Are GCCs facing an existential crisis? It’s time to rethink and adapt

The COVID challenge is forcing GCCs to change business course with new operating models

This article was originally published in Express Computer and has been reproduced here with permission.
COVID-19 is moving Global Capability Centers (GCCs) to the crossroads. As the pandemic puts more pressure upon businesses, leading to a growing clamor for nearshoring, the need for GCCs to transform their operations to stay relevant to their parent organizations has never been greater.
The impact of the pandemic differs across GCCs – depending on how they are structured, what services they are offering, how they are governed, and on the physical and technical infrastructure investment over the years.
Changing gears to stay relevant
According to the NASSCOM Captives report 2019, overall revenue for GCCs in India has increased by a CAGR of 9.8% – from $19.4 billion in 2015 to $28.3 billion in 2019. There has been significant growth over the past decade, and different operating models have evolved to different levels of maturity (e.g., Centers of Excellence, shared services, project-based work, and staff augmentation).
As the focus changes post the pandemic, there are four key areas that will impact the evolution of GCC operating model and will require changes to plug the gaps.
  • Organization structure: Transition to flatter structure to increase efficiency
  • Service portfolio: Realigning services to the current needs of parent companies and clients to create higher value
  • Governance: Simplify governance and control for the current maturity of the organization
  • Infrastructure: Reinforce IT Infrastructure and revisit physical infrastructure strategy
Revisit Organization Structure
To cater to changing business needs, GCCs should transition into flatter structures to maximize value delivery. A well-defined change strategy followed by effective training plans will be critical to adapt to the new structure.
Organizations at different maturity levels need effective controls for smooth functioning. Future success will depend upon organizing a clear target followed by enablement and scaled implementation.
Adapt Service Offerings and Operating Model to New Normal
Amidst COVID-19, GCCs should evolve their service offerings to retain strategic value for the parent organization and clients. This includes delivery of specific GCC offerings like innovation and emerging technology services as well as realigning their operating model.
In the area of Innovation & Emerging Technology Services, GCCs should aspire to become digital hubs for futuristic products, and scale up operations through DevOps to channelize demand for the next wave of productivity and value addition. They must invest in emerging technologies such as Big Data, mobility, AI, ML, IoT, and robotics to become the driver for change.
Developing demand delivery mechanism in line with current needs and revamping sourcing strategy will enable GCCs to carry out vendor rationalization and consolidation. An effective people strategy through training and development, and focus on agile delivery will help align with the new normal.
Use technology to rationalise controls
Going forward, GCC processes should be enabled with the right technology for higher productivity and minimal downtime in today’s remote work situation. As GCCs renew focus on reindustrialization of delivery, it will require mapping of new processes to facilitate WFH and other remote collaborations, and to identify gaps in such situations. This also calls for a move away from micromanagement.
GCCs need to work on developing new KPIs and metrics at different channels to ensure smoother delivery. As Agile methodologies provide tangible benefits, the objective should be on achieving flexibility via Agile ways of working (e.g., with interdisciplinary teams and adopting SAFe framework as the foundation).
Bring infra to the digital age
GCC infrastructure, both physical and IT, should be calibrated for the digital age based on usage and relevance. This is because the COVID pandemic has made digital workplaces more relevant.
Apart from driving awareness among employees around BYOD, GCCs should leverage several facets of a digital workplace, including Kanban boards for effective visualization and rapid adoption. And in doing so, they must keep an eye on cybersecurity given the heightened risk environment of a remote workforce.
In conclusion, different GCCs differ in terms of maturity levels and scope of operations. They need to assess themselves to identify transformation opportunities. The post-pandemic world is expected to be more transparent, more demanding and more technology enabled. In a COVID-induced undervalued market, business acquisitions have become an attractive option to absorb startups for potential business in local geographies.
Bring infra to the digital age