Global companies are bringing more work in-house at their India cost centres as AI boosts productivity and reduces reliance on outsourcing partners, ​executives at a Reuters summit in Bengaluru said.

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 such as engineering, product development and analytics.

At ⁠Daimler Truck’s Bengaluru hub, the company is bringing development of core software and performance-critical algorithms in-house, said Radhakrishnan Kodakkal, head of its innovation centre in India.

The automaker is prioritising internal control over ‌areas that provide a “competitive” edge, particularly software that directly influences vehicle performance and safety, he said.

Daimler Truck will retain activities it considers core ‌and ongoing, he said, while turning to external vendors for functions that fluctuate at ‌the ⁠project level.

U.S. retailer Target, which employs more than 5,000 people in ⁠India, already relies heavily on internal teams.

“We do the vast majority of our tech in-house already,” Target India head Andrea Zimmerman said, adding that external partners mostly “provide flexibility.”

While low costs ​initially drove the growth of India’s ‌global capability centres, AI is now shaping how far they move up the value chain, enabling companies to handle more work internally without proportional hiring.

At IBM, automation has allowed the company “to do a lot more with the same complementary people,” ‌India head Sandip Patel said.

The shift is also evident in how work is ​distributed globally.

Danish drugmaker Novo Nordisk’s Bengaluru centre is playing a growing role in global drug launches, handling more preparatory work, including for its ⁠recently launched oral obesity pill in the United States.

“A good proportion of the work for any market (launch) would be done out of the India centre. There’s probably not a ‌medicine launched anywhere in the world that hasn’t had a thumbprint of Bengaluru on it,” said John Dawber, managing director for global business services.

Enterprise software firm Workday said its India teams are increasingly responsible for end-to-end product delivery rather than supporting individual modules, signalling a move away from fragmented, outsourced work models.

U.S. retail group Catalyst Brands said companies are also stepping up investments in internal talent.

“Most players in the market … ‌are investing in in-house talent to be able to create capabilities,” said Nihar Nidhi, Catalyst’s India managing ​director.

Even among firms that continue to use vendors, the balance is shifting. Instead of long-term outsourcing contracts, partners are increasingly engaged for specialised ⁠skills or faster execution, while strategic ownership remains internal.

Executives said the trend was still evolving ⁠and unlikely to eliminate outsourcing. But as AI reduces routine work and raises the premium on speed, control and integration, global firms are steadily expanding ‌what they do in-house.

“Essentially, we are able to do significantly more with the same set of people that we have because of the power that ​AI brings in,” Epsilon India Managing Director Pratik Nath said.

Published – May 27, 2026 10:02 am IST