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When Global Capability Centers (GCCs) first emerged on the business scene, they were all about one thing – cost savings. These early GCCs delivered immense value by providing access to skilled talent at lower price points, and they excelled at it. In fact, they were so effective that “cost arbitrage” quickly became the industry benchmark for measuring their success.
However, as GCCs have evolved over time, expanding their capabilities and taking on leadership roles in advanced domains like Analytics and Platform Engineering, the metrics used to gauge their value have failed to keep pace. Outdated, cost-centric measurements continue to dominate, obscuring the true extent of GCCs’ contributions and creating a persistent “Value Gap.”
The problem lies with the outdated yardsticks being used to measure success. The GCCs in India have undergone a dramatic transformation, developing robust ecosystems and tackling increasingly complex global objectives. Yet, the narrow focus on cost savings persists, overshadowing their more significant contributions.
As a result, a disconnect has emerged between the strategic influence GCCs have gained and executive perceptions of their worth. This Value Gap risks leaving massive innovation potential untapped, as the true capabilities of these centers go unrecognized. GCCs have matured into hubs of high-value skills, and it’s time to redefine how we quantify their impact beyond mere cost savings.
As GCCs mature, the direct cost savings might start to level off or even decrease in the near term. But this shouldn’t be viewed as a problem. Instead, it’s a clear indication that these centers are taking on new roles and expanding their abilities within global companies.
Take innovation and ideation projects within GCCs as a prime example of this disconnect. These centers have transformed into breeding grounds for ideas and solutions. However, most GCCs limit tracking the volume of ideation (number of ideas/PoCs built) but not the efficiency of the processes or impact of innovation (number of ideas implemented in product roadmap/number of ideas). As a consequence, the true worth of GCCs is hidden from view, and their ability to drive strategic growth remains largely untapped.
To close this gap between the actual value GCCs provide and how they’re perceived, we need to completely rethink what we consider as “VALUE” when it comes to these centers. It calls for a shift from traditional cost-centric metrics to a broader understanding.
When we talk about the value of GCCs here, we need to look at two key aspects: Health and Performance. These two dimensions give us a more comprehensive picture of how well a GCC is doing and the impact it has on the organization as a whole.
The concept of Health in a GCC context goes beyond mere operational metrics to include factors such as employee engagement, culture, leadership quality, and morale. A healthy GCC is characterized by a vibrant and supportive work environment, effective communication, and a shared sense of purpose.
When employees feel valued, empowered, and motivated, they’re more likely to bring their best ideas to the table and go the extra mile to solve complex problems. This kind of environment is a breeding ground for innovation, creativity, and continuous improvement.
Moreover, a healthy GCC is better positioned to attract and retain top talent. In today’s competitive landscape, skilled professionals are looking for more than just a paycheck. They want to work in an organization that values their contributions, invests in their growth, and provides opportunities for meaningful work.
Performance, on the other hand, relates to the GCC’s ability to achieve strategic goals and deliver tangible outcomes. This includes financial performance, customer satisfaction, quality, and operational efficiency.
A high-performing GCC distinguishes itself through its ability to deliver services efficiently, exceed customer expectations, and outperform its peers in key metrics. It’s not just about doing things cheaper, but about doing them better and faster.
When a GCC consistently delivers strong performance, it demonstrates its value as a strategic partner to the parent organization. It shows that the GCC is not just a cost center, but a source of competitive advantage that can help the company achieve its goals and thrive in the marketplace.
By considering both Health and Performance, we get a more holistic view of the value GCCs provide. This broader perspective is crucial for making informed decisions about investments, resource allocation, and strategic planning.
Achieving a balance between Health and Performance in a GCC requires skilled and strategic leadership. Leaders play a critical role in steering the center toward success, and this involves much more than just focusing on cost savings.
GCC leaders need to have a clear vision for the future – one that recognizes the evolving role of these centers and the untapped potential they hold. They must be able to look beyond the traditional cost-centric models and embrace a more holistic approach that values innovation, agility, and continuous improvement.
Fostering a culture of innovation is a key part of this. Leaders need to create an environment where employees feel encouraged to think creatively, take risks, and challenge the status quo. This means providing the resources, support, and freedom that teams need to experiment with new ideas and approaches.
At the same time, leaders must ensure that this pursuit of innovation doesn’t come at the cost of efficiency and performance. They need to strike a delicate balance, encouraging creativity while also maintaining a focus on results.
To do this effectively, leaders need to establish clear metrics that reflect the GCC’s evolving role and contributions. Traditional cost-based metrics, while still important, don’t paint the full picture of a GCC’s value. Leaders must develop new ways of measuring success that takes into account factors like innovation, strategic impact, and employee engagement.
This isn’t always easy. It requires a significant shift in mindset and a willingness to challenge long-held assumptions about what success looks like for a GCC. Leaders need to be bold, visionary, and persistent in driving this change.
They also need to be excellent communicators. Helping stakeholders understand the new vision for the GCC, and getting buy-in for new metrics and ways of working, requires clear, compelling, and consistent communication.
In many ways, the story of GCCs is a story of transformation. These centers have evolved significantly from their early days as simple cost-saving units. Today, they are increasingly indispensable strategic partners, helping global organizations navigate the complexities of the modern business environment.
But to fully realize this potential, GCCs need to close the Value Gap. They need to embrace a new, more comprehensive understanding of value that goes beyond just cost savings. There is a need to develop metrics that capture the full impact of GCCs, from their contribution to innovation and strategic objectives to their role in building a strong, healthy organizational culture.
This is the future of GCCs. It’s a future where these centers are recognized and valued for their true potential – not just as cost savers, but as drivers of strategic innovation and excellence. It’s a future that organizations need to embrace if they want to thrive in an increasingly complex and competitive global landscape.
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