The domestic GCC market is projected to hit $110 billion by 2030. Moreover, India, already a technology and services hub, might have around 2400 GCCs by 2030, and it might even go up to 2550! That’s some serious growth on the horizon.
GCCs are changing how businesses work and how you think about innovation, making a big impact on the economy. Want to know more about how they’re doing it? Let’s find out how these powerhouses are shaping the future of business.
What Are GCCs?
Global Capability Centers are offshore units established by multinational corporations to perform a range of strategic functions. They leverage specialized talent, cost arbitrage, and operational efficiencies in various locations worldwide. They’re not just about saving money; they do key jobs that keep everything running smoothly for the parent company.
Core Functions of GCCs
GCCs help companies concentrate on their core competencies while using the skills of centers in other places to grow and come up with new ideas. Here are some of the primary functions of GCCs:
- Spearheading innovation initiatives, conducting research, and developing new products or services
- Managing IT infrastructure, software development, cybersecurity, and other technology-related functions
- Handling back-office processes such as finance, human resources, procurement, and customer support
- Analyzing large volumes of data to derive insights, support decision-making, and drive business growth through data-driven strategies
- Ensuring compliance with regulatory requirements and mitigating risks associated with global operations
Shaping Innovation, Business Environment, and Global Economics
Innovation and Technology Adoption
GCCs serve as innovation hubs—they bring together specialized talent, encourage collaboration, and tap into diverse perspectives. It’s a space for experimentation, technological advancements, and process optimization. They bridge global knowledge with local insights continuous improvement, and develop future-ready solutions within organizations.
Business Environment Transformation
Without the functions of this GCC, customers’ purchase journeys will be impacted as merchandise may not reach the stores or fulfillment centers. It will significantly impact both the top and bottom lines of the business.
— Madhu Natesan, VP of Business Operations and Site Leader, Saks India
GCCs provide a platform for strategic and core functions. They give companies more control and oversight, helping them be efficient and top-notch in quality, follow global standards, and tailor their operations. This approach helps businesses grow steadily and adapt to changes in the market.
Global Economic Trends
A substantial workforce growth and economic contribution position GCCs as key players in affecting global economic trends. Besides a 5X multiplier effect on jobs, the projected hiring of 2.6 million people in India by 2030 proves the extensive economic reach of GCCs, with over 4.5 million people expected to be employed in these centers by the same year.
7 Core Benefits of Establishing Global Capability Centers
An interesting fact is that the captive centers of large companies that were earlier gobbled up by third-party IT/BPM companies are ‘born again’ with great enthusiasm and fanfare. UBS, T-Systems, Mastercard, Deutsche Bank, Citi, Aviva, AIG, and Unilever are some of the prominent examples. The reason is quite simple: digital transformation is seen as core to every company’s business. They want to ‘co-own’ those capabilities rather than merely ‘lease’ them.
— Ramkumar Ramamoorthy, Partner, Catalincs and former Chairman and Managing Director, Cognizant India
1. Cost Efficiency
GCCs make smart financial moves by tapping regions with lower labor costs. This leads to significant savings in salaries, infrastructure, and operational expenses, allowing businesses to allocate resources wisely for better fiscal health and competitiveness.
2. Access to Specialized Talent
With access to a talent pool from all over the map, companies can snag pros with the exact skills they need, tailoring their dream team. This works as the ultimate combo for innovation, problem-solving, and operational excellence.
3. Enhanced Operational Control
With GCCs, organizations get a grip on operations like never before. Direct oversight, smooth communication, and alignment with the parent company’s goals ensure everything runs like clockwork. This control is key for quality, regulatory compliance, and quick adaptation to changing business scenes.
4. Risk Mitigation and Business Continuity
Global Capability Centers are like a safety net for businesses. Spreading their operations across different places helps companies dodge regional challenges. It ensures business goes on smoothly, no matter what surprises come their way.
5. Scalability and Flexibility
GCCs give companies this incredible ability to scale up or down super quickly, depending on what the market is doing. So, whether it’s handling sudden spikes in demand or taking on exciting new projects, GCCs keep businesses nimble and competitive.
6. Knowledge Transfer and Collaboration
These centers work as hubs for knowledge transfer and collaboration within the organization. The global nature of GCCs helps exchange best practices, insights, and innovative ideas across different business units. This cross-pollination of knowledge develops a culture of continuous learning and improvement.
7. Strategic Focus and Innovation
GCCs let companies zero in on core functions and innovation. Entrusting routine tasks to these centers helps organizations free up resources for strategic initiatives, product development, and market expansion. This focus sharpens the competitive edge, nurtures a culture of ongoing innovation, and drives the company towards sustained growth and adaptability.
Top Industries Where GCCs are Prevalent
By 2030, the annual new GCC establishments could increase to 115 from the current 70. Popular Indian cities like Bengaluru, Hyderabad, Chennai, and Mumbai are traditional GCC sites. Still, tier-II cities like Visakhapatnam, Jaipur, and Coimbatore are gaining traction due to favorable infrastructure, policies, and cost advantages.
Moreover, India’s growing startup ecosystem further creates collaboration opportunities between GCCs and startups. So, GCCs have found significant grip across diverse industries, such as the following:
Software
GCCs thrive in the software industry, particularly in countries like India, where software exports remain a key component of service exports. Offshoring services have seen continued growth, making it an ideal sector for establishing GCCs.
Artificial Intelligence (AI) Industry
GCCs shine in AI, requiring top talent and collaboration for their advancements. The development and deployment of AI solutions benefit from the global perspective and innovation fostered by GCCs.
Cloud Computing
The demand for scalable and flexible cloud services has led to the prevalence of GCCs in the cloud computing industry. These centers help smoothly deliver cloud solutions, aligning with the industry’s dynamic and evolving nature.
Data Analytics
With data-driven decision-making becoming crucial, GCCs have gained prominence in the data analytics sector. The global perspective and collaborative nature of GCCs enhance the ability to analyze vast amounts of data and derive actionable insights.
Cybersecurity
The ever-growing importance of cybersecurity has driven the establishment of GCCs in this sector. These centers provide capabilities aligning with the need for a reliable and global approach to cybersecurity.
Impact on Third-Party Service Providers
GCCs offer a more integrated and controlled approach, hence disrupting traditional outsourcing paradigms. As organizations increasingly opt for them, competition with third-party service providers intensifies.
GCCs as Captive Models
Initially, MNCs engaged in outsourcing for cost advantages in developing countries. Eventually, their focus shifted from mere cost savings to a focus on quality as they recognized the importance of delivering high-quality services and products.
Consequently, they moved to captive units, i.e. GCCs. Creating captives was a big move — it gave companies total control. These in-house units, fully owned by the parent company, meant direct influence over operations, processes, and quality standards.
GCCs’ Captive Models vs Traditional Outsourcing Models
More and more companies across sectors are realizing the value of doing all these in-house rather than giving it to third-party IT services majors.
— Ankur Mittal, Senior Vice President-Technology & MD, Lowe’s India
We will have to make trade-offs on speed, user experience, ownership, culture, etc., if we decide to go out.
— Sunil Gopinath, CEO, Rakuten India
1. Ownership and Control
Third-party providers operate independently and are external entities, offering services on a contractual basis. They have limited client control over day-to-day operations. However, GCCs, being captive units, are fully owned and controlled by the parent company, providing greater influence over processes, strategies, and decision-making.
2. Expertise and Specialization
Traditional outsourcing service providers are specialized in offering specific services, often leveraging economies of scale. They provide external perspectives and may serve multiple clients across industries. On the other hand, GCCs are tailored to the parent company’s needs, offering deep domain expertise aligned with organizational goals. They are focused on internal requirements and innovation within the company.
3. Flexibility and Scalability
The tasks undertaken by the Chennai center were previously managed through European engineering hubs, but scaling up proved challenging. With 1.5 million engineers graduating annually in India, we are able to train, upskill, cross-skill, and deliver at scale and speed. That’s why we are able to do 1,000 projects from here.
— N. Venu, Managing Director & CEO, Hitachi Energy in India and South Asia
Scaling up with a third-party provider can be challenging due to limited control and communication. In contrast, GCCs offer greater flexibility as in-house units, allowing for smoother scaling with direct oversight and tailored adjustments to meet evolving business needs.
4. Pace and Approach
Traditional outsourcing service providers prioritize cost reduction and value creation, leading to swift transformation initiatives with proven strategies. In contrast, GCCs may undergo a more gradual transformation due to collaboration with stakeholders, contributing to a more measured pace of change.
5. Cultural Alignment
Third-party providers may face challenges in aligning with the client’s organizational culture and values. On the other hand, GCCs are inherently aligned with the parent company’s culture and thus more likely to have a smooth integration of values and goals.
The Bottom line
Global Capability Centers are rewriting the entire playbook. A surge in new GCC set-ups isn’t just a growth spurt; it’s a dynamic ripple effect, turbocharging economic engines. Going beyond saving costs, it’s into full-blown innovation in sectors like software, AI, cloud computing, data analytics, and cybersecurity.
GCCs are in full control, super flexible, and understand the vibes of different cultures. This makes them a big deal in shaping how businesses work globally, leading to a future full of new ideas and lots of success.
