Global Capability Centers (GCCs) are instrumental in shaping the dynamics of businesses worldwide. These centers, often located in countries like India, have evolved beyond their initial cost-cutting objectives to become integral to the global business landscape.
In this blog, we’ll explore the evolution of GCC’s, and their profound impact on the business world.
GCCs initially focused on cost reduction but have since evolved to offer a broader range of services. They now provide maintenance, product engineering, design, customer intimacy, and content operations.
Pradeep Lankapalli, Thomson Reuters
Tesco GCC India serves as an example, handling architecture design, data science, supplier induction, and managing a substantial portion of the company’s finances.
Sumit Mitra, Tesco GCC Head
India holds a staggering 50% of the world’s GCCs, with over 1,400 recognized GCCs employing more than 1.4 million people directly and indirectly. India’s GCC model is mature and validated, attracting GCCs from various industries and countries.
GCCs recognize the importance of collaboration with the startup ecosystem and IT services companies. They understand that global solutions cannot be developed in isolation.
Today, GCCs account for 30% of India’s tech industry, with a 5.4 million employee base and 24% of export revenues. They also contribute to 45% of the global GCC headcount.
Vandhna Babu, Nasscom Research Analyst
1. Internal Charging
GCCs employ a system of internal charging, where the GCC entity in India sends a monthly invoice to the headquarters based on the expenses incurred. This practice streamlines financial transactions within the organization.
2. Decision-Making Dynamics
In GCCs, decision-making is a hybrid process involving both regional and headquarters’ input. For example, while hiring local talent, input comes from regional HR, but funding is provided by the headquarters.
3. Shared Services Centers (SSC)
Shared services or shared services centers (SSC) are dedicated units structured to centralize various business functions, supported by IT and IT services. They aim to optimize efficiency and effectiveness across the enterprise.
Here are some challenges that they have:
1. Integrating with the Parent Organization
One significant challenge faced by budding GCCs is the seamless integration with their parent organization’s culture and operational processes. Bridging the gap between local and global practices, aligning with the parent company’s vision, and fostering effective collaboration can be complex tasks. This challenge persists, particularly when the tenure of the staff is relatively short.
2. Retention Woes
GCCs struggle with employee retention, with many staff members departing within 2-3 years. This is often due to the absence of a well-defined career path for employees with specialized skills. Companies that establish centers of excellence for these skills can attract and retain top talent by offering clear career progression opportunities.
3. The Cost of an FTE Employee
Did you know that the average cost of a Full-time Employee (FTE) in a GCC exceeds $19,500 USD? This cost is expected to rise to $29,500 USD as India’s talent market becomes costlier.
While GCCs originally emerged as a cost-saving measure, the landscape has shifted dramatically. Costs have steadily risen, with the Indian market averaging $29,500 per FTE employee and projected to reach $39,000. This transformation underscores that cost savings are no longer the primary driver behind GCCs.
In conclusion, Global Capability Centers have not only reshaped the global business landscape but have also evolved in profound ways. As they continue to grow and adapt, they remain essential players in the ever-changing world of business.
Stay tuned for more insights on GCCs in the upcoming month!
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List of Global Captive Centers (GCC’s) in India Download Complete List Company Name Revenue Employee Count Company HQ Industry Company Description Contact Email Wells Fargo >1B >100K United States of America Financial Services More proof that banking has become the wild wild West: Wachovia wed Wells Fargo at the end of 2008 to create North […]
