Costco says AI boosts productivity by 60% as it expands its Hyderabad technology center

Costco is pointing to artificial intelligence as a near-term operational lever, saying it has achieved a 60% productivity improvement tied to AI use as it plans to expand its technology operations in Hyderabad, India. The company’s comments, reported by Yahoo Finance, frame the investment as part of a wider effort to modernize how it plans, manages and supports large-scale retail operations, where logistics and inventory decisions must be made quickly and consistently.

According to the report, Costco’s technology expansion is centered on its Hyderabad technology center, which it intends to grow as it moves more work toward AI-enabled tools and workflows. The report characterizes the 60% figure as an AI-related productivity gain, without detailing the specific tasks, systems, or measurement methodology used to arrive at the number.

The same report also suggests Costco may expand its Indian footprint beyond Hyderabad. It says the company is considering establishing operations in other Indian cities, though it does not provide the names of the additional locations or a timeline for any such move.

For Costco, the emphasis on AI-enabled productivity is notable because the company’s business model relies on scale, tight execution, and efficient replenishment across its warehouses. In practice, AI is often used to support demand forecasting, smarter inventory planning, routing and logistics optimization, and automation of parts of back-office work. However, the report does not specify which of these areas Costco is applying AI to in its Hyderabad efforts.

Costco’s move fits into a broader pattern among large retailers that are using AI to improve internal operations while keeping customer-facing offerings stable. The potential upside is straightforward: faster decision cycles and fewer manual interventions can reduce waste and improve service levels, particularly for businesses that carry thousands of stock keeping units and depend on consistent execution across regions. At the same time, retailers are increasingly cautious about implementation timelines and governance, including how models are tested, monitored, and kept aligned with operational realities.

Still, several key details remain undisclosed in the report. Costco does not break down what the 60% productivity gain measures, whether it applies to a specific department, team, or application, or how it controls for other variables such as staffing changes or process redesign. The company also does not provide capital spending estimates for the Hyderabad expansion, any expected hiring numbers, or the scope of work that would be handled in additional Indian cities if expansion proceeds.

Looking ahead, investors and observers may focus on whether Costco provides more granular disclosures about its AI deployment and the scope of its India expansion. If the company later shares information on costs, timelines, or the performance targets tied to these AI initiatives, it could help clarify whether the productivity gains are likely to translate into broader efficiency improvements across its global operations. Separately, any confirmation of additional Indian locations would be a announcement of how far the company intends to scale its technology capacity in the region.

For now, Costco is offering a high-level message: it plans to expand a key technology hub in Hyderabad while citing a large AI-linked productivity improvement, and it is keeping the door open for further growth in India. The next test is whether the company supplies more specificity on the applications, results, and economics of the effort.