BENGALURU -- A rush of multinationals establishing tech offices in India in recent years brought relief to a technology workforce under pressure from domestic software companies cutting back on hiring as revenue stagnated, but this job engine is also starting to struggle as artificial intelligence forces companies to reassess their operations.

More than 400 of these offices, called global capability centers (GCCs), were set up in India in the two years to March 2026. Luxembourg-headquartered steelmaker ArcelorMittal and American financial services firm Vanguard were part of the boom as the number of these offices leaped to 2,117, according to estimates by the Zinnov consultancy.

The employee count soared 24% to top 2.36 million. But the number of workers per GCC shows signs of plateauing, after having grown to 1,130 in 2024 from about 910 in 2019. This year, the number is roughly 1,115, indicating that multinationals have also turned cautious on hiring.

Although the number of GCCs -- which handle tasks such as information technology development, research and data science -- looks set to keep increasing, some existing offices have cut jobs. Visa, Technicolour, PayPal and Fidelity are among those that have each slashed hundreds of positions, with industry executives saying AI is making companies rethink their large workforces. "Our whole industry was based on how many people we could hire because work output was directly proportional to the number of people," said Lalit Ahuja, chief executive at ANSR, which helps companies build GCCs. But "the newer GCCs and even the incumbents are rationalizing headcount."

The job squeeze could worsen as a large part of the work done by Indian GCCs is in the crosshairs of AI. Zinnov categorizes nearly 18% of GCC work as "commodities," repeatable tasks like software testing, and 37% as "procedures," work that is complex but follows a well-understood process, such as software development. This implies 55% of "GCC portfolios are under displacement pressure." In light of this, some companies might become skeptical about GCCs altogether, particularly as multinationals take a hard look at their technology spending amid the fallout from the U.S. and Israel's war with Iran.

Last week, Tata Consultancy Services took over American retailer Best Buy's GCC in India, following HCL Tech's acquisition of Guardian Life's GCC in August. "There are companies that are doing advanced technological work, but we are talking about a long tail ... supplying commoditized talent, (and) continuing to play up the cost arbitrage angle," said Praveen Bhadada, chief executive at technology consultancy Neovay, adding that AI could "seriously come after commodity jobs that are in India."

By his estimates, about 25 GCCs in India either closed or were sold in the fiscal year ending this past March. That number is set to double in the current fiscal year.

In addition, a report by consultancy UnearthIQ estimates that more than 500 GCCs in India are not "fully realising their potential," hamstrung by limited decision-making rights for local leadership, falling investment levels and other issues.

The challenges come as European countries like Poland, Hungary and Romania, along with Brazil and Mexico, vie for a slice of the GCC market. India is currently home to nearly 40% of the world's GCCs, according to UnearthIQ estimates, but European operations have gained importance as companies seek to comply with the European Union's General Data Protection Regulation, while Mexico and Costa Rica benefit from business hours that largely overlap with the U.S.

"Any location that can bring in a few good AI people, at least the first cohort, can have that competitive advantage," ANSR's Ahuja said. "The other reason why some of the other locations are coming up is risk mitigation. ... You want alternative locations just in case something goes wrong in India from a geopolitical risk perspective, like travel is disrupted or there are sanctions." Still, there are also indications that India's GCCs are upping their game by gradually taking on more complicated tasks, such as building out AI agents and foundation models.

Zinnov's 2026 estimates of their workload were a sharp improvement from nearly 45% procedural and 35% commoditized work a decade ago. The challenge for India's GCCs is increasing the number of high-skilled workers: Staffing solution provider Quess Corp estimates that about 28% of India's AI-trained workforce of 920,000 specializes in "core AI" work, such as foundational models, agent systems, generative AI engineering and analytics, but these skills comprise about 66% of demand.

UnearthIQ CEO Gaurav Vasu said that the struggling GCCs are more likely to transform than close.

"The fact that the GCC boom is happening at the same time as the AI boom clearly indicates that global organizations need India, both for their existing GCC functions and to build AI-first GCCs," Vasu said. "The future will be led by small and midsize GCCs built around AI-native applications, and since AI needs human-led, human-in-the-loop models, that human layer will come from India." Indeed, Ahuja is betting on the arrival of new GCCs to keep the job engine chugging. McDonald's and Starbucks are among the companies to have announced plans, while the likes of Sanofi and JP Morgan have said they will expand their GCCs, and this could "offset the reduction in headcount," he said.

While India has challenges and other locations enjoy advantages, "it's the ecosystem that brings GCCs to India, the same way startups go to the Silicon Valley," said Kamal Karanth, cofounder of staffing firm Xpheno.

"There are more than 2,000 companies here, which also means India offers experts across domains, which is very underappreciated," Karanth said. "Companies want to be closer to their competitors to know what they are doing, and possibly poach, so this ecosystem piece is a huge advantage for India."