What Are the Different Offshoring Models – and Why Global Capability Centers (GCCs) Are Gaining Ground

Outsourcing, Offshore Development Centers (ODCs), Build-Operate-Transfer (BOT), and Global Capability Centers (GCCs). These terms get thrown around a lot – in boardrooms, strategy decks, and vendor meetings. And more often than not, they’re used interchangeably.

We get it. The lines between these global delivery models can be blurry. Each has evolved over time, and on the surface, they can look pretty similar.

But having worked across all of them, we know there are clear distinctions – and even clearer use cases.

And right now, one model is standing out from the rest. Global Capability Centers (GCCs)are quietly becoming the preferred offshoring model – not just for cost efficiency, but for driving innovation, agility, and control.

In this blog, we’ll unpack what sets GCCs apart from Outsourcing, ODCs, and BOTs—and why more global enterprises are placing their bets on this model to scale smarter.

What are the most common global delivery models?

Most global companies still operate within three primary offshore models: Outsourcing, Build-Operate-Transfer (BOT), and Global Capability Centers (GCCs).

• Outsourcing remains the oldest and most familiar. A third-party Service Provider sets up and manages offshore operations, employing its own staff and delivering work based on contractual SLAs. It’s predictable, scalable – and increasingly limited in strategic impact.
  
• BOT, meanwhile, offers a transitional model. The vendor sets up and runs operations temporarily before transferring ownership to the client. For many, it serves as a halfway house between outsourcing and full in-house control.
  
• GCCs represent the boldest bet. Companies directly establish and operate their own offshore entities – hiring talent, owning IP, and embedding their global strategy from Day One. The offshore centre becomes an extension of the mothership, not a satellite.

And that distinction is everything.

Why are GCCs seeing a groundswell of momentum?

GCCs are gaining traction because they offer what modern enterprises want: control, integration, and innovation. While cost arbitrage remains a benefit, it’s no longer the sole driver.

• Control over operations, talent, and IP is perhaps the most compelling advantage. In regulated industries like banking and healthcare, IP security and data protection are non-negotiable. GCCs bring those functions in-house – literally and metaphorically.
  
• Cultural alignment is another underrated factor. Outsourced teams often remain on the periphery, but GCC employees are embedded into the core – aligned with the company’s values, rhythms, and long-term goals. That translates into better engagement, stronger retention, and more meaningful contributions.
  
• Talent magnetism is a third lever. High-performing professionals, especially in India and Eastern Europe, now actively prefer working with GCCs over traditional service providers. The work is more meaningful. The pay is better. The career paths are clearer.

And while cost has moved down the priority ladder, it still matters. GCCs unlock access to world-class talent at 30–50% lower costs than home markets – an unbeatable combination in today’s climate.

What kind of work is moving into GCCs?

If the first wave of GCCs focused on IT and support functions, the current wave is rewriting that playbook.

Today’s GCCs are running:

• Engineering R&D
• Digital Transformation Programs
• Enterprise Shared Services across Finance, Legal, HR, and Marketing
• COEs (Centres of Excellence) in AI, Cybersecurity, Cloud, Analytics, Sustainability, and more.

What we’re witnessing is not just offshoring – it’s deep embedding of expertise. In many MNCs, the offshore GCC is leading experimentation in AI and Automation, defining CX standards, and even co-owning P&L metrics.

If GCCs are so strategic, why do some companies still choose ODCs or BOT?

The answer, as always, lies in risk, speed, and familiarity.

• ODCs (Outsourced Delivery Centres) offer fast ramp-ups and minimal upfront investment. For companies unsure about a new market or lacking leadership bandwidth, outsourcing provides a familiar safety net.
  
• BOT models offer a middle path – particularly appealing for companies seeking to eventually insource but unwilling to take the full plunge immediately.

There’s also the issue of knowledge continuity. Long-standing service partners often hold institutional memory and operational know-how that can’t be replicated overnight. Plus, in certain publicly listed firms, adding full-time employees – even offshore – can negatively skew revenue-per-employee metrics.

And then there’s awareness – or lack thereof. In EMEA markets and among mid-sized firms, many still don’t fully grasp how today’s GCCs differ from the vanilla offshore models of yesterday. Education remains a barrier.

Are Global Capability Centers only for the Fortune 500?

Not anymore. Mid-sized companies – especially those backed by Private Equity or operating in digital-native sectors like Fintech – are entering the GCC game with surprising aggression.

For these players, GCCs provide the ability to scale fast, experiment with digital transformation, and build niche capabilities without over-relying on third-party vendors. Challenger Banks, Healthtech Start-ups, and SaaS firms are quietly building teams of 100–300 in markets like India and Mexico – and doing so with remarkable capital efficiency.

What challenges do companies face while setting up a GCC?

There are hurdles. Some bureaucratic, others strategic.

• Regulatory compliance tops the list. Navigating tax codes, labour laws, and business registrations requires local expertise.
• Talent acquisition is another speed bump – especially when competing with tech giants for the same engineering or data science talent.
• Cultural alignment between HQ and offshore teams can make or break the integration.
• Strategic positioning of the GCC within the enterprise is often overlooked. If not aligned with core business goals, even the most well-funded GCC can be reduced to a transactional back office.

But here’s the good news: none of these are unsolvable. With over 23 years of experience and a track record of setting up and transforming 190+ GCCs, ecosystem partners like Zinnov help enterprises navigate these hurdles – faster, smarter, and with fewer missteps. 

How do companies pick the right location for a GCC?

The choice of city is no longer just about cost – it’s a multidimensional puzzle.

Companies now evaluate:

• Talent pool depth and specialization
• Regulatory ease and business-friendliness
• Infrastructure maturity
• Quality of life for expats and local hires
• Ecosystem maturity (start-ups, universities, other GCCs)

While India, the Philippines, and Mexico remain leading hubs, there’s growing interest in Tier-II cities and niche locations that offer focused skills, better retention, and operational diversification.

What’s next for GCCs?

The future of GCCs is not just about offshoring – it’s about co-creation.

• GCC-as-a-Service is making it easier for companies to go live in under 90 days – de-risked, compliant, and operational.
• Hybrid models are gaining popularity, blending captive centres with outsourced partners.
• AI and digital COEs are rapidly becoming the heartbeat of many GCCs.
• Hub-and-spoke models are emerging, with flagship GCCs supported by satellite locations to tap niche talent.
• Sustainability mandates are also landing on GCC desks, with ESG charters increasingly managed from offshore.

In many ways, the GCC model reflects a broader corporate shift: from efficiency to intelligence, from cost-saving to value creation. It’s no longer about whether to offshore – it’s about how strategically you do it.

And GCCs, quietly but powerfully, are proving to be the most strategic move of all.