GCCs will help drive digital evolution in future

GCCs will help drive digital evolution in future
23 Dec, 2021

Over the last few years Global capability centres (GCCs) have grown in significance in the global ecosystem and have evolved from being an ‘internal service provider’ to being a ‘value creator’. India is home to more than 1,430 GCCs, directly employing 1.38+ million people, with a market size of US$35.9 billion as of FY2021. While a lot of initial growth was in facilities and administrative (F&A) costs, contact center operations, the last few years have seen a disproportionate growth in the technology and digital space with a bulk of global tech capabilities either sitting in the GCCs or with third party service providers. 

While there has been organic growth of digital capabilities in GCCs, the pandemic has played a role of an accelerator for multinational corporations (MNCs) to drive more digitization across the value chain. Most of the global organisations depended on GCCs for their business continuity during the pandemic and GCCs were at the forefront of driving digitization for the global organisations due to capability concentration and will play an even more important role to do the same in the future. 

Leveraging the strong technology services ecosystem 

There was a time when headquarters used to look at GCCs and third party providers as either/or but today most organisations have a hybrid operating model and GCCs are playing a key role in managing third parties as well as leveraging their capabilities to drive more digitisation. Also, in most cases, GCCs and ITES companies tap into the same talent pool and are able to drive learning and knowledge seamlessly. 

Partnering with start-ups 

Start-ups are at the forefront of leading innovation agenda and GCCs are a lever for start-ups to go global and solve business problems. GCCs are partnering with startups for their low-cost, high-impact tech and digital solutions. GCCs in return invest in startups and take them to global markets. More than US $1.5 billion was invested in 2019 in start-ups by companies with GCC in India. About 80-90K people were hired in startups founded by ex-GCC employees. There are 10-15% of tech startup founders/CEOs who have roots in GCCs.  

Investing in Skill building 

To build a specialised knowledge pool GCCs are spending close to $275–325 million to impart the relevant capability development and are training professionals in digital and emerging technology skills (e.g., AI, analytics). This coupled with investment by government, ITES and other sectors in skill building is leading to increasing the required skills. 

Playing the role of R&D and Innovation centres 

More GCCs are being set up in India. Over the past five years, 30+ new centres for R&D and 60+ centres for digital work have been set up in India. These innovation centres undertake end to end product development, product innovation and technology transformation for their parent organisations which in turn gives them an increased role of driving transformation in the global setup 

More Tech Leadership roles in GCCs 

Given the increasing Tech focus in most GCCs, we are now starting to see more leadership roles sitting out of GCCs, whether it’s pillar leads, platform leads or even in some cases the CIOs who have good understanding of the overall technical and leadership capabilities.  

Collaborate with academia 

There is a big demand placed in talent where GCCs are tying up with academia and govt to try and drive a skill agenda so that India can remain the talent hub for GCCs. GCCs provide exposure to global ways of working and training in the latest digital technologies, such as AI and machine learning, providing first-hand experience and making students future ready for jobs-academia partnership. More than 0.5 million students picked AI and Internet of Things (IoT) skills through academia partnerships.

Other factors 

Covid has brought back the focus on flexibility that firms need in uncertain times, and GCCs provide the firms with flexibility that sometimes does not exist in third party contracts. Also, as subsequent waves of digitisation touch more core parts of the organization, there are concerns over Intellectual Property (IP) where again GCCs have an advantage. 

Overall, GCCs have been a big lever for MNCs to drive and expedite digitisation and if they continue their journey of innovation and value addition, they will continue to play a pivotal role in digital transformation and in addition to be referred to as GCCs, they could also be referred as “Digital Business Services”.

Gaurav Gupta

Gaurav Gupta

Gaurav Gupta is a Partner at Deloitte India