India remains central to multinational companies’ global operations, but AI is threatening to rewrite the decades-old outsourcing model that powers the country's roughly $315 billion technology services sector.

The theme was front and centre of conversations at the Reuters India Summit, where executives spoke about productivity, automation and specialised hiring rather than large-scale workforce expansion.

India is a key hub for multinational companies because of its large skilled workforce and lower operating costs, and global firms continue to expand their operations in the country. Yet, executives suggested that the next phase of expansion would be driven less by headcount growth and more by AI-led productivity and specialised work.

Novo Nordisk said at the summit it was using AI to accelerate drug launches while expanding India’s role in global operations. But it expected to be "conservative" while hiring.

At Daimler Truck, AI tools are helping engineers in India “generate IP faster”. The company is scouting for "niche talents" in areas such as AI, cybersecurity and digital technologies.

Epsilon, the technology and marketing services arm of Publicis Groupe, said AI was driving productivity gains even as headcount remained largely steady.

“What has changed is the amount of work that we are delivering, the new responsibilities that we have picked up,” said Pratik Nath, Epsilon India’s managing director.

Lalit Ahuja, CEO of ANSR, which helps firms build and run global centres, warned that their growth and scale in India from a people standpoint will taper over time.

“Companies are hiring fewer people, just as a matter of abundant caution,” he said.

The shift is spreading beyond permanent hiring, with Indian firms increasingly turning to contract and outsourced staffing as AI uncertainty reshapes workforce planning.

“Companies are becoming more cautious about long-term fixed costs,” said TeamLease Services Chief Strategy Officer Subburathinam P. Its CFO Ramani Dathi said firms were being advised to keep “20%-30% of their workforce on outsourced or variable models”.

Click here to read how India’s AI-driven outsourcing shift threatens to deepen pressure on the country’s consumption-led economy as white-collar jobs begin disappearing across global technology centres.

Globally, the changes are starker. Standard Chartered plans to cut more than 7,000 jobs while ramping up AI investments. “It’s not cost-cutting. It’s replacing in some cases lower-value human capital,” CEO Bill Winters said.

Some of the most affected roles will be in the bank’s back-office centres, including Chennai and Bengaluru, two of India’s biggest global technology hubs for multinationals.

The skills companies want are changing too. Kimberly-Clark said employees now needed domain expertise alongside AI literacy as automation handles routine coding tasks more and more.

Even companies that are continuing to hire signalled that the old outsourcing playbook is evolving.

Southwest Airlines plans to scale its Hyderabad technology centre to about 1,000 employees over the next few years. But Krishna Kallepalli, vice president and global head of innovation (India) at the airline, said the new office was not intended to operate as a traditional back-office hub.

"We don't want to just do a lift and shift and create another back office," he said. "We are looking at business capabilities that are technology-infused."

The message is clear: India remains critical to multinational companies, but AI is significantly altering the long-standing link between growth and hiring.

Some Indian firms are turning to ‌floating-rate bonds to attract investors and manage borrowing costs at a time when expectations of rate hikes have pushed up yields on conventional fixed-rate debt, which makes buyers wary of locking in lower rates.