The Global Capability Center (GCC) model has transformed how multinational companies evolve and differentiate themselves in a competitive environment. No longer just cost-effective operational units, they have turned into sources of innovation, analytics, and technology development.
McKinsey has stated that almost 80% of Fortune 2000 companies have set up a Global Capability Center (GCC) to improve control, agility, and access to talent. However, to set up and operate a GCC successfully, one needs more than just acquiring real estate and human resources. It requires careful consideration, management approval, and blending of cultures.
Let’s examine the best practices to build a robust and high-performance Global Capability Center, so to speak.
About GCC and Its Growing Importance
A Global Capability Center (GCC), or a captive center, is an entirely owned offshore or nearshore subsidiary that provides services or supervision of a core business function, including IT, finance, human resources, or research and development. A GCC provides total ownership and control over operations, quality, and intellectual property, unlike outsourcing.
GCCs that used to be merely a means for companies to save on costs have now become enablers of talent access, process uniformity, and speeding up innovation. The majority of companies these days regard their GCC as a hub of excellence for automation, AI, and digital business. When thought through, a GCC will eventually position itself as a key facilitator of business growth and change.
Ways to Set Up a Successful Global Capability Center (GCC)
A combination of a clear strategy, local awareness, and capable leadership is required to establish a GCC.
Define a Clear Vision and Business Objective
Start from a clear existing reason for building your GCC. Are you looking to reduce costs, improve digital capabilities, or create new products? Each of these goals will impact your structure and resource design. Identify the type of work — IT support, finance, HR, or analytics and set specific performance objectives. A clear vision is critical to keeping your GCC on target to deliver against the parent company’s strategy and vision, ensuring it makes a measurable impact rather than merely functioning as a back-office activity.
Choose the Right Location and Setup Model
The right location is one of the most significant factors in the likelihood of your GCC being successful. Evaluate countries and cities against their talent pool, cost of living, safety, and ease of doing business. For example, India is a premier choice for many global firms due to its large pool of talented people and advanced tech ecosystem. The option of where to place it (fully captive, joint-venture, or build-operate-transfer) must rely on your ambition and the investment that you are ready to make. Getting the advice of local experts and legal counsel right from the beginning will not only keep you on track but also ensure that you are compliant.
Build Strong Governance and Compliance Structures
A GCC ought to operate at or below the standards set by the principal organization. Set up the governance structure that specifies the roles, the reporting relationships, and the management of decisions. Compliance should be given the highest priority and should include tax, labor laws, and data security. Good governance will not only be a support but also a means of establishing transparency and trust among the headquarters, the local center, and even between the two. Set up vs. reviews and audits regularly to keep the GCC in effective condition and aligned with the organization’s goals.
Focus on Talent, Culture, and Leadership
The people are the true backbone of any GCC. Hire talented individuals who are necessarily align with your organization’s culture and who also align with its growth intent. Consistently plan for training, mentoring, and leadership development programs to help them grow. Headquarters and local team collaboration will happen through dialogue and cultural exchange. Those talented people who feel valued and connected to the organization’s “why” will most likely render their highest value to the organization and stay with it for a longer time.
Conclusion
A Global Capability Center (GCC) is not just about reducing costs; it is about creating a permanent structure conducive to innovation and growth. If it is set up with the right structure, governance, and people, it can easily become the pillar of success.
If you decide to establish or expand a Global Capability Center, Harjai Technologies can assist you every step of the way, including strategy, infrastructure, talent, and operations, all aimed at helping businesses establish GCCs that deliver real, sustained value.