GCC 101: Clearing Up the Confusion

There are three primary offshoring delivery models that companies typically use. The first is Outsourcing, where a service provider sets up and manages a development centre in an offshore or nearshore location. The resources working within this setup are employees of the service provider rather than the client organisation. Here, the service provider is measured based on the SLAs of the contract.

The second is Build-Operate-Transfer, or BOT, which is essentially a stepping stone to setting up a full-fledged in-house centre. In this model, a service provider sets up the offshore centre, operates it for a period of time, and then transitions ownership to the client by transferring employees to their entity. BOT is often considered a hybrid approach, offering an initial buffer before companies take full control of their offshore presence.

And then, we have Global Capability Centres, or GCCs, where the company directly establishes its own entity in an offshore or nearshore location, hires its own employees, and manages all operations independently. Unlike the other two models, GCCs function as an extension of the parent company, embedding global business strategies, corporate culture, and long-term objectives into the offshore operations.

The shift towards GCCs is happening for multiple reasons. One of the biggest advantages is full control over operations and resources, allowing companies to integrate offshore teams into their core business and corporate culture. This creates stronger alignment and makes it easier to drive company-wide initiatives globally.

Another key driver is intellectual property protection. In an outsourced setup, critical know-how of the product, platform or process often sits with third-party vendors. By bringing operations in-house through a GCC, companies retain complete control over their data, technology, and processes. Data security is another important factor – especially for industries like banking, healthcare, and technology, where regulatory compliance is crucial.

Beyond security, GCCs are also seen as more attractive to top talent. Unlike outsourcing providers, GCCs give employees more ownership, career growth opportunities, and competitive salaries, making them a preferred employer. This results in lower attrition rates and better knowledge retention – a crucial factor for long-term success.

And while cost is no longer the primary driver, cost arbitrage is still a major advantage. Companies can tap into high-quality talent at a fraction of the cost of hiring in their home markets, making GCCs a strategic and financially sound investment.

GCCs have evolved far beyond traditional IT and support functions. Today, they cover a wide range of business areas, including Engineering R&D, Digital transformation services, and Business Process Management (BPM). Many companies also use them for Shared Services, such as Finance, HR, Legal, Marketing, and Sales.

One of the biggest shifts we’re seeing is the rise of Centres of Excellence, or CoEs, within GCCs. Companies are now using their offshore centres to drive cutting-edge work in AI, Analytics, Cybersecurity, Cloud, and Automation. Beyond technology, we’re also seeing CoEs emerge in areas like Sustainability, Talent Management, Risk & Compliance, Business Strategy and so on.

This shift highlights how GCCs are moving from being cost-focused support centres to becoming hubs of expertise and innovation. Companies are leveraging them not just for efficiency, but for driving business transformation.

Even though GCCs offer significant advantages, many companies still choose Outsourcing or Build-Operate-Transfer (BOT) models for some practical reasons.

One of the biggest factors is risk minimization – setting up a GCC requires time, investment, and strong leadership commitment. By working with an existing service provider through an ODC or BOT model, companies can leverage established frameworks and contracts with the partner, making the transition smoother and less risky (compared to working with new partners altogether).

Knowledge transfer is another key consideration. Many organisations have long-standing relationships with outsourcing providers, who have deep expertise and operational know-how. Moving to a GCC could mean losing access to this built-up knowledge, which isn’t always easy to replace.

Speed to scale also plays a big role. Outsourcing allows companies to ramp up or down quickly without the delays involved in setting up a legal entity, hiring talent, and building infrastructure from scratch.

For some businesses, financial optics matter as well. Publicly traded companies, for example, aim to maintain high revenue per employee ratios, and adding more full-time staff-even offshore-can impact these metrics.

And finally, awareness of the GCC model remains low, particularly in EMEA and among mid-sized enterprises. Many organisations simply aren’t familiar with how companies have successfully leveraged GCCs over the past couple of decades and the great outcomes ‘they’ can stand to achieve by adopting this model.

Not at all! While large enterprises were the early adopters of GCCs, mid-sized businesses are now one of the fastest-growing segments in this space. In particular, Private Equity-backed portfolio companies and Challenger Banks are increasingly setting up their own GCCs.

For SMEs, GCCs provide a way to access top-tier talent at a competitive cost while also gaining direct control over operations. By establishing offshore hubs, mid-sized companies can accelerate their digital transformation, scale faster, and build specialized capabilities without relying entirely on third-party providers.

While the benefits of GCCs are clear, setting one up comes with its own set of challenges. Regulatory compliance is often the first hurdle, as businesses must navigate local labour laws, tax policies, and industry-specific regulations. Talent acquisition can also be tricky as companies need to attract and retain skilled professionals in an often competitive market.

Beyond legal and talent challenges, companies must also focus on cultural integration. GCC teams need to work seamlessly with global headquarters, and bridging these differences takes effort.
Finally, there’s the challenge of positioning the GCC within the organisation – without clear alignment with business strategy, GCCs risk being viewed as just another offshore cost centre rather than a strategic asset.

Having said that, these can be easily overcome by leveraging a GCC Set-up specialist that has defined best practices and ready playbooks to overcome each of these challenges.

Location selection is a critical decision, and companies evaluate multiple factors before choosing where to set up their GCC. Talent availability is a primary driver—companies need access to a skilled workforce that aligns with their specific needs. Cost structures, including salaries, real estate, and operational expenses, also play a key role.

Other important considerations include infrastructure quality, ease of doing business, and regulatory stability. In recent years, locations like India, Mexico, Poland, and the Philippines have become popular GCC hubs. However, companies are also exploring smaller, niche locations to diversify their talent footprint and reduce dependence on traditional offshore hubs.

GCCs are undergoing a major transformation. They are no longer just about reducing costs—they are now driving innovation, digital transformation, and strategic decision-making.

Companies are increasingly using their GCCs to accelerate advancements in AI, Automation, and Cloud Technologies. Beyond technology, GCCs are also playing a central role in customer experience, business operations, and product innovation. Many organisations now see them as key enablers of global business strategy, rather than just offshore extensions of their HQ.

Several exciting trends are shaping the future of GCCs. One of the biggest is GCC-as-a-Service, a model that enables companies to establish their offshore centres quickly, efficiently, and with minimal risk, often going live in as little as 60 days.

We’re also seeing the rise of Hybrid Models, where companies blend in-house GCC operations with selective outsourcing for more flexibility.

A growing trend is companies increasingly utilizing their GCCs as hubs for AI experimentation, allowing them to drive business transformation.

The Hub-and-Spoke Model is also gaining wide traction, where companies expand beyond major hubs to set up smaller, niche locations.

And finally, driving Sustainability and ESG charters from GCCs are becoming quite common, with several GCCs playing a bigger role in managing and driving corporate sustainability goals.