From cost arbitrage to core value drivers: Setting up a successful GCC

16 Feb 2022Business Services
From cost arbitrage to core value drivers: Setting up a successful GCC

Global Capability Centers (GCC) have evolved from cost generators to strategic business enablers and value generators. During the initial stage, the majority of transactional activities, headcount, and budgets are off-shored under local governance with the aim of cost reduction. As GCCs grow over time, there is an increase in demand for service and for talent. Companies then shift from focusing exclusively on cost reduction towards increasing service standards and improving efficiencies. Finally, GCCs transform into Global Integrated Business Service centers and in this form they take onus of all cross-functional transactional activities. But, their objectives go beyond improving operational efficiencies to now include an added responsibility of creating value and innovating new solutions.

Captives, Build, Operate, and Transfer (BOT), and Managed Services were among the top GCC operating models. Captives and BOT models aid in the implementation of a faster go-to-market strategy, while the Managed Services model aids firms in achieving long-term economies of scale. As GCCs became value generators, they start to become multifunctional to deliver higher throughputs. Based on Nasscom's sample survey report, 43% of GCCs are singularly focused, while 57% are integrated or multifunctional.

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