Something significant is happening to India’s technology workforce in 2026. Most people are describing the symptoms. Very few are examining the cause.
Indian IT services firms are reducing headcount at levels not seen in the sector’s history. TCS, the country’s largest IT employer, reduced its workforce by approximately 2 per cent in FY26, its largest single-year reduction in recent memory, citing a pivot to an AI-first delivery model.
Media reports suggest that across India’s five largest IT services firms, more than 80,000 roles disappeared in the eighteen months to mid-2025. These were not cuts driven by financial distress. Revenues remain stable. Margins remain healthy. The reductions reflect a strategic shift rather than a crisis response.
At the same time, industry estimates suggest India’s Global Capability Centres are on track to hire more than 510,000 professionals in 2026, with most new roles centred on AI, data science and intelligent automation. Hiring accelerated even as the broader white-collar job market slowed.
These are often treated as separate stories. They are not.
“Did India’s IT services industry spend two decades building a talent ecosystem that its biggest clients no longer need it to manage?”
The engineers, architects and technology professionals leaving India’s IT services firms are increasingly joining the Global Capability Centres of the very multinational companies those firms have served for decades. Often, they are moving across the road rather than across the country.
This is not a cyclical hiring trend. It is a structural shift in how global companies access Indian talent. And it raises a difficult question.
Did India’s IT services industry spend two decades building a talent ecosystem that its biggest clients no longer need it to manage?
The intermediary is being bypassed
The Indian IT services model had a logic that served everyone reasonably well for two decades.
Global companies needed technology work done. Indian firms supplied the talent. TCS, Infosys, Wipro, and HCL built enormous organisations around the ability to recruit, train, deploy, and manage large numbers of technology professionals on behalf of clients worldwide. The model created millions of careers. It made Indian engineering graduates among the most employable in the world.
The model also had a structural vulnerability.
It depended on remaining indispensable to the client.
The moment the client no longer needs the intermediary, the model does not slowly weaken. It begins to hollow out.
That is what is happening. The companies building GCCs in India today are not new entrants. They are the same multinationals that created the outsourcing contracts that made TCS and Infosys what they are. They built the demand that created the Indian IT services industry. They shaped the delivery expectations, provided the revenues, and validated the model for two decades.
Now they are building their own capability centres. Hiring directly. Setting up shop in Bengaluru, Hyderabad, and Pune. Paying more. Offering ownership of global work rather than delivery against someone else’s specifications.
The clients became the competition. On Indian soil. With Indian talent. Using the very capability that Indian IT services firms spent twenty years building.
The salary gap that says everything
The most revealing indicator of this shift is not headcount. It is compensation.
According to the EY Future of Pay 2026 Report, GCCs are leading India’s salary increment projections at 10.4 per cent, ahead of IT services at 9.6 per cent. That gap looks narrow on paper. The underlying salary reality is not narrow at all.
NASSCOM and EY GCC Pulse Survey 2025 data indicates that GCCs typically pay 25 to 40 per cent more than equivalent IT services roles at the mid-senior level. To put that in concrete terms: media reports citing compensation benchmarking surveys suggest a senior engineer at a GCC in Hyderabad might earn twice what the same title commands at a mid-size IT services firm in the same city.
Same city. Same title. Same years of experience. The difference is the employer model.
According to the EY GCC Pulse Survey 2025, GCC attrition has fallen to 9 per cent, down from 13 per cent in 2023, the lowest of any major employer segment in India’s technology sector.
When the better-paying option also has lower attrition, the employer brand equation is not close.
HR leaders inside the IT services sector know this better than anyone. The question of how to respond sits on every CHRO’s desk in the sector, and most of them do not yet have a satisfying answer.
“The clients became the competition. On Indian soil. With Indian talent. Using the very capability that Indian IT services firms spent twenty years building.”
The talent is not leaving the industry. It is leaving the model
According to staffing firm Xpheno, nearly half of the professionals displaced from Indian IT services firms have found roles in GCCs. They are not leaving India’s technology industry. They are moving within it, from delivering for a client to becoming part of the client’s organisation.
The IT services model built this talent. Trained it, deployed it, gave it client exposure and project experience. That investment is now benefiting the organisations that are competing with the very firms that made it.
There is an irony here that the sector has not fully acknowledged.
The professionals making this move are not jumping to startups or relocating abroad. They are staying in the same cities, often moving into buildings a few kilometres away, doing increasingly similar work for significantly better pay with more direct ownership of outcomes. The switching cost is low. The financial incentive is substantial. The career narrative of moving from “delivery” to “ownership” is compelling.
From an HR perspective, this is a retention problem unlike any the sector has previously faced. The competition is not a startup offering equity or an overseas opportunity requiring relocation. It is a well-funded, structured, professionally managed organisation that is often the IT services firm’s own client.
“The premium is no longer just financial. It is professional.”
What has changed about GCCs
The perception of GCCs has changed far faster than many organisations realise.
According to the EY GCC Pulse Survey 2025, 87 per cent of GCCs now own end-to-end global processes, and 45 per cent participate directly in global enterprise decision-making. These are not cost centres performing transactional work. They are capability centres building global products, running AI platforms, owning cybersecurity architecture, and making decisions that affect the parent company’s operations worldwide.
NASSCOM data indicates that roughly 80 per cent of new GCCs launching in 2026 are prioritising AI and machine learning capabilities at their core. That is a complete inversion from the model of a decade ago, when most GCC work focused on infrastructure support and process execution.
A technology professional joining a GCC today is joining an organisation where their work has direct and visible impact on what the parent company builds and how it operates globally. That is fundamentally different from the value proposition offered by outsourced delivery. It is closer to the value proposition of a product company.
IT services firms are not offering an equivalent alternative. Their delivery model, optimised for utilisation rates, bench management, and client-defined specifications, cannot easily replicate the ownership culture that GCCs are offering. The structural difference between the two models is not a gap that can be closed through employer branding alone.
This explains why higher salaries alone are not the whole story. Professionals are not moving only because GCCs pay more. They are moving because the work itself has changed. Ownership, visibility, global exposure and proximity to decision-making have become career accelerators in a way traditional delivery models struggle to match.
There was a time when joining TCS or Infosys meant working on global technology programmes that few Indian companies could offer. That distinction has narrowed considerably. Today, GCCs are offering the same global exposure, but with greater ownership, faster decision-making and a closer connection to the business outcomes the work creates.
The premium is no longer just financial. It is professional.
“The Indian IT services industry taught the world to trust Indian technology talent. It should not be surprised that the world now wants that talent without the intermediary.”
The question the sector is avoiding
India’s IT services industry is one of the great economic success stories of the past three decades. It created a professional class, built globally recognised brands, and proved that Indian talent could compete at the highest levels of technology delivery worldwide.
The GCC story does not diminish that. In a real sense, it is a consequence of it. The fact that global companies want to build large, sophisticated capability centres in India is a direct result of what the IT services model demonstrated about Indian talent and India’s ability to support complex technology work at scale.
But the consequence comes at a structural cost to the original model.
Every senior professional who moves from an IT services firm to a GCC takes accumulated knowledge and capability with them. Every graduate who chooses a GCC over an IT services firm compounds the shift. Every client that builds a GCC is, by definition, reducing its dependence on the outsourcing relationships that the IT services model depends on.
The IT services sector built a model. The model trained millions of people. Those people are now being recruited by the companies the model was designed to serve.
For HR leaders inside IT services firms, the strategic questions this raises are not comfortable ones.
What is the employee value proposition that competes with a 25 to 40 per cent salary premium? How do you retain experienced professionals when the client sitting across the table is also the recruiter in their inbox? What does career development look like inside a model that is actively reducing its senior layers while the model next door is building them?
These are not talent acquisition questions. They are questions about organisational identity and long-term purpose.
The IT services model built India’s technology reputation. The GCC model is now the primary beneficiary of it.
What is already clear, however, is this: India’s IT services industry spent two decades proving the value of Indian technology talent to the world. The world listened. It simply decided it would rather hire that talent directly.
The Indian IT services industry taught the world to trust Indian technology talent.
It should not be surprised that the world now wants that talent without the intermediary.
1 Comment
An exceptionally well-researched and thought-provoking article. The observation that India’s IT services industry painstakingly built world-class talent, only to see global clients hire that same talent directly through GCCs, perfectly captures today’s structural shift. One additional opportunity is for IT firms to build AI-native talent clouds powered by agentic AI, skill graph analytics, and federated learning. By enabling continuous reskilling, trusted AI governance, and outcome-based innovation ecosystems, they can transform from talent suppliers into indispensable strategic innovation partners.