Let’s face it – cost optimization is the major reason most companies establish their global competency centers (GCCs) in India. I have come across several MNCs that have set up their offshore operations to reduce operational costs. But what if I told you that setting up your GCC in India can be a strategic investment for achieving business growth rather than just an establishment for saving a few bucks?
We all can agree that India has long emerged as a sought-after destination for global companies. Companies are investing in skilled Indian talent. The infrastructure is top-notch yet inexpensive. And the government is highly welcoming companies looking to set up their base in the country.
Traditionally, companies came to India to delegate their back-office operations. They have looked at offshore centers as spaces that carry out their support functions. But times have changed. Companies are looking beyond cost savings and delegation of secondary activities. Today, several of these Indian captive subsidiaries or GCCs as they are now called have become hubs for innovation and operational excellence.
While offshoring back-office operations is all well and good, there’s a whole world of untapped potential that GCCs can offer. Here are a few areas that come to my mind which can transform India setup into a growth engine for companies –
- Achieve R&D Excellence
India is slowly rising as an innovation hub, which means better opportunities for research & development. Investments in advanced research and intelligent engineering is rising, leading to growth of skilled talent for R&D. And for the same cost in India, you can 3X your team and R&D capabilities, with added excellence and skills. We can witness the evolving R&D infrastructure and talent in India that is now open to MNCs looking to innovate with India’s capabilities. - A Global Marketing Team
I have always thought of marketing as a worthy offshoring function. Today, marketing is more than flashy campaigns – it involves a lot of data analytics, content creation, and campaign management. Companies need people who can assemble all these things together, do the lay–work, and even provide ideas for marketing execution. It also helps them build from one capability to another. Imagine you outsource for UI development and get additional support for website maintenance and digital marketing. A win-win scenario. - Harnessing Consulting Power
We are witnessing an explosion of companies eyeing towards India for harnessing its prowess in consulting. By hiring smart B-school graduates from the top institutes in India, companies can build their consulting function without the complexities and costs involved in building a team on-site. While it starts with tasks like creating presentations and putting together data, as their experience grows, these consultants would be available to take on global roles as the business grows.
These are just a few examples. There are other successful offshore based teams that manage global sales lead generation, HR recruitment among others. History has shown that those who look at this as an opportunity beyond cost arbitrage, will benefit immensely over time.
I think it’s a great opportunity for companies to capitalize on the potential of these areas by setting up a GCC in India. Conventionally, companies have been less considerate towards these functions. The limited nature of such functions and a lack of confidence were the key reasons why companies didn’t consider separate centers for them. But as India continues to evolve in its talent and infrastructure, I am sure companies will be more than willing to invest in these areas.
In such case, I would suggest the virtual plug-and-play model for offshore setup. This model, also known at CaptiveAide as warehousing, enables companies to quickly setup their operations in India without any hassle. All the employees are under the payroll of the GCC company, and they take care of all the infrastructure needed to successfully establish their India arm.
Companies like Oracle have successfully brought important functions to India, which are now delivering impact and contributing to business growth. It established a highly successful tele sales team, housed in India, calling prospects all over the world and driving sales. Tied to an account manager, their team became more efficient, and became a strategic hub for increasing revenue.
While moving functions to India helps in cutting cost, I believe some companies have restricted GCCs to only such activities. There are areas, which are by their very nature, small and don’t allure companies in setting up a separate entity. But leveraging the talent, infrastructure, and ease of doing business in India, companies can transform these functions as drivers of business growth rather than just support activities.
Can companies build GCCs for key functions that drive business growth? I believe they are ready to take the leap.
What do you think?