Global capacity centers (GCCs), also known as global innovation centers (GICs), are a tried-and- true paradigm for exploiting worldwide talent. Companies such as General Electric, Texas Instruments, and American Express were among the pioneers in the development of this model of innovation consulting services nearly three decades ago. Nowadays, more than a thousand multinational corporations (MNCs), including most Fortune 500 companies, utilize GCCs in India to gain a competitive edge.
The following article will give you the top 10 reasons to leverage GCC innovation by GCC providers.
10 Reasons to Leverage GCC Innovation
The underlying business plan and competitive responses to market developments are made evident through a company’s digital capabilities. The following is a list of ten reasons chief information officers employ global innovation centers to speed up digital transformation initiatives.
- Differentiating Capabilities Should be Built in-house
The use of offshore talent can help chief information officers (CIOs) to solve the shortage of digital capabilities in their native nation and to accomplish more with the funds that they have available. Building new, distinctive capabilities is the goal of digital transformation. The associated knowledge and experience represented by the employees should be owned
(GCC option) rather than rented for it to be a source of competitive advantage (outsourcing option). Building intrinsic, internal expertise should be the focus of investments in new
technology and education. Any expertise or skill developed by vendor staff can be shared with several other clients and no longer serves as a differentiator.
- Aligned and Engaged Employees are the Foundation of Transformation
Employees of GCC are a part of the enterprise and are highly aligned with the objective of the company. They have a more direct connection to the activities of customers, as well as
the corporate strategy and operations. As a result, they are in a better position to contribute to the productivity and innovation that is tailored to the requirements of the firm.
- GCCs are Better at Attracting IT Talent
Placement trends show that engineering graduates are much more likely to work for global innovation centers providing innovation consulting services than for third-party IT service providers. According to conventional belief, outsourced work is probably ordinary and repetitive in nature. The generation of efficiencies is the primary emphasis of innovation, which may be hampered by the concerns of customers over the protection of intellectual property. GCCs, on the other hand, provide employees with the chance to work with fundamental business processes, as well as with strategic digital technology. Moreover, GCCs are known to provide a higher salary, work culture, working environments, and work- life balance.
- Digital Operations Thrive on Agility and Collaboration
According to McKinsey, a two-speed architecture has emerged to provide the functionality the digital enterprise needs. “A fast-speed, customer-centric front end running alongside a slow-speed, transaction-focused legacy back end,” is what two-speed architecture suggests. Under this framework, customer experience, distinction, and innovation are “faster-paced” applications of digital technologies. They have shorter release cycles, respond quickly, and can be rearranged quickly. This is only possible with a collaborative and agile operating model.
- Centers of Excellence (COEs) Act as Catalysts for Transformation
The GCCs function as shared service centers (SSCs) in their respective regions. SSCs are responsible for driving economies of scale and optimizing the use of service delivery
resources throughout the whole company. Consolidating, simplifying, and standardizing services instead of leaving them disparate and divided across many locations or functions is
one way to accomplish this goal. GCCs are perfectly equipped to establish “centers of excellence” for the quick development and deployment of digital capabilities throughout the company because they also have access to lower-cost staffing.
- Tighter Controls for Cybersecurity
A necessary condition for the viability of digital activities is strong cybersecurity measures. As customer data and interactions become more digital, the danger of privacy violations
increases tremendously. Controlling, managing, and keeping an eye on privileged access to networks is essential for enterprises. The governance, risk management, and compliance
procedures of a global innovation center are a continuation of the home office. GCCs provide a more secure environment, making them the ideal platform for constructing digital
- Enhanced Operational Resilience
Online customers have come to demand an “always-on” service that is available around the clock. By carefully dispersing their core operations through GCCs in many locations, many multinational businesses, including MNC banks, have improved the robustness of their operational infrastructure. In the case of an issue at one location, service queues are
seamlessly transferred to the other locations. With a service provider, it is difficult to accomplish this because there is little control or access to his operations.
- Leverage the Local Innovation Ecosystem
Most businesses are aware that relying solely on in-house creativity and innovation may not be enough to stay competitive. As a result, they try to keep up with recent advancements in pertinent sectors in the outside world. GCCs establish the company’s footprint in India’s labor market through networking with potential employees. Given India’s expansive and varied innovation ecosystem, there are numerous examples of GCCs aiding home offices by linking up co-innovation and other types of engagement with technological incubators, start-ups, and universities. These examples can be found all over the country.
- Ownership of Business Outcomes
A GCC gains operational autonomy and responsibility away from the home office as it
becomes older, grows, develops experience, and establishes a track record of performance
and dependability. A GCC eventually develops into an important component of the
organization, taking charge of crucial tasks and projects that have an impact on overall
- Cost Savings and Greater, Lasting Value
When a business decides to handle its own procurement, it can cut costs by avoiding the profit margins charged by outside vendors (which can range from 20 to 30 percent). If a vendor believes that a client would have a difficult time moving to a different supplier or insourcing the work, they are more inclined to charge the client a higher price. There is evidence that simply the existence of a GCC can encourage a vendor to decrease pricing since there is a threat of insourcing. It is the case because there is competition from other suppliers.
Setting up a global innovation center providing innovation consulting services is likely to be a better long-term option than simply outsourcing to an IT service provider if you are considering leveraging the IT talent that is available in India to build digital capabilities and operations for your company. If you are considering this, you should keep in mind that setting up a global capability center will cost more than simply outsourcing to an IT service provider. It is also important to note that the risks and expenses associated with establishing global innovation centers have been continuously decreasing over the years. Time and money spent on initial setup have been cut significantly because of the availability of systems hosted in the cloud as well as pay-as-you-use, pre-built physical infrastructure. With the massive Indian IT services sector, experienced leadership is not hard to get at all.