How Global Capability Centers (GCCs) Are Evolving
CA Amit Bansal
CA Amit Bansal is a Fellow Chartered Accountant with over a decade of experience in accounting, auditing, and advisory. As Partner at GMCS & Co. and Founder of ABVS Management Consultancy, he leads key assurance and compliance projects across industries. He holds ICAI certifications in Forensic Accounting (FAFD), Concurrent Audit of Banks, ADR, and IND AS, and is a certified Peer Reviewer, known for his commitment to audit quality and integrity.
In the last decade, Global Capability Centers (GCCs) have transformed from being cost-efficiency tools or back-office hubs to becoming strategic engines of innovation, transformation, leadership, and growth for many enterprises. They are no longer mere delivery centers; rather, they are increasingly central to product development, research and development (R&D), new business creation, and competitive differentiation. This paper examines how GCCs are evolving, the factors driving this evolution, the benefits they offer, and the challenges that require careful management.
How GCCs Are Evolving:
- From Operational Support to Strategic Value Creation
GCCs are moving far beyond transactional, repetitive work (such as financial bookkeeping, report generation, and basic IT support) toward owning entire product lifecycles, contributing to innovation, building new business lines, and developing new technologies. - Increased Focus on Innovation, R&D, Advanced Capabilities
Many GCCs now house centers of excellence in artificial intelligence and machine learning (AI/ML), data analytics, digital transformation, the Internet of Things (IoT), and cloud-native platforms. They’re not only implementing innovations but driving them. - Collaboration with Startups, Academia, and Ecosystems
To access new ideas, niche deep-tech skills, and fresh perspectives, GCCs are working closely with universities, research institutions, incubators, and startups. These collaborations speed up prototyping, reduce risk, and bring in external innovation. - Talent Dynamics: Skill Upgradation, Leadership, and Geographies
GCCs are investing heavily in upskilling and reskilling, building leadership pipelines, encouraging diversity, and moving into Tier-2 & Tier-3 cities to tap into new talent pools. Additionally, roles in GCCs are becoming more senior and increasingly global in ownership. - Using Technology & Automation to Boost Efficiency and Enablement
Automation—including robotic process automation (RPA), intelligent document processing, generative AI, and predictive analytics—is increasingly embedded across GCC functions to reduce manual work, improve quality, and accelerate delivery. - Broader Service Mix / New-Age Offerings
GCCs are expanding their portfolios to include more complex and strategic functions, such as strategic procurement, regulatory and legal services, marketing and communications, ESG monitoring, and portfolio management. - Greater Autonomy, End-to-End Ownership
Instead of being purely execution arms, GCCs are being given more decision rights. This means more responsibilities, more ownership, greater involvement in strategy, in setting directions, in owning outcomes. - Shift toward Sustainability, ESG, Employee Well-Being
More GCCs are embedding environmental, social, and governance (ESG) practices. Employee benefits are evolving to emphasize mental and physical health, work–life balance, flexible benefit structures, and inclusion. They are also emphasizing sustainability in operations and investments in green infrastructure. - Geographic Diversification
Rather than being concentrated only in major metropolitan areas, GCCs are expanding into smaller secondary cities (Tier 2 and Tier 3), which have improving infrastructure, lower real estate and operating costs, and a growing pool of talented professionals. This also supports balanced regional development. - Policy, Incentives, Government Support
Many states/countries are creating policy frameworks, giving capex & opex incentives, tax/lease support, skill subsidies, infrastructure improvements, etc., to attract GCC investments. These make setting up and scaling easier.
Benefits of the GCC Evolution:
Because of these changes, GCCs are delivering more value, both for the parent organizations and for the host economies. Here are the key benefits:
- Cost Efficiency + Quality Improvement
Even as they assume more advanced responsibilities, GCCs continue to deliver cost advantages, including lower salaries, reduced real estate costs, and favorable currency positions. However, the trade-off is shifting: the focus is not solely on cost savings but on achieving higher quality and faster turnaround with the same investment. - Speed, Agility, Innovation
With GCCs owning critical functions and being equipped with automation and advanced technologies, parent companies can bring innovations to market faster, respond more quickly to changes, experiment, pilot, and scale. - Improved Competitive Differentiation
Rather than being viewed as cost centers, GCCs are becoming sources of competitive advantage: new products, data insights, new business models, customer experience improvements, etc. - Access to Skilled Talent & Leadership
Enterprises benefit from a growing pool of people with cutting-edge skills (AI/ML, analytics, cloud, etc.), often at more competitive costs. Also, leadership roles are increasingly located in GCCs, which enhances career opportunities and retention. - Resilience & Operational Continuity
Having globally distributed GCCs with diversified geographies and automated or digitized processes often allows parent organizations to better manage disruptions such as natural disasters, geopolitical risks, and pandemics. GCCs increasingly act as change enablers, not just followers, helping organisations adapt. - Economic & Social Development in Host Regions
For host countries (e.g., India), GCCs generate high-skilled jobs, build human capital, spur infrastructure development, provide spillover benefits in education, entrepreneurship, and local vendor development. They help spread wealth beyond big cities when located in tier 2/3 areas. - Better Employee Experience & Employer Branding
As GCCs become more strategic, they invest in better work conditions, flexibility, mental health support, inclusion, and opportunities for learning and growth. That makes them more attractive to talent, lowers turnover. - Regulatory & Ecosystem Leverage
Policy incentives, favourable regulations, government-led skill development, and infrastructure (digital, physical) are making GCCs more attractive. Parent companies can benefit from supportive frameworks. Host governments benefit from investments, tax revenue, and skill building.
Challenges & What Needs Careful Management:
While evolution brings many benefits, there are challenges and trade-offs that GCCs and their parent companies need to manage:
- Skill Gaps & Talent Retention: As GCCs move up the value ladder (advanced tech, innovation, etc.), demand for specialist skills increases. Ensuring consistent upskilling, attracting talent to less-known geographies, and retaining them is hard.
- Culture, Leadership & Change Management: Shifting from “execute what HQ asks” to “think for upstream strategy” demands leadership maturity, trust, autonomy, and alignment of culture and ways of working. Often, GCCs need to evolve in governance, structure, and mindsets.
- Ensuring Innovation Doesn’t Stall at Pilots: Many GCCs experiment with AI or automation but struggle to scale or embed those innovations into the core business. It requires investment, metrics, and reward systems.
- Infrastructure & Regulatory Uncertainties: Even though many places are improving infrastructure and policy, unpredictable regulatory changes, real estate, utilities, connectivity, etc., remain a risk. Also, continuing to ensure IP protection, data privacy, and compliance across jurisdictions.
- Cost Inflation & Rising Competition: As more GCCs emerge, competition for talent increases, pushing up wages and costs. Also, cost savings as a differentiator reduce with time.
- Balancing Centre and Decentralized Decision Making: With more autonomy comes risk of misalignment, duplication, or divergence from the parent company’s strategic goals. Governance and oversight must evolve.
What This Means for Companies Setting Up / Growing GCCs:
- Clarity on Strategic Role
Define early whether the GCC is intended to be merely operational or expected to drive innovation, product development, or transformative change. Set metrics accordingly (not just cost or turnaround time, but innovation, business impact). - Invest in People & Leadership
Strong leadership in the GCC that is empowered, as well as continuous skill building. Leadership development (especially bridging global and local), domain expertise, and cross-functional exposure. - Culture, Autonomy and Governance
Provide autonomy with accountability. Clear governance structures. Embed GCC in the enterprise’s strategic conversations. Ensure alignment of culture but allow local adaptation. - Partnerships & Ecosystem Engagement
Work with universities, startups, innovation labs, and local governments. This helps access new technologies, fresh ideas, talent pipelines, and reduces risk. - Technology & Automation Adoption
Use AI, automation, cloud, and data analytics to reduce routine work, speed up workflows, and improve quality. Build CoEs / internal innovation labs to pilot emerging tech. - Geographic Spread & Infrastructure Thoughtfully Planned
Consider whether expanding into lower-cost cities or tier-2/3 hubs makes sense. However, this expansion requires adequate infrastructure—including connectivity, real estate, reliable power, and internet access—along with sufficient talent availability and quality of life. - Sustainability & ESG Aspiration
Make sure the GCC’s operations are energy-efficient, socially responsible, and inclusive. Employee well-being, DE&I, reporting, and compliance must be part of the design. - Measuring & Tracking Impact
Beyond usual KPIs, measure innovation outputs, business growth, employee engagement, retention, diversity, strategic roles taken, etc. Use data to iteratively improve.
Conclusion
To sum up, GCCs have come a long way. From serving as cost-arbitrage or back-office hubs, they are rapidly evolving into strategic, innovation-led, value-creating entities. With the right investments in talent, technology, culture, policy support, and partnerships, they have the potential to transform both the companies that own them and the ecosystems in which they operate.
As globalization, digitalization, and disruption continue apace, GCCs will likely be among the most important levers companies and governments use to stay competitive, resilient, and forward-looking.
If your organization is considering setting up a GCC or evolving one, thinking strategically about what you want it to become (not just what it is now) is crucial. The future will belong not to those who merely deliver but to those who lead, innovate, and shape.
For any clarifications or queries, please feel free to reach out to us at admin@fintracadvisors.com
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