On Episode 1018 of The Core Report, financial journalist Govindraj Ethiraj talks to Jaspreet Bindra, Co-founder and CEO at AI&Beyond as well as Matthew Morgan, Partner and the Chief Operating Officer at Eisner Advisory Group LLC.

SHOW NOTES

(00:00) Stories of the Day

(01:00) Oil Prices Stay Unrelentingly High

(01:42) Diesel Is The New AI For India As Govt Refiners To Boost Production By Over 16 Million Tonnes Next Year

(02:55) Is India Exhausting More Ammunition Than Necessary In Trying To Defend The Rupee Against The Dollar

(05:41) Microsoft’s Mass Move To Reduce Headcount By Over 25% And Anthropic’s Mega IPO, What Ties Them Together?

(16:08) Are GCCs Still Expanding In India And Where?

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Wednesday, the 28th of October, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital, where it's looking a little less smogged out compared to previous days, but still quite terrible.

Our top stories and themes…

Diesel is the new AI for India as government refiners to boost production by over 16 million tonnes next year.

Oil prices are still unrelentingly high, affecting markets.

Is India exhausting more ammunition than necessary in trying to defend the rupee against the dollar?

Microsoft's mass move to reduce headcount by over 25% and Anthropic's mega IPO, what brings them together?

Are GCC still expanding in India and where?

Markets, Diesel, The Rupee and Some Company Results

Oil prices rose on Tuesday as investors awaited the outcome of diplomatic talks in Tehran, while renewed Houthi attacks on Saudi Arabia highlighted the risks in West Asia. Brent crude were up about 45 cents to about $116.26 or just under $117 on Tuesday morning. Saudi Arabia, Pakistan and Turkey are visiting Tehran to hold talks with Iranian officials and were there on Monday and the talks are aimed at easing tensions in West Asia.

Iranian state media said the four countries agreed to continue talks with a view to strengthening cooperation and peace and security. At these levels of crude and for so long, the question that must be asked is obviously when will India hike retail prices? On the flip side, demand for diesel is rising and India has a competitive edge here that's globally speaking. We may not have artificial intelligence or chips, but we do have diesel and are ramping up capacity just like the chip makers are ramping up theirs.

India's diesel exports are set to jump from 2027, giving India an even bigger role in global markets as government-owned refiners boost their capacity. In 2027, refiners like IOC, BiPCL and HPCL will together increase their diesel production capacity by about 16.5 million tonnes as they boost capacity of existing refineries, Reuters quoted officials saying. India is now the second-largest exporter of seaborne diesel this year, just behind the United States.

We will be in a happy situation of not only refining for ourselves but for the world, Reuters quoted Oil Minister Hardeep Singh Puri saying at a conference in Goa. India is becoming a global refining hub as it prepares to boost refining capacity to 300 million tonnes by 2030 from about 267 million tonnes right now and then moving to 400 million tonnes in a few years. Increased diesel exports are also bringing some balance in India's trade numbers and reducing pressure somewhat on the rupee which of course has been unrelenting because remember we import 90% of our crude oil requirements.

But India should not fixate on a number for its currency level or run down foreign exchange reserves to defend the rupee. Raghuram Rajan former RBI governor said in an interview with Reuters on Tuesday, India has spent about half of its 140 billion dollars brought in through special measures including the foreign currency non-resident deposits to support the rupee and also absorb surplus banking system liquidity. Rajan said that we've just spent a lot of money trying to get the FCNRB money in.

It would be a shame if that was quickly spent in defending a level which historically we haven't done. The rupee has lost about 6% of its value in 2026 making it the second worst performing currency in Asia and it had hit a record low of 96 rupees 96 paise in May but on Tuesday it closed up by about 3 paise to 95 rupees 12 paise against the dollar possibly due to intervention from the reserve bank. I think the first response would be don't panic Rajan told the Reuters global markets forum warning that there was scope for the current account deficit to widen further if oil prices stayed elevated.

He also said that I would take a very sensible view and look at the longer term and examine whether this situation is an outlier relative to past episodes. Some currency depreciation is not necessarily a bad thing he said in this kind of environment it allows you to stabilise your exports and makes your goods more competitive. Yesterday Uday Kotak founder of Kotak Bank said he estimated India would have to repay more than 130 billion dollars that was raised under the along with interest taking the total repayment obligation to about 160 to 170 billion dollars for which of course we have about three years still.

With all of this in the backdrop including pressure on the rupee the centsix and the nifty 50 were flat on Tuesday. The centsix closed eight points down at 73,598 and the nifty 50 was down three points at 22,749 in yet another choppy market day. The broader markets did better with the nifty mid-cap hundred rising about one percent and small cap hundred rising about 2.7 percent on Tuesday.

Elsewhere India's economic growth is forecast to have slowed this year and likely to stay around seven percent over a forecast horizon as higher energy costs add to near-term inflation risks a Reuters poll of economists found. While the war in West Asia has not had much impact on economic growth but it has pushed up inflation thanks to higher energy costs. GDP was forecast to grow 7.1 percent in the year ended March 2027 according to a median estimate in a poll between October 19th and 26th which is down from about 7.7 percent earlier projected.

Elsewhere some company results are still coming in strong also thanks to strong overseas demand and a depreciating rupee the latest being Bajaj Auto which reported a 35 percent rise in second quarter profits to about 3,354 crore rupees.

What Ties the Recent Big Moves from Microsoft and Anthropic?

Two significant developments in the technology space have taken place in the last 48 hours. First Microsoft on Monday said it's offering buyouts to a big chunk of employees in the form of a new voluntary exit offer for certain workers in the United States, Canada, India and the United Kingdom at its experience level of 70 or below.

Around 60,000 people are eligible CNBC quoted sources saying and the effort affects about 27 percent of Microsoft's total workforce of 223,000 people. Now Microsoft as we all know has been ramping up spending like everyone else on data centres to accommodate high AI computing demand supplying cloud services to Anthropic OpenAI among others. Capital expenditures CNBC said for the September quarter should exceed 50 billion dollars and in the same quarter a year ago capital spending and finance leases came to about 35 billion dollar.

The other major development is Anthropic's initial public offer. The barely five-year-old company could raise more money in its IPO than any firm in history and also overtake Berkshire Hathaway in value. Its valuation has gone from 183 billion dollars barely a year ago to about 965 billion dollars in its most recent round.

Expectations are that Anthropic could be worth near two trillion dollars once it goes public which also would create a big windfall for employees and investors even those who got into the company somewhat late a Bloomberg report pointed out. Together both developments highlight the relentless march of artificial intelligence and the impact it could and will have on the global computing economy and workforce. I reached out to Jaspreet Bindra co-founder and CEO of AI&Beyond which builds AI literacy in organisations and an author and I began by asking him how he was viewing these developments beginning with Microsoft's surprise move and saying with AI and impact and service organisations including the question on whether GCCs in India will expand or contract.

INTERVIEW TRANSCRIPT

Jaspreet Bindra: Both these announcements are quite significant individually. You know, I've been at Microsoft and they've said 60,000 people or people below 70 levels. 70, by the way, is a very senior level, so it pretty much means almost every employee across at least these four countries.

And obviously, it means what they have said is that they're reorganising and, you know, a lot of AI moving in to do workflows, etc. And from an employee perspective, while it is voluntary, you know, right now they get money, they get counselling, and possibly if they don't take it, who knows whether it will become involuntary after a period of time. So that in itself is interesting.

If you look at the Anthropic S1, individually, again, obviously, as expected, it's very interesting, but it's also almost mind-numbing the kind of numbers which are there. You know, that's where the link comes in as I'll come to. I mean, the revenue grew 31x, 31x in five quarters, costs grew too, but the cost per dollar of revenue actually went down considerably.

And the S1 actually shows some kind of a positive operating margin, so some operating profit. Now, the link, while obviously there is no causal link, but if you kind of draw up and you look, there definitely is a link. What is happening, I think, Govind, is that if you go back to the factors of production, you know, you used to have capital and you used to have machinery and you used to have people, land, you know, these were all factors of production.

Actually, what is happening is that money is moving from one huge factor of production, which is people, okay, to machinery, which is compute, in this sense. And that's really the massive shift that is happening. To stay relevant, companies like Microsoft, which have now become the incumbent big tech, in a sense, also need to do this shift.

And, you know, the shift is absolutely visible in the Anthropic S1. The other thing in the Anthropic S1 is that the revenue per employee is about 6.1 or 6.2 million dollars. Revenue per employee in Microsoft, I don't have the exact number, would be in the range of 100 to 200 thousand dollars, if I may think so.

So, again, you see this. So, I think this whole voluntary layoff, in a sense, or voluntary retirement, is really to make this shift happen, to free up money, so that Microsoft and such companies can also transform and move money into compute the same way as the Anthropic sector of the world.

Govindraj Ethiraj: Right. But what does this tell us about Microsoft or companies like that and their workforce so far? If the company is able to look at laying off or separating from 25% of its workforce, what was that contribution of that workforce so far that makes them so quickly redundant?

Jaspreet Bindra: Well, that's an interesting question. I mean, if you look at all of these big companies, Microsoft, Meta, Alphabet, etc., they had a certain number of workforce pre-COVID, pre-pandemic. And in pandemic, tech boomed. Okay.

Also, the pandemic was the time of the zero percent interest rate regime or near zero percent interest rate regime. And so, therefore, free money, okay, and huge amounts of demand. And so, people added on huge amounts of people at that time, you know, tens of thousands.

And actually, if you look at... Well, I won't talk about the recent one, but if you look at even the forced layoffs, the real layoffs until, say, a few months back, and then if you count the people, and this is not only Microsoft, I think some of the others have laid off even more, like Meta, for example, you actually will find that the number of people left are broadly similar to what was there before the pandemic. In some sense, there was fat which was added to the system.

Lots of fat, unnecessary fat. And AI, in many ways, has done a rescue act. Whether those jobs are being replaced by AI or not is a mood.

You know, it's very easy sometimes to say that we're going to, you know, automate using AI. Therefore, these people will go. The market rewards you for that behaviour also.

But having said that, yes, I think, you know, very clearly, a lot of these companies have found that they can do many jobs which were done by human beings, mostly comparatively junior human beings. And therefore, they are absolutely reorganising for this new world of work. And this new world of work is going to look very different from the old world, as much as the digital world of work looked different from the machinery world of work.

And so they are reorganising for that. And in some sense, from a capitalism perspective, it's a good thing.

Govindraj Ethiraj: If you were to do a sort of a status check, or if I were to ask you to do a status check on where AI is today, as you see around you, both in enterprises in India or elsewhere, where would you say we are today in terms of understanding what the real benefits and impact of AI has been so far or is right now?

Jaspreet Bindra: You know, if you consider the chat GPT launch as a seminal moment, you know, AI was there before that also. But if you take the last four years, AI has moved considerably. And it has the two shifts in a sense, there are many shifts, but in this context, the two shifts that have really happened is that chat has moved to work.

And so if you look at your chat GPT screen today, for example, and even your co-pilot screen, for example, there are tabs which say chat or work. And I can bet you that the chat tab is going to go away soon. So everything is about work.

And so in some sense, AI is gradually becoming the substrate of work. And all work will be done, not with AI on the side, which is what is there today, but AI below, you know, in a sense, as the surface on which you work, like computing is the surface on which you work today. That's one big change.

And the second big change is, in some sense, we have moved from, as the chatbot era is going away. And you know, the agentic era and beyond agentic era, now AI becoming the operating system of work in a sense and always on agents like instinct or news, et cetera, coming in. We are moving from asking the AI to tasking the AI.

So, you know, initially used to ask something of the AI and it will answer you. Today, you give work to an AI, give a task, and it kind of completes the task for you, with you and in a group. So those are two big, massive fundamental changes.

And I mean, if you now kind of bring them to the enterprise, like you said, obviously the AI native enterprises and some of the big techs are much more further in this journey. And that's one of the reasons you see these layoffs happen or these voluntary retirements happen. But if you look at traditional enterprises, say in India, most of them 80, 90, 90% plus of them, we are still in the ask the AI mode.

Okay. And so we are still there and we are still at the chat mode rather than the work mode. But some companies, especially in the, as I said, the tech world, some in the financial services world, some in the GCC world are actually moving, you know, through this spectrum towards the task end.

Govindraj Ethiraj: This is obviously a status check. So things can change literally next week. So from your understanding of what's happening in India now, this is an India specific question.

Is the impact going to be more in IT companies or do you see more impact of AI and its efficiency drives in other industries as well?

Jaspreet Bindra: The big difference between AI and the other technologies that came before it is that AI is much more of a cognitive technology than the others were. It's not manual in that sense until physical AI comes in. Which will happen at some point of time.

And so the industries naturally that are going to get affected, including in India, are the ones which are cognitive industries or knowledge industries or services industry in some sense. And then if you look at which are those, obviously the IT services and ITES industries are squarely out there. Okay, which is one.

The tech companies other than the ITES, IT companies are the others. Whether they be product companies, SaaS companies. I mean, SaaS, you know, is now moving to this new SaaS software as a service, moving to service as a software, you know, where it's in human plus agent bundle thing.

And so that's a big impact on these. Then second order will be the other services companies like banks, for example, any other retail services or consulting firms, professional services firms. So I think these two actually are in squarely in the line.

On the other hand, it will also give opportunities, by the way. For example, in IT services companies, there's a huge opportunity from a cyber security standpoint. So what is going to happen is it's not jobs as much going.

It's the roles which change. Okay. And then how human beings get attached to the new roles will protect their jobs or not protect their jobs.

Govindraj Ethiraj: Got it. Good note to end on. Jaspreet, thank you so much.

And I'm sure I'm going to come back to you very soon for a fresh latest check.

Jaspreet Bindra: Thank you. The OpenAI S1 comes, which I'm sure is expected any day now.

Govindraj Ethiraj: Indeed. Thank you.

Jaspreet Bindra: Great.

Are GCCs Still Expanding In India And Where?

Eisner Amper is one of the largest accounting tax and advisory firms in the United States with more than four and a half thousand professionals across offices nationwide that's in the United States and internationally. Eisner Amper ranks a few notches below the big four and is in the big ten. Some 1000 Eisner staff work at its India global capability centres across four cities.

Given all the trends that we're seeing, how are GCCs like Eisner Amper responding and what is their growth pipeline in India looking like? I spoke to Matt Morgan, COO of the Eisner advisory group presently visiting Mumbai and I began by asking him how he was seeing the latest trends.

INTERVIEW TRANSCRIPT

Matthew Morgan: In knowledge work or professional services, advisory work, I'm framing it in three different transformations. The first one is in automation, which is both the implementation of AI applications and the enablement of the workforce for AI augmented knowledge work. So that's probably the most straightforward for us and many of our competitors, but there's two additional transformations that will be disruptive in our industry, next of which is a commercial transformation.

So both from a revenue and a cost standpoint, AI is changing the economics of our industry where the primary economic unit in the past has been the billable hour. And from a cost side, we'll see much more of a technology component to the cost with the consumption of tokens or licence fees that are directly attributable to the client work as a cost of sale, rather than as an OpEx platform type of thing where your labour has been driving more of that billable hour cost. And from a revenue standpoint, driving fixed fee value-based deliverable pricing as opposed to time and materials billable hour pricing.

And so we think the commercial transformation is something that will really change the way that professional services, accounting specifically, but also consulting law firms will operate their business and even their financial statements, how revenue is recognised and all of that. And then the third piece after the automation and the commercial transformation is talent development. So in the past, these industries have been apprenticeship-based models where colleagues in relatively earlier career stages would progress successively to have senior relationship ownership roles as partners or managing directors of a book of business with the clients with whom they would work for whatever the service offering is, tax audit advisory.

What we'll see in the future is much of that early career work that people would have built a basis of their subject expertise will be automated. And so rather than learning on the job, it's incumbent on us and our competitors to build new models of training based on simulation, residency, and where that training is not happening in a way that's billable by the client or maybe even embedded into the AI augmented work where reviews are also teachable moments for those colleagues. So that thoughtful talent development must also be built into the operating model of the firm and constitutes another transformation.

So you mentioned, you know, at two different ends of the spectrum with Microsoft and Anthropic, but from the business services standpoint, we're seeing this threefold transformation of automation, commercial, and talent development.

Govindraj Ethiraj: Right, and tell us about your India operations and you're now in many cities across India. So what are the kind of capabilities that you're building here and how do you see this being able to deliver what Eisner needs or Eisner's clients needs or will need globally?

Matthew Morgan: Sure, so India, as you know, it's just reached our 20th year in country, which for our market segment in the middle market has been a pretty early mover and we operate in four cities. For us, our largest one is Mumbai because of our financial services industry sector roots, but we've since diversified to other client industry sectors. We offer four services, tax, assurance, advisory, and outsource.

By outsource, I mean both bookkeeping and fund administration and the range of services that we offer has also expanded over the years. But what's really driving the growth for talent here is our model of an integrated delivery approach where we have a global staffing model. So if somebody is running a book of business out of one of our offices in the US, they'll have colleagues across the US and from India filling out the different manager or senior or staff roles that are on an engagement team.

And I think this is a differentiator in the marketplace where the work that's being done in the Global Capabilities Centre is much more end-to-end and much more likely to interact directly with those senior clients serving people and even the US-based clients than many of those in the marketplace. Even among our competitors, we're starting to see others take this model up, but because we've had it embedded for such a longer period of time, it's much more core to our way of doing business and it has a depth and breadth that I don't think we've seen amongst our competitive set. So it's a real differentiator for us in the marketplace.

Govindraj Ethiraj: Right, and within GCCs today, and GCCs are, of course, of different shapes, sizes, and forms, what would you say is, let's say, your path, even within the world of tax and advisory, and what are the kind of skills that you would be looking for and looking out for which will sort of enhance your offering globally?

Matthew Morgan: India workforce is really reflective of our US workforce because of this delivery model as we've expanded into new industry sectors and new service offerings. We've seen growth in our India workforce along those lines where financial services, hedge funds, private equity, family office has been the core, then expanding to real estate offerings, expanding to technology and medical sciences. So these types of service industry sectors, I should say, have brought in new skillsets among our colleagues and contributed to this growth to 1,000 people.

On the service offering side, the longest legacy of our business has been the tax and audit type of accountancy work. As we've expanded into other types of consulting and advisory and other types of outsource services, we've seen broader growth of the types of services that we offer to clients and the clients consume from us, and that, therefore, we staff with our colleagues here in India.

Govindraj Ethiraj: As you look ahead, do you see your GCC in India, for example, growing? And which specific areas would it grow more and which are the areas it may not grow as things change externally?

Matthew Morgan: Yeah, so currently our GCC is servicing 23% of billable hours across the firm, which for a global workforce of around 5,000 colleagues, and we've just surpassed the 1,000th India colleague here, that's a 20% headcount. So pound for pound, that's a pretty good servicing by our India colleagues. And we've seen very rapid growth as using, again, the hours as the traditional economic unit.

As I mentioned, in the last fiscal year, we delivered 800,000 hours of client work from our four GCC offices. That's a rapid growth over 660,000 hours the year before. This year, we'll be closing in on a million hours.

So you could see the growth of the offering in India, and I perceive that 23% of hours delivered has an opportunity just within that pie, but Eisner Ampere continues to grow both organically and through M&A. With M&A, with mergers and acquisitions in different regional markets in the US, we'll often bring on a firm that has a presence in a different city in the US and doesn't have this type of foundation that we've built in India. So that becomes another big growth driver for our India-based workforce because those colleagues haven't had the advantage of having this globally extended workforce.

And so it creates new growth opportunities for India as well. Since Eisner Ampere took private equity investment six years ago, we've done 27 different acquisitions. And so that has been a big driver of growth, and I think we'll continue to do so in the future.

Govindraj Ethiraj: Right, and you said you're in four cities in India already, and I'm assuming part of that is also divided by the verticals and the vertical specialisations. For example, you said Mumbai and finance. Are you looking at other kinds of expansion and the next phase of expansion, however, whenever that comes or as that goes on, would be driven by what?

Would it be a certain skillset or would it be cost or something else?

Matthew Morgan: So the core in Mumbai is driven from the financial services background. We are the largest accountancy GCC here in Mumbai. We also have offices in Bangalore and Hyderabad where to your point, the different industry verticals such as technology services have a good talent base that we've been able to attract.

And then with an acquisition different from the example and many of them or even most of the acquisitions we've done they came with a team in Ahmedabad that we've integrated in to our platform. So from a geographic standpoint, if we need to move into a new service offering or new industry sector that could potentially drive geographic and new market entry within India, I don't think from a cost standpoint that that would be part of our strategy or what we're trying to drive here. Out of the 27 acquisitions, it doesn't happen very often because most US firms, if at that scale, if they're only located in one US market, they may be using contract outsource instead of having their own teams.

But those two are relatively further advanced from what we've seen for these regional CPA firms, regional certified public accounting firms. And so they brought India teams that we subsequently integrated into our platform.

Govindraj Ethiraj: Right, this is obviously a very uncertain period and you've got wars going on, you've had tariff wars before that. What does all of this mean to your client universe and how are they responding and how are you responding to their needs?

Matthew Morgan: Yeah, so Eisner Ampere is quite innovative and forward-thinking firm that is focused on the different areas of expertise where our clients have the biggest needs. You mentioned tariffs. We have a lot of thought leadership in that in regulatory change in the US on the tax marketplace, which is a core expertise that we hold.

We also publish a lot of thought knowledge about cybersecurity, which has become an increasingly changing situation with the advent of AI and even the implementation of AI. So we advise our clients on a range of different areas of expertise and help them navigate this rapidly changing marketplace. I think that's a great point and thank you for asking about that.

Govindraj Ethiraj: All right, Matt, thank you so much for joining me as well.

Matthew Morgan: Appreciate the opportunity to join you.