In the fast-moving global business world, the language changes as quickly as the technology. A decade ago, the dominating buzzwords were “outsourcing” and “offshoring.” Today the new acronym du jour is taking boardrooms from New York to London by storm: the GCC.
There is, however, some misunderstanding about the concept amid its increasing popularity. “What is a GCC?” and “How does it differ from old-fashioned outsourcing” are common questions in the minds of many CEOs.
This guide removes the industry-speak to help demystify just what a GCC is at its core base level — What is the Global Capability Center and Why?
DEFINITIONS: WHO OR WHAT IS A GCC?
What is a GCC at its most basic?
Definition: Global Capability Center (GCC) A GCC is a facility which has complete ownership, control and responsibility from the parent company and are based from offshore locations. It’s important to note that a GCC is not an ISV or an offshoring firm – it is actual legal entity of the said company. It also acts as a virtual satellite office, performing important operations like IT support, R&D and business process optimization.
To really know the What of a GCC The best way to understand what a Global Capability Center(GCC) is not as “support center” but as “centre of excellence”. It is a committed team of your own employees, in a different geography, working on some of your most strategic efforts.
The Shift: From Captives to Capabilities
These centers have also historically been referred to as “Captive Centers.” They were motivated by cost-cutting above all else. Companies would establish small offices in areas where labor was cheaper and handle repetitive, back-office tasks like data entry or payroll.
But the current thoughts on what “can be considered a GCC” have changed drastically. The “C” has gone from Captive to Capability. These centers are innovation hubs today. They are no longer just obeying orders; they are being productive. Among the largest enterprises, both Google and JP Morgan have their own GCC platforms, while Walmart still work on its, using it to power AI R&D as well as to process much of the data behind digital transformation.
GCC Vs Outsourcing – A Very Thin LineBuilderInterface GUIStyle vs Style?
The reason I mention that is because if a C-Level executive asks “what is a GCC” he or she’s in many cases trying to distinguish it from outsourcing. The distinction is one of ownership and command.
You take the work that was being done by your employees, and you hire an outside third-party firm (such as a BPO or IT services company) to handle it. You hand off the work, and they deliver the result. You don’t really get to choose who does the work, or how.
GCC: You construct your own office. You hire the talent directly. You remain in control of the culture, the processes and importantly, – the IP.
Knowing what is a GCC in this sense also explains its biggest benefit: risk reduction. And because it’s your center, you don’t ever have to fear a vendor disclosing your trade secrets or not putting yours needs first.
Why do global giants build GCCs?
So now we know what is a GCC, the next question is why? Why go the trouble of establishing a legal entity overseas?
Tapping Into the Global Talent Marketplace: The motivation is no longer exclusively cost > skill. GCCs give companies access to enormous reserves of engineering and data science talent in countries including India, Poland and the Philippines.
Vision Alignment: A GCC staff member is a one-team player. No temporary contractor would know the long-term vision as well as they do of the company.
Own-Your-Innovation: By retaining operations within the company, they are laying deeper culture of innovation that helps them build proprietary technology sooner than later.
Conclusion
The global playing field is overripe. It’s no longer a matter of shopping for the cheapest vendor as you try to decide who can afford to deliver it.
So, what is a GCC? It is the future of the multinational. It is a strategic ship that offers both the savings of offshoring and the control of insourcing. A GCC is frequently the most effective tool for businesses that want to grow in the digital age, and build a business that will last.
