Charles Schwab has opened a new office in Hyderabad this month, not that it seems like a big deal. American companies have been sending jobs to India for decades, where call centers, accountants, and IT-support staff take care of mundane tasks for their better-paid US counterparts.
Yet Schwab is not opening another call center. The company wants to staff its India operations with 2,000 workers by 2027, and the Hyderabad office is going to specialize in technology, engineering, and operations. In addition, Schwab has planned to shift some functions from its contractors to in-house employees. These changes are part of a much bigger trend. India's back-office is transforming into its own brainpower center.
The Old Contract Was Written in Lower Pay
India's old outsourcing model was simple: a company headquartered in New York, London, or Frankfurt needed thousands of workers to handle clerical, customer support, and other routine operations. India produced graduates with degrees in engineering who were willing to work for lower pay. Add to that a deep pool of language skills and an established business-friendly services sector, and you have a recipe for success. Companies outsourced, and India delivered.
The people doing the work remained essentially in "support" positions. India got paid for executing tasks identified by headquarters. This division of labor, with India being a giant executioner for the global multinationals, has defined the old outsourcing model.
GCCs Are Rewriting the Script
The new trend is about global capability centers (GCCs). They are effectively "owned and operated" by the multinational companies, which is different from traditional outsourcing models. Equally important, these are not really just "back-end" capabilities anymore.
India's GCCs provide extended enterprise services spanning R&D, cybersecurity, analytics, financial modeling, drug discovery, cloud computing, and global product development. The value of India's services sector, including the GCCs, is estimated at $100 billion, with more than 2,100 centers employing 2.36 million Indians, according to Reuters.
The dynamic is similar: India provides labor, which is comparatively cheaper than what would be available in the multinational's headquarters. Yet, cost is no longer the sole reason for India's dominance in this space. Other factors, such as talent, are becoming increasingly important.
The Office Leasing Numbers Say It All
If there was a quiet revolution underway, it would show in the number of square feet multinational companies lease and occupy in India. And it seems there is a boom in the works. India registered 45.52 million square feet of office leasing activity in the first half of 2026, with GCCs accounting for 43% of the overall demand, Reuters reports. Meanwhile, according to real-estate consultancy Cushman & Wakefield, there has been a demand for approximately 43 million square feet of office space across the markets it covers, with GCCs driving the demand with 38% year-over-year growth. The numbers might not be comparable due to different methodologies, but the trends are similar. Multinationals are not just quietly adding more staff in India's back offices.
Artificial Intelligence Will Not Kill Offshoring, But It Will Transform It
Artificial intelligence was supposed to make outsourcing obsolete. Why would companies continue to rely on India to handle accounting or customer support when AI could do a far better job? This has partially come true: AI takes over more and more routine operations, and companies are shifting their operations to higher-value areas. At the same time, firms looking to open new GCCs want to hire engineers, cybersecurity specialists, and data scientists. Schwab is expanding its India operations while also using AI to automate some operations. In effect, AI makes offshoring more valuable, but shifts the balance toward automation. Similar trends are likely to affect other occupations. A multinational company might well need fewer analysts or programmers in India to support its AI systems, but it might want to use India's engineers to build these systems.
India Is Moving Up the Value Chain
Suppose there are two operations in India with 1,000 employees each. One essentially follows instructions from India's outsourcing managers to process invoices, and the other builds software for the company's entire operations stack. Both have value, but only one of them gives the Indian employees a meaningful say in the development of products used by customers. Furthermore, only one of them will require India to employ highly qualified workers.
The shift toward higher-value roles is dictated less by costs (though they continue to be important) and more by the availability of talent. India competes with itself to provide multinational companies with qualified workers to build sophisticated systems, applications, and tools. Hyderabad is home to a large pool of cyber security experts. Bengaluru has ample supply of AI-ready engineers. Pune can deliver talent to work on global products. Chennai's employees are set to manage worldwide operations at some point in the future. Effectively, different Indian cities compete with each other to provide multinational corporations with the expertise they need.
The Same Script, But With Fewer Contractors
India's outsourcing model has always been about contractors. An Indian company hires workers and provides digital services to a multinational corporation that buys these services. GCCs continue this tradition but represent a shift toward "insourcing." Domestic workers continue to staff these positions, but they become direct employees of the multinational corporations. Such an approach makes the management of sensitive data easier. In addition, this model disrupts India's traditional outsourcing industry.
An Indian developer working for an outsourcing company that provides software-development services to a US-based multinational could be hired directly by the US company to work out of India. Effectively, the relationship between the Indian developer and the US multinational changes: before, they were separate entities, but now, they are directly integrated. The operations remain in India, but the corporate ties have changed.
The Real Export Is No Longer Seen as an Export
India continues to export millions of jobs to other countries, but the GCCs make it harder to clearly define where these jobs go. An engineer in Hyderabad works for an American company, develops features for its application, and is managed by executive vice presidents based in three different countries. The Indian employee never leaves India, and the application is not necessarily sold there. Nevertheless, important elements of the technology now exist within the Hyderabad-based GCC.
The old-style outsourcing asked the question "how much do we save by doing this in India?" The next round of offshoring asks the question "what capabilities in India does our company need to own?"