India’s GCC Boom Faces Hurdles as US Tariffs and Agentic AI Raise Concerns

Ira Singh
Khabar Khabaron Ki,13 May’25

India’s ascent as a global hub for Global Capability Centres (GCCs) is facing unexpected roadblocks, with geopolitical tensions and rapid technological evolution challenging its momentum. With over 1,700 GCCs employing 1.9 million professionals, India has long been at the centre of the global outsourcing map. However, a mix of U.S. tariff uncertainty and the rise of agentic artificial intelligence is causing delays and strategic recalibrations among companies planning to expand or enter the Indian market.

Industry observers point to the resurgence of tariff-related rhetoric, particularly tied to former U.S. President Donald Trump’s trade policies, which have led many American multinationals to hit pause on their offshore expansion. “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,” Roop Kaistha, Regional Managing Director, APAC at AMS reportedly stated. “The cycle from starting conversations to getting a go-ahead to contracting is increasing, and decision-making is becoming slower.”

While the tariffs are not directly levied on services, the strain on the core businesses of U.S.-based multinationals—ranging from retail to semiconductors—is forcing budgetary constraints. “Some US-based MNCs are hitting pause on new tech GCCs or expansions… Projections suggest a range of 6 to 18 months in delays. Around 20-30% of the 500-plus GCCs in the pipeline for 2025-26 are experiencing delays,” noted Sandeep Agarwal, India MD and Global CTO, Visionet Systems.

These delays have momentarily softened the demand for commercial real estate. “As tariff uncertainty looms over GCCs in India, real estate requirements have witnessed a momentary pause. However, companies have not abandoned plans… They are recalibrating strategies to optimise operational costs,” added Shrinivas Rao, CEO of Vestian.

Agentic AI Adds to the Challenge
Adding to the geopolitical concerns is the rise of agentic AI—systems capable of independently executing tasks without human intervention. These technologies are prompting headquarters to reevaluate GCCs’ roles and long-term relevance. “Suddenly, GCCs are getting asked what they are doing with so much happening on the AI side,” stated Gaurav Gupta, Partner and GCC Industry Leader at Deloitte India.

This shift is pushing GCCs up the value chain. Demand is rising for roles in cybersecurity, cloud computing, data science, R&D, and niche technology skillsets, while recruitment in traditional roles such as coding and mid-office operations is waning. “Our banking clients used to hire about 14,000–16,000 annually at their peak. That number has come down to almost a third. Attrition rates have also dropped since April from the late teens to 11–13%,” stated Kaistha, indicating a potential slowdown in hiring by 3–5% over the coming quarters.

Despite the short-term disruptions, agentic AI adoption is still in its infancy. Experts believe that real, widespread implementation may take another three to five quarters. “Companies are still in experimentation and MVP (minimum viable product) stages, and face regulatory and ethical hurdles, particularly in sectors like BFSI, pharma, and aerospace,” Kaistha noted.
*Shifting Locations and Priorities*
With major cities like Bengaluru and Hyderabad nearing saturation, companies are eyeing tier-II cities to spread operations and tap into fresh talent pools. “There is a war for talent in Bengaluru and Hyderabad, and the best way many firms recruit is by poaching from competitors,” said Kaistha.

This saturation is forcing firms to consider additional investments in infrastructure and connectivity in newer locations. The long-term strategy for most companies remains rooted in India, but the form and function of GCCs are evolving quickly in response to global and technological shifts.

Outlook: Strategic but Positive
Even as short-term headwinds stall immediate expansion plans, analysts remain optimistic about the sector’s long-term trajectory. India’s strategic advantage—ranging from its deep talent pool to cost-effectiveness—continues to make it a preferred destination. However, the GCCs of tomorrow may be leaner, more specialised, and more embedded in high-impact operations.