Global Companies Shift Core Work to India Hubs as AI Boosts Productivity
Multinational firms are moving engineering, product development, and analytics functions in-house at their India operations rather than relying on outsourcing partners, executives said at a Reuters summit in Bengaluru on May 27.
The trend reflects how AI is changing the economics of global work distribution. As automation handles routine tasks, companies need fewer people to accomplish more, reducing the cost advantage that once made outsourcing attractive.
Strategic Control Over Competitive Functions
Daimler Truck is bringing development of core software and performance-critical algorithms in-house at its Bengaluru innovation centre. The automaker prioritizes internal control over areas that provide competitive advantage, particularly software affecting vehicle performance and safety.
Radhakrishnan Kodakkal, head of Daimler Truck's India hub, said the company will retain activities it considers core and ongoing while turning to external vendors for functions that fluctuate project-to-project.
Target, which employs more than 5,000 people in India, already handles the vast majority of its technology work internally. Andrea Zimmerman, Target's India head, said external partners mainly "provide flexibility" for variable workloads.
AI Enables Scale Without Hiring
IBM's India head Sandip Patel said automation has allowed the company "to do a lot more with the same complementary people."
At Novo Nordisk, the Bengaluru centre now handles substantial preparatory work for global drug launches. John Dawber, managing director for global business services, said a significant proportion of work for any market launch occurs in India, including for the company's recently launched oral obesity pill in the United States.
Workday's India teams increasingly own end-to-end product delivery rather than supporting individual modules, signaling a move away from fragmented, outsourced work models.
Internal Talent Investment Accelerates
Companies are stepping up investments in in-house teams. Nihar Nidhi, India managing director at Catalyst Brands, said most market players are "investing in in-house talent to be able to create capabilities."
Even firms continuing to use vendors are shifting the balance. Partners are increasingly engaged for specialized skills or faster execution, while strategic ownership remains internal.
Pratik Nath, managing director at Epsilon India, said the company can "do significantly more with the same set of people that we have because of the power that AI brings in."
Outsourcing Remains, But Narrower in Scope
Executives said the trend was still evolving and unlikely to eliminate outsourcing entirely. As AI reduces routine work and raises the premium on speed, control, and integration, global firms are steadily expanding what they do in-house.
The shift reflects a structural change in how multinationals use their India operations, moving beyond cost-focused support roles to centres that own core functions. For product development teams, this means competing for roles that require strategic decision-making and technical depth rather than execution of predetermined tasks.
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