
| RPA + AI Integration | High | Low-Medium | Bundle with process consulting for BFSI & insurance clients |
Balanced View: Threat vs. Opportunity
Final Thought
AI is not the end of Indian IT—it’s the start of a re-segmentation.
For large vendors, the challenge lies in the speed of reinvention.
For specialists, the opportunity is to scale smart before the window narrows.
For a deeper dive into how enterprises are building those outcome-driven models, see my sectoral analysis in India’s Digital Ground Game (Part 2).
Sources:
