In June 1943, the US Army Air Forces asked Lockheed for something no American company had yet built: a jet fighter. Engineer Clarence “Kelly” Johnson promised a prototype in 180 days. To get there, he pulled a small group of engineers and mechanics out of the main organization and set them up in a rented circus tent beside a wind tunnel in Burbank, California, far from the approvals and handoffs that slowed the rest of the company.
The team delivered the XP-80 in 143 days. The way of working outlasted the aircraft. Lockheed’s Skunk Works went on to build some of the most advanced aircraft of the century, and its formula of a small expert team, a clear mission, and protection from everyday pressure became a template organizations still borrow.
The literal meaning of a Center of Excellence is – ‘A place where the highest standards are maintained.’ The Software Engineering Institute of the Carnegie Mellon University defines a COE as “A premier organization providing an exceptional product or service in an assigned sphere of expertise and within a specific field of technology, business, or government, consistent with the unique requirements and capabilities of the COE organization.”
However, COEs mean different things to different organizations, depending on their business needs. For instance, an R&D organization would define a COE as a dedicated team that operates with the mandate and accountability to define and implement the vision for a “specific focus,” one that is aligned to the strategic vision of the organization. For a data or AI team, a COE is often the group that owns the platform, standards, and governance every other team builds on.
Now the question arises as to how to know if an organization needs a COE.
Much like Kelly Johnson’s team, which was given a single mission and the freedom to pursue it, establishing a Center of Excellence (COE) requires a clear purpose and strategic roadmap. COEs are typically founded under one of two scenarios:
In today’s rapidly evolving world, the pace of technological advancement is relentless, compelling companies to continuously innovate to meet changing customer expectations and maintain a competitive edge. Setting up a Center of Excellence (COE) becomes crucial for companies aiming to differentiate themselves by offering solutions that reflect a deep understanding of their domain and technology. COEs serve as incubators of innovation, enabling organizations to develop new skills, drive innovation, and adopt a fail-fast approach to quickly adapt to market changes.
By focusing on specialized areas of expertise, COEs help organizations harness and disseminate knowledge, ensuring they remain at the forefront of their industries. This strategic approach to innovation and skill development is vital for companies seeking to establish themselves as leaders in their fields, capable of delivering cutting-edge solutions to their customers.
The scale of this shift is clear in India alone, which is home to 2,117 GCCs employing 2.36 million professionals in FY2026, according to the Zinnov-Nasscom India GCC Landscape Report 2026. More than 1,200 of these centers now have AI/ML capabilities.
Having a dedicated team means that employees and the world are aware of the focus. COEs also demonstrate that an organization is committed to excellence.
COEs are not impacted by the day-to-day business of an organization. They do not have to deal with immediate revenue pressures and are free to channel their expertise and focus on a single business activity, process, or capability.
COEs are not limited by the process overheads that typical product teams may have to deal with. They have the flexibility to innovate fast and fail fast.
The newest and fastest-growing COE in most enterprises is the AI COE. Activity is rarely the issue. Zinnov’s study found that 92% of India GCCs are piloting or scaling AI, yet more than 70% lack a structured framework to measure its impact. The Owning the AI Agenda: GCC AI Maturity Study, developed with Nasscom and Tiger Analytics, adds that 51% of GCCs remain at the earliest stages of AI maturity, running AI in pockets with little enterprise-wide ownership.
An AI COE gives AI one home and a clear mandate. It typically owns four areas:
The AI COEs that scale share a few traits. They build leadership, capability, and foundational readiness in parallel, and they secure the budget authority and decision rights needed to own outcomes. Size does not decide who leads: the study found no correlation between GCC AI maturity and headcount, so a smaller, well-led center can move as fast as the largest ones.
There are several interesting instances from the industry where COEs have taken the spotlight and made a significant difference in an organization’s strategic goals:
agilon health was looking to expand its innovation capabilities by leveraging global talent. Zinnov partnered with them to kickstart their globalization journey and set up a center of excellence in India in just four months.
Companies are striving to win this tussle for excellence and are leveraging COEs, and increasingly AI COEs, as tools to stay ahead. As the saying goes, “Well begun is half done.” Setting up a COE marks the beginning of an organization’s journey to excellence, yet it is only half the task. To stand out, organizations must make sure they have the right ingredients to establish an effective and successful center of excellence.
Change and challenges are inevitable, and ready or not, expertise is the key to the future.
Other Helpful Resources:
A Center of Excellence (CoE) is a centralized team of experts that gathers knowledge, develops best practices, and provides support and guidance in a specific area of expertise. They serve as a hub of expertise for the entire organization and help to ensure that best practices are adopted and implemented consistently across all departments. COEs can be established in a variety of areas, such as technology, customer service, sales, marketing, and operations.
An organization should establish a Center of Excellence (CoE) to consolidate expertise, promote best practices, and foster innovation, which can lead to competitive advantages, cost efficiency, and a commitment to excellence in a specific domain. CoEs also offer flexibility for experimentation and risk mitigation while facilitating cross-functional collaboration and providing a structured framework for measuring success.
A CoE is a good idea when an organization has a need for: 1.Consistent and standardized practices across the organization 2.A centralized source of expertise and knowledge, support and training for employees 3.Improved performance, reduced costs, increased innovation, and improved risk management
Establishing a Center of Excellence (CoE) offers several advantages, including: 1.Enhanced Performance and Reduced Costs: A CoE promotes best practices, streamlines processes, and fosters innovation, leading to improved performance and reduced operational costs. 2.Centralized Expertise and Improved Decision-Making: A CoE serves as a hub of knowledge and expertise, providing valuable insights and support to decision-making across the organization.
Global Capability Centers (GCCs) are offshore services units established by Multinational Corporations (MNCs) to perform strategic functions, leveraging global talent, cost and operational efficiencies. GCCs encompass Technology, Engineering, and Operations functions, including Shared Services Centers of MNCs in India.
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