Is GCC Insourcing Weakening IT Services Relationships?

As global capability centres (GCCs) expand rapidly and increasingly bring technology capabilities in-house, a recurring industry question has emerged: will insourcing weaken the long-standing relationship between multinational enterprises and IT services firms?

Recent commentary from HCLTech suggests the answer may be more nuanced than a simple shift from partnership to competition. 

During one of its earnings calls, the company noted that it already works closely with nearly 200 GCCs globally, positioning itself as a strategic partner supporting clients’ operating and technology strategies, even as certain functions move internally. 

While executives acknowledged that GCCs are absorbing more work in-house, they argued that the growing number and diversity of new centres are creating fresh avenues for collaboration rather than displacement. HCLTech emphasised its strengths in high-value services, software capabilities, and domain expertise that complement GCC expansion rather than competing with it directly.

The broader industry context, however, reveals why this question has gained urgency.

For years, India’s IT services sector relied heavily on global outsourcing demand, leaving it vulnerable to economic slowdowns and shifting enterprise priorities. Critics increasingly argue that this model encouraged service-oriented delivery over deep R&D investments and high-end skill development. Today, slowing outsourcing growth, combined with the rapid rise of AI-driven automation, is beginning to weaken that traditional engine.

At the same time, GCCs are pursuing a different strategy—building internal capabilities to gain greater control over technology outcomes. 

By hiring and scaling their own engineering teams, global enterprises can reduce vendor overheads while strengthening ownership of intellectual property, data security, and product direction. As a result, GCCs are now competing directly with IT services firms for advanced engineering talent, particularly in AI, data, cybersecurity, and platform engineering.

Financial institutions were among the earliest adopters of this do-it-yourself (DIY) approach, driven by regulatory pressures, compliance requirements, and data sovereignty concerns. Deutsche Bank’s India GCC illustrates this transition clearly. 

The organisation has deliberately stabilised its workforce mix at roughly 70% internal employees and 30% external partners, signalling a decisive move towards internal ownership. 

External vendors continue to provide specialised expertise and support during peak demand periods, but ownership of core platforms, intellectual property, and strategic innovation now sits firmly within the GCC. This represents a classic evolution toward a DIY-GCC model, where internal teams lead core development while partners play an enabling role rather than a controlling one.

Fully owned captive setups are particularly attractive for strategic mandates such as R&D centres, innovation labs, and specialised centres of excellence that evolve over multi-year cycles. 

Organisations require full control in these environments to pivot technology stacks, embed proprietary processes, and align capabilities with long-term business strategy. 

The economic rationale is equally compelling: companies operating fully owned GCCs report cost savings of 25-35% compared with building equivalent teams in developed markets—including approximately 35-40% savings in financial operations, 30-45% in human resources and compensation, and up to 50% in IT support functions.

Industry advisors echo this sentiment. Gaurav Shukla, Partner and Leader, Cyber, Deloitte South Asia, tells AIM that external innovation ecosystems are increasingly seen as supplementary rather than competitive to in-house capabilities.

From Vendor Model to Capability Augmentation

For IT service providers, this shift requires repositioning their value proposition. Venkatesan Somasundaram, Global GCC Head at Sonata Software, tells AIM that insourcing discussions are now common across client conversations.

“Our focus is on capability augmentation, not replacing internal teams. I want to repeat that because it’s very important. We are not trying to replace the GCC’s internal teams. We are trying to augment their capabilities,” he mentions.

According to Somasundaram, service providers increasingly handle specialised or emerging technology areas, allowing GCC teams to focus on strategic initiatives. He adds that building trust has become critical, especially as enterprises remain cautious after past vendor experiences.

Unlike traditional outsourcing contracts, newer engagements emphasise outcome-based and modular models.

“GCCs pay only for measurable impact. Rather than paying for every activity… they pay for the value delivered,” he explains.

Greenfield, Brownfield, and the Mid-Market Opportunity

The GCC ecosystem itself is diversifying. Some IT firms focus on helping enterprises establish new centres—known as greenfield GCC setups—covering infrastructure, taxation, staffing, and geopolitical considerations. Others work with already established centres through brownfield engagements.

Sonata Software says it operates across both segments while increasingly targeting mid-market GCCs, particularly companies with revenues between $25 million and $1 billion.

Private equity firms are also emerging as a new driver of GCC expansion, bringing portfolio companies to India but often requiring external expertise to establish operations successfully.

“An AI project might start as a few hundred thousand dollars… Setting up a technology centre could become a multi-million-dollar opportunity… Infrastructure support could add another multi-million-dollar stream,” Somasundaram says.

The evolution of engagement models is also giving rise to ‘GCC-as-a-Service’, according to Anuj Khurana, Co-Founder and CEO of Anaptyss, a digitally-enabled managed services firm specialising in the banking and financial services industry, tells AIM. “The ‘GCC as a Service’ model marks a clear shift in how global capability centres are conceived and scaled in India.”

Organisations are moving away from asset-heavy setups towards more agile, partnership-led approaches focused on speed, access to specialised talent, and cost efficiency.

Khurana highlighted growing collaboration between GCCs and academic institutions as a key transformation. “These partnerships go beyond talent acquisition; they are creating continuous innovation pipelines… blending academia with real-world problem solving in areas such as AI, data engineering, and emerging technologies,” he states.

He adds that GCCs are increasingly viewed as engines of product innovation and digital transformation rather than back-office extensions.

Industry observers say the evolving dynamic represents a redistribution of responsibilities rather than the displacement of IT services firms.

Sunil Padmanabh, a strategic advisor for GCCs, explains this shift with a practical example: “A global retail company’s GCC now builds and owns its core data and AI platform internally. Earlier, that work went to an Indian IT vendor.” 

However, enterprise-scale complexity still requires external expertise. “When that platform has to integrate with SAP, legacy ERPs, systems across 20 countries… they still rely on Indian IT,” he states.

“GCCs are absorbing core thinking and ownership. Indian IT continues to handle scale, integration, and operational complexity. This is a redistribution of work, not replacement,” he says, summarising the transition.

Adding to this, Alouk Kumar, CEO of Inductus Group, tells AIM, “A GCC is naturally tethered to the parent company’s internal roadmap and legacy systems. In contrast, major IT firms invest billions in R&D and maintain vast ecosystems of niche tech partners and startups. By collaborating, a GCC can ‘plug into’ this external innovation engine, experimenting with emerging technologies like generative AI or quantum computing without the risk of permanent, high-cost hiring.”

This creates a flexible model in which the GCC handles the core business logic while the IT partner provides the cutting-edge specialised talent required for specific, high-impact transformations.

Rohit Kaila, Head of Technology and Site Leader Wayfair India TDC, tells AIM in a conversation that “the core work always stays inside. It doesn't matter. You have GKE or not”. He emphasises that enterprises retain ownership of capabilities central to business differentiation. At the same time, IT services firms continue to play an important role in areas requiring flexibility and adaptability. 

Building on earlier remarks, Pankaj Vyas, CEO & MD, Siemens Technology and Services Pvt. Ltd, and Head of Siemens Foundational Technologies Development, points out that the future of GCCs will be shaped less by what work they do and more by how they approach it. 

Addressing concerns about the future of IT services firms, both leaders describe the current moment as a natural phase of industry evolution. 

“We are in a tech space… that reinvents itself every few years,” Kaila says, adding that while this may be one of the biggest reinventions yet, “their existence will not be threatened, but the nature of work will significantly change.”

“The companies that are able to adapt to that change very quickly will last. The ones that don't will disappear,” he warns. 

He suggests that IT services companies may evolve into broader transformation partners, stating that they will need to become “AI enablement or transformation companies” rather than firms that simply execute assigned tasks. Ultimately, he concluded that the industry is moving towards outcome-driven engagement models, where value creation—not service delivery alone—defines success.