Global Capability Centre (GCC): A Complete Guide

A Global Capability Center, otherwise known as a Global In-House Center or captive center, is a unique office operated by a large multinational corporation in another country. It does not service outside clients or customers; it only services its parent company. Rather than hiring another company to do the work, the company builds its own team in another location. The reason for the location outside of their headquarters is usually cost-effective skilled labor. The GCC serves as an extension of the main company’s corporate office and provides business functions internally.

There are many sound reasons for establishing GCCs. A main motivator is cost savings; hiring skilled resources in India is much less expensive than hiring in US or European labor markets. And in addition to cost savings, the level of talent is often very strong, particularly in technology, engineering, and analysis. Another motivator is the ability to monitor the quality of work done once the firms establish their own center as opposed to (possibly) using another agency to deliver the work. Another motivator is innovation; many of today’s GCCs do much more than just execute support tasks; they will engage in truly advanced initiatives such as artificial intelligence, software development, data science, and cybersecurity. It is also a benefit to offshore companies that they can run projects 24/7 because of the time differences. All of these factors demonstrate that GCCs represent both an important territory for business efficiencies and a compelling business case.

A GCC is owned and operated solely by its parent company. In other words, the parent company controls all the rules, guidelines, and standards. The people employed in the GCC will only work with projects that relate to the parent company and will adopt the culture, values, and ways of working from the parent company. The parent company is responsible for managing the team, measuring their performance, providing training, and ensuring the work produced meets quality standards. Typical functional tasks completed by GCCs are software development, technical support, finance and accounting, digital marketing, human resources, data analytics, R&D, and product development. Over time, many GCCs evolved to be hubs for developing new ideas, or Centers of Excellence, for the company's digital transformation journey.

Establishing teams in countries such as India or the Philippines is significantly more cost-effective on salary, infrastructure, and day-to-day operations than employing people and doing similar work in the US or Europe.

There is a surprisingly large pool of quality labor available, such as engineers, analysts, developers, and other professionals, who are well-trained and can take the burden of complex projects. 

When the center is owned by the organization, it gives complete control of processes, quality, timelines, and data security, unlike using the services of an outside enterprise. 

The Global Center of Excellence (GCC) teams are no longer only relegated to support groups. They are actively innovating, creating new products, working in the area of AI, cloud computing, automation, etc., and helping keep their organizations ahead for the future.

Being located in a different time zone, the GCC enables the company to operate almost continuously, allowing for faster output and support worldwide. 

Since the team is internal, it's easier to protect proprietary information, proprietary technologies, and business strategies without outside interference.

The GCC helps the organization build its own capabilities back home with knowledge, culture, and technologies and become competent on its own over time.

Setting up a GCC requires significant upfront investment for costs associated with office facilities, technology setup, legal fees, hiring staff, and training.

The GCC needs to avoid being ineffective and not being aligned with company objectives if there is unclear leadership or unclear systems, such as a reporting system or processes for management. 

Global Capability Centers are evolving rapidly.

This type of learning center traditionally carried out more operational tasks, such as support or administrative work. Today, GCCs are progressively becoming important engines for innovative ideas, technological changes, smart and artificial intelligence-based systems, new product development, and potentially new operating models. In many cases, countries such as India are becoming hubs for innovation as a result of the proliferation of GCCs established by large tech and finance companies. In the future, GCCs will develop beyond being just drivers of support services for the parent company and act as key players enhancing the company's ability to scale globally, develop new knowledge, and intervene in its future trajectory.

In summary, a Global Capability Centre (GCC) is a component of a sizable organization, or multiple organizations, that provides support to the parent organization in a different country to supplement a key business function. Companies create capability centers to reduce costs, gain skills access, and have better oversight over the quality and innovation of work. Establishing a GCC is also an investment because establishing a GCC is expensive, you have to retain quality staff, and cultures are different, yet it is an enduring investment. At this point, GCCs are now centers for innovation and a key driver of how many organizations work globally, wherever they need to work. When managed appropriately, a GCC can shift an organization's operating paradigm and set its path to success globally.

At this stage of maturity, the provider of technology and solutions partners like Naxtre Technologies Pvt. Ltd. is also critical within this process. They will have expertise within the areas of software development, digitization, AI, and product development. Naxtre helps companies navigate the obstacles of establishing and growing the capability center. They can provide scarce resources as well as build innovative solutions, which now allows organizations to save costs and progress innovation within their GCC. This ultimately provides Naxtre with a great partnership opportunity with organizations looking to leverage their offshore centers and achieve developmental acceleration.