Costco cites 60 percent AI productivity gain in India tech hub

Costco's disclosure comes as the retailer is building out its first global capabilities center in Hyderabad, which now employs over 70 people and supports software development, data analytics, cybersecurity and digital advertising for its worldwide operations. Polit's comment that Costco sees opportunities to do technology operations outside of Hyderabad suggests the company is considering a broader technology footprint in India, with next steps including ramping up local employment and possibly launching other technology hubs there.

The productivity figure sits alongside a planned shift in Costco's staffing mix. The company aims to rely more heavily on permanent technology staff, expecting its technical team to eventually be around 75 percent employees and 25 percent contractors, versus roughly a 50-50 split today. That change, coupled with an in-house software effort in Hyderabad that uses geofencing to recognize members approaching Costco facilities and speed up check-in and check-out, points to a push to own more of its technology stack as it grows its global warehousing operation. Costco has not disclosed financial details on the expansion, and the move may increase operating efficiency while giving the retailer more control over software development.