From Vision to Reality - A Complete Guide to Launching Your GCC

According to NASSCOM’s 2024 GCC Annual Report, over 1,800 GCCs in India alone have contributed $64.6 billion in revenue and are expected to surpass $100 billion by 2030.

Global Capability Centers (GCCs) have now clearly established their ability to manage complex projects like market research and product development, and drive innovation for large enterprises.

However, achieving these lofty goals isn’t easy. Quite a few challenges occur along the way, including:

• Compliance challenges: Countries like India are known for their stringent regulatory challenges. To set up a GCC, enterprises must adhere to various tax and labor regulations and be mindful of the laws that vary across states. A lot of time is spent maneuvering complex rules across different jurisdictions. 
• Culture: According to a study by CaptiveAide and Feedback Insights, 84% of respondents cite cultural integration as the topmost concern for setting up GCCs. Issues like cultural and language barriers can make it harder for the workforce to collaborate and work cohesively. Problems like resistance to change and a constrained mindset can prevent the workforce from spearheading challenging projects.
• Data privacy risks: There is always a risk of data and security breaches if the GCCs have a weak security posture and data privacy framework. 
• Shortage of skilled talent: While countries like India have a vast talent pool, there are concerns about skill gaps. Lack of niche skills and project-ready resources makes it hard for enterprises to set up GCCs and hand over complex projects.

So, what can enterprises do to overcome these challenges and turn the vision of setting up a GCC into a reality? We will explore this in detail in this blog.

How to Launch Your GCC: A Step-by-Step Guide

Launching your GCC can be exciting but challenging. The following guide can help you navigate the complexities, prepare for the unexpected, and realize your vision.

• Step 1: Determine why you want to establish a GCC

Determine why establishing a GCC is crucial for your business. Will it save costs, streamline your business operations, or drive innovation and generate a new revenue stream for your business? Knowing the objective will help you determine the scope of the GCC, its structure and model, capabilities, and even long-term factors like location and talent choice.

• Step 2: Do a feasibility study to determine the viability and risks of setting up a GCC

Setting up a GCC is expensive. Hence, do a feasibility study to understand the risks and viability of the business. Here are a few factors to check:

• Risks: Check for the location's regulatory, cultural, and geopolitical risks.
• Regulations: Know the labor laws, data protection regulations, and other local regulations governing the location.
• Infrastructure: Evaluate if the location can access basic infrastructure and internet connectivity.
• Government support: Countries like India have strong support from state and central governments. Check if the location you choose offers adequate government support. Don’t be afraid to look beyond the traditional sectors – today centers in states like Kerala are showing their effectiveness across industries. 
• Cost: Ensure the chosen location is cost-effective and does not charge hidden fees. Before setting up, know the costs involved in building the GCC, including overhead and operational costs. 

• Step 3: Decide on a location based on the feasibility study

Once you zero in on the location based on the feasibility study, ensure it ticks off the following checkboxes:

• Talent pool: Ensure your chosen location has access to a skilled talent pool that can successfully implement your vision. 
• Economic viability: Check if setting up a GCC in the location is economically viable to your business. Compare different places' operational and labor costs before making the final decision. 
• Compliance: Know the local regulations that govern the business.
• Geo-political landscape: External factors matter as much as the internal ones. Business continuity is crucial. Hence, ensure the geo-political situation in the location is stable and conducive for the business. 

• Step 4: Identify a business use case and launch a proof-of-concept to check its viability

Build a business use case for setting up a GCC. Consider factors such as the potential risks, costs, and expected return on investments. To ensure the project is viable, launch a proof-of-concept (PoC). A PoC helps enterprises test new technologies in a controlled environment, assess their feasibility in the real world, and measure their impact on business. This will help the enterprise save costs, avoid disruptions to operations, and innovate without fear. 

•  Step 5: Launch a pilot initiative

Once the PoC is found to be viable, enterprises can consider launching a full-fledged program. This involves improving the solutions portfolio based on feedback received during the pilot initiative, allocating resources, monitoring the impact, and scaling operations without significant risks. 

• Step 6: Build operational framework, infrastructure, talent, and technological capabilities

To launch the pilot program, enterprises must establish a robust operational framework for GCCs. This includes:

• Building scalable infrastructure to support future workload and resources
• Using the right tech stack for operations, IT security, analytics, and cross-functional collaboration
• Attracting and retaining the right talent and training them to make them project-ready
• Defining roles and responsibilities of different resources to avoid misalignment or mismanagement of resources
• Building an organizational culture that fosters collaboration and innovation
• Defining performance metrics and monitoring them to ensure the program is aligned with business objectives

• Step 7: Measure the impact and scale the operations

Setting up a GCC is just the first step. Ensure you measure its impact to identify roadblocks and opportunities and make continuous improvements. A few KPIs that you can measure include:

• Customer satisfaction
• ROI on GCC investments
• Cost per FTE
• Cost savings after automation
• Project success ratio
• Cost of GCC operations
• Resource utilization

Continuous monitoring and iterations can help GCCs address the challenges and scale operations.

• Step 8: Choose the right partner and partnership model for launching a GCC

While the above steps are essential for setting up a GCC, choosing the right partner and partnership model is the most important. According to the CaptiveAide and Feedback Insights study cited earlier, 34% of enterprises partnered with local experts to set up a GCC, acquire new talent, streamline operations, and adhere to regulations. Once you find the right partner, choose an appropriate partnership model. Typically, enterprises follow any of the following partnership models:

• Build-Operate-Transfer Model (BOT): In this model, the local business sets up and operates the GCC for a specific duration under the purview of the parent enterprise.
• Joint venture: In this model, both the local GCCs and parent enterprises have shared ownership and run operations together. 
• Managed Services: In this model, the GCC operations are outsourced to a third-party service provider.
• Wholly Owned Subsidiary with Local Consulting Partners: In this partnership, the parent enterprise partners with local consulting enterprises to set up long-term GCC projects.

Consider the following factors while choosing the right model:

• Ensure the partner understands your goal and is aligned with it
• Check if the partner has an adequate talent pool of skilled resources and minimal barriUnderstand the scale and scope of operations and ensure the GCCs are capable of carrying them out smoothly
• Check the partner’s experience and expertise and ensure they can help reduce the complexities of setting up a GCC in India.

You can read more about the partnership models in this blog.

• Step 9: Establish data and cybersecurity, compliance, and governance to adhere to regulations

To avoid legal and compliance implications and to safeguard data, ensure the following:

•  A well-defined data privacy law 
• A robust IT infrastructure for smooth IT operations and security operations centers (SOC) to mitigate data and cybersecurity risks
• A business continuity and disaster recovery plan to minimize impact due to cyber and geo-political risks or unforeseen outages
• Standard operating procedures (SOPs) and other policies to ensure compliance with regulations
• Frequent audits and inspections to maintain compliance

• Step 10: Measure success and make continuous improvements to deliver value

You are now at the end of setting up a GCC. But the journey doesn’t end here. Continue monitoring the defined KPIs to analyze if they are delivering value. This will help you identify potential bottlenecks and improvement areas and predict trends that usually go unnoticed. Measuring KPIs and making continuous improvements will help GCCs deliver value and meet business goals like enhancing the innovation quotient of the operations. 

Conclusion

GCCs have come a long way from being cost centers to innovation hubs. They are now helping enterprises implement cutting-edge technologies like AI, advanced analytics, and cloud computing and stay ahead of the competition.

There can be challenges in building GCCs. From following stringent regulations to procuring skilled talent, setting up a GCC can be an arduous task. However, by following the steps above and working with the right partner, you can overcome these challenges and turn your vision into a reality.

Need help in setting up your GCC, feel free to contact us.