Today, businesses are aligning their functions for adjusting to technological advancements. Be it HR, admin, finance, or operations, the changing pace of business is driving companies to rethink every process. New economy technologies like AI, Blockchain, Cloud, and similar others have transformed the way companies manage their material and intellectual resources, allowing them to increase productivity, flexibility, and creativity in their operations through alternate operational models.
This is where the role of Global Capability[JB1] Centers (GCC) becomes crucial.
As per Gartner, GCCs are continuously witnessing growth in recent years. About 1600 new centers have been established globally in the past five years. This growth is expected to move ahead at a rate of about 5% to 10%. each year. They have become important areas of operations that enable organizationsto leverage skilled experts for streamlining their business functions.
However, these centers have now transformed from cost centers to profit centers. They are innovation hubs and centers of excellence where strategic and operational decision-making takes place. But before we unravel the multiple other benefits of offshoring, let’s explore the traditional reason why companies set their operations in India: cost savings.
The traditional reason to set up GCC
Most multinational companies set up Global Capability Centers as offshore divisions for the primary goal of saving money. They take advantage of cost arbitrage, which reduces their operational expenses and gives them the same benefit for a lower cost by setting up an entity in countries like India.
These offshore centers can help organizations save costs by strategically allocating resources worldwide and accessing cost-efficient talent. Here’s how big companies leverage GCCs to save cost:
- Affordable Talent: They provide access to a wide pool of skilled professionals globally, most often at lower costs compared to domestic markets.
- Fixed expense efficiency: By considering locations with lower operating costs, organizations can reach significant savings in terms of salaries, real estate, and other fixed operational expenses.
- Inexpensive Specializations: They assist companies in leveraging affordable specialized skills and expertise that may not be readily available in their domestic markets.
While several reasons support that offshoring just has cost benefits, their value proposition goes beyond cost saving. It holds many more promising gifts.
These centers have crossed the traditional boundaries and are focusing more on digitization, global integrations, and more. These new-age subsidiaries are expanding their footprint to help in decision-making and support innovation.
Let’s take a deep dive into it and see what more such offshore entities can offer for your business.
The true value proposition: building global competency
Offshore units have proven to have a big impact on developing global capabilities for a company. They also influence economic growth by transforming how businesses work and innovate. Not just cost savings, outsourcing to India has several other benefits. These include –
- Access to Global Talent
The ability to access a diverse global talent pool is one of the ways that GCCs have elevated organizational operations. Businesses can easily hire experts with specific skills, creating the best possible team for creativity, problem-solving, and operational excellence.
They are also significant because they give companies access to specialized knowledge that isn’t available locally. This competitive edge helps businesses maintain their market leadership and effectively promote innovation.
- Increased Efficiency and Productivity
Global Capability Centers (GCCs) drive efficiency and productivity through strategic optimization. They consolidate roles, streamline processes, and standardize procedures, supporting transformation.
By prioritizing the 3Es- efficiency, effectiveness, and experience, they continuously enhance operations. Additionally, these units transition from tactical to strategic roles, playing a pivotal role in innovation. They leverage global and local talent, technology, and location advantages, ensuring a significant impact on organizational success.
- Better Innovation
Global Capability Centers (GCCs) enable companies to focus on core functions and innovation by handling routine tasks. This shift allows organizations to allocate resources to more important initiatives, product development, and market expansion.
Offshore expansion also fosters innovation by assembling diverse teams and combining different perspectives and expertise. This makes way for collaboration and creativity which leads to better problem-solving approaches.
- Improved Scalability and Agility:
Every organization wants control over their business. Good oversight, clear communication, and alignment within departments ensure everything runs like clockwork. This control is important for quality, compliance, and rapid adaptation to changing business scenes.
Additionally, GCCs help businesses expand quickly and effectively in response to market demands. They can swiftly scale up or downsize operations as needed by utilizing global talent pools and standard operating procedures.
This ability to grow guarantees that businesses can adapt to shifting market conditions without sacrificing effectiveness or standards, enabling them to stay relevant in evolving business landscapes.
- Become more customer-centric
By digitizing back-end processes, GCCs improve efficiency and free up resources to enhance customer engagement. This includes optimizing customer query management and implementing AI-driven claims validation processes, which lead to higher engagement rates.
They also play an important role in enhancing customer service through various strategic initiatives. These centers leverage customer data to analyze trends and preempt customer requirements, leading to hyper-personalized services.
Furthermore, these outsourced centers leverage digital capabilities to transform product and service delivery experiences. For example, by developing solutions for tracking equipment warranties, They help companies understand customer needs better. With expertise in managing various customer channels, they can develop unified omni-channel strategies. This ensures a seamless experience for customers across all touchpoints.
GCC spotlight: Goldman Sach’s business case
In 2021, Goldman Sach’s [JB2] launched its Center of Excellence in Hyderabad with a space for approximately 2,500 professionals. Their goal was to tap into the growing potential of India’s workforce in the field of Cloud Computing, Artificial Intelligence and Machine Learning.
The company set up the GCC for enabling key functions across engineering, finance, human capital management, and customer business services. Today, the Goldman Sachs India center boasts of 9,000+ professionals, acting as the microcosm of their New York headquarters, aligning key business goals and integrating technology with their business.
The India team has played a pivotal role in the launch of a co-branded credit card with Apple in 2019 for Goldman Sachs. It has become an innovation hub where the company leverages India’s talented pool of resources to expand its offering portfolio.
Conclusion
Global Capability Centers (GCCs) offer many benefits beyond cost savings, changing how businesses operate and innovate in the modern technological landscape. They drive efficiency and productivity through strategic optimization and transition from tactical to strategic roles, supporting innovation and leveraging global advantages. Moreover, they enhance customer focus by analyzing trends, preempting requirements, and transforming product and service delivery experiences.
They also improve scalability and agility, allowing organizations to adapt quickly to market demands. Overall, GCCs play a crucial role in driving organizational success and fostering innovation in the ever-evolving business world.
[JB1]check NASSCOM website whether GCC is Capability or Competency
[JB2]if we are using the name then we need to quote t he source