Why some Global Capability Centers (GCCs) cannot deliver value

The correct GCC operating model - By operating model, we mean the organization structure, activity placement and handoff, the ability to deliver end-to-end processes and the sourcing strategy. If an organization is complex and the processes are highly fragmented, spanning across multiple teams, or there is a lack of understanding on ownership of platforms, processes or transformations, then establishing a GCC will only amplify this issue. In such a case where large organization realignment is not possible, a prudent approach would be to carve out a subset of processes handed over to the GCC to manage end-to-end activities, and then set goals for the center to enhance and make the processes efficient.
 

Empowering GCCs to make strategic decisions - The question, “what should the GCC do?” usually precedes the decision to empower GCCs. Should it simply follow instructions and perform repetitive tasks, or can it add value by driving the organization’s transformation agenda? Should the answer be the latter, then empower the GCC leadership. In the truest case of empowerment, a GCC leader should be able to drive a budget and perform resource allocation, meeting the organization’s needs, rather than being tied up in a bureaucratic approval process for every requirement.
 

Understanding local nuances before planning - It’s always best to partner with someone locally, especially if the organization has limited understanding of the local market and the on-ground challenges. Often companies make the mistake of creating ambitious growth plans that are separated from reality.
 

Every company today is trying to hire top talent and the supply of certain skills is severely limited; and the situation is the same regardless of where you are in the world, and even more so in India where thousands of GCCs are operating alongside very large service providers in accessing a common talent pool.

The subsequent phases are much shorter, with the local leadership driving towards the goals and objectives. Similarly, understanding cultural sensitivities is equally important. What works in other countries may not work in India and tweaking expectations may prove beneficial in the long run.
 

Right measures at the right time - When a GCC starts out, the measurement of how well it is performing might involve very rudimentary elements such as the rate of ramp up, onboarding time and setup costs. However, these might no longer be relevant in subsequent years. The metrics tracked should change over time and become increasingly challenging to push the boundaries–only then will a GCC jump levels of maturity and deliver beyond expectations.
 

These are only a select subset of challenges which GCCs face in the initial years of their existence. They define the success or failure of the centers. There are many more such as the quality of local leadership, the organization culture and internal dynamics and the sourcing strategy, which need discussions when beginning the GCC journey.