GCC value zones

If you are following the tech talent movements across the global tech industry, the rise of Global Capability Centers (GCCs a.k.a. GIC, GBS, GDC, GSC, etc) probably hasn’t eluded you. Given the cost pressures and the paucity of talent in “global north” markets, many organizations are looking to setup / expand their offshore presence in countries like India, Philippines, Vietnam, UAE, Mexico, etc.

As a sponsor of such a setup, you are looking to get the best value out of your investment in setting up a team in a low(er)-cost, talent-rich country. When you prepare the business case for setting up the GCC, the winning argument is “Cost Arbitrage”. So, they start in zone A, where the value that they expect from their GCC is engineering capacity at lower cost.

The trouble with zone A is that double-digit pay-hikes and high attrition toss your original cost arbitrage calculations out of the window. In a couple of years, you struggle to justify the investment you’ve made. Unfortunately, you have also attracted talent that will make it difficult for the GCC to move to a higher value zone.

Most old GCCs started in A or B zones and are still struggling to shift their value proposition. Newer GCCs have an option to leapfrog and start in a higher value zone from the get-go, but it’s easier said than done.

The ability to operate in a higher value zone is directly proportional to the level of autonomy at play

Long term value for business back home as well as for the GCC is in operating in the D, E and F value zones where the value proposition from the GCC is Innovation (a.k.a. Intellectual Arbitrage). But the ability to operate in a higher value zone is directly proportional to the level of autonomy with which the GCC functions. As the HQ relinquishes control and delegates outcomes, the GCC provides higher value.

The 1st step change is to hold the GCC accountable for quality of delivery and let the GCC leadership figure out the capabilities, governance structure, tools and processes required to maintain a high standard. This requires the HQ to relinquish is delivery management responsibilities.

The next step is to start expecting tech innovations and platforms for common functionalities from the GCC. You share the burden of creating operating advantage through technology with your GCCs tech leaders.]

The final step change is to expect product and business innovations from the GCC and to empower it with capabilities and business acumen. This is the most difficult transition and many GCCs will never get here.

This is a multi-year journey fraught with commercial and political mires… but it’s the only way to create sustained long-term value with a GCC. If you are looking to change the value zone your GCC operates in, we should talk!

NOTE : The portfolio of work in a GCC will lie across this spectrum. These step changes start at a team level and gradually propagate through the organization with each passing success story.