The Great Shift: Why Indian IT Companies Must Move from Industry to Function

The news of TCS planning to lay off 12,000 employees by the end of this year has sent ripples across India’s tech and business media. In a sobering trend, more than 1.25 lakh IT professionals have reportedly lost their jobs in India since early 2023 — largely attributed to the accelerating AI-fication of routine tech roles. This development, while unsettling, is not entirely surprising. AI is increasingly automating mechanical entry-level and even mid-level IT work: testing, low-level coding, monitoring, support, BPM tasks — the bread & butter of India's IT giants for decades.


But that’s only one part of the story. The other side is less discussed, but far more telling: GCCs (Global Capability Centres) — especially mid-tier ones — are hiring aggressively, not retrenching.

While Indian IT firms are trimming their workforce in response to shrinking profit margins from commoditized work, GCCs are onboarding niche engineering talent — AI engineers, chip designers, data scientists, platform architects, system integrators, simulation experts, and product lifecycle managers. A recent ET report highlights that mid-tier GCCs are hiring even faster than the top-tier ones, as global companies in newer industries like EVs, energy, medical tech, semiconductors, and defence systems ramp up R&D and systems engineering capabilities in India.


IT Services Today: Industry-Specific Offerings

Right now, Indian IT companies mostly structure their business around industry verticals:

  • BFSI (Banking, Financial Services, Insurance)
  • Healthcare
  • Retail
  • Manufacturing
  • Energy

Each vertical has teams that understand that specific industry’s workflows and regulations.


What It Must Do: Shift Toward Function-Specific Offerings

I am proposing the future offerings should be function-centric instead of just industry-centric. For example:

  • Operations Transformation
  • Supply Chain Optimization
  • Sales Force Automation
  • HR Management Systems
  • Finance and Accounting Digitization
  • Legal Documentation and AI Review

Across industries.

Meaning, a Supply Chain Management solution could be sold to a pharma company, a retail chain, and an auto manufacturer without treating them as totally different industries.

This is also how business schools report placements:

Industry = Where you work (FMCG, Consulting, E-commerce)

Function = What you do (Marketing, Finance, Operations)


Why this shift will make sense

GCCs are internalizing industry expertise.

Foreign companies are increasingly building their own India-based GCCs for core domain work—e.g., Boeing’s GCCs for aerospace design, Pfizer’s for drug development support, etc.

Indian IT companies must avoid getting squeezed.

If foreign firms keep industry-specialized work in-house, Indian IT firms must capture the function-specialized digital transformation needs left over.

Functions scale better than industries.

Once you build a strong practice in, say, AI-driven accounting automation, you can apply it to any company, any sector, with minimal tweaks.


Strategic Directions for Indian IT Services Companies:-

Build Horizontal Practices (Functions) more aggressively than Vertical Practices (Industries).

Hire functional experts (like former finance controllers, operations managers) alongside IT talent.

Productize function-specific AI solutions that are cross-sector.

Reposition as Function-as-a-Service providers.


Conclusion: It's time for a sociological shift in the Indian IT industry

The time has come for Indian IT companies to transition themselves to complementors, not competitors, of GCCs. This change will signal a maturing of India’s IT landscape, where Indian IT firms pivot from generalist service provisioning to becoming outcome-linked digital transformation partners; while global corporations' GCCs turn to India for niche engineering and innovation work for their global value chains.

If Indian IT companies continue to rely solely on cost arbitrage and legacy workflows, they will continue losing ground. But if they reframe themselves as function optimisation partners in an AI world, there is still a future of relevance — not redundancy.

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