For years, Global Capability Centers (GCCs) have been a cornerstone of global business strategy. Initially established primarily to leverage cost advantages in offshore locations, they have evolved significantly, taking on increasingly complex and strategic roles within their parent organizations. But as the global landscape continues to shift, the question arises: What is the next phase for GCCs, and should they even continue to be positioned as just "GCCs"?

To truly understand the future trajectory, we must consider the perspectives of Global Specialty Centers (GSCs). This model is related but distinct. It offers valuable insights into the potential evolution of GCCs.

The GCC Evolution: From Cost Center to Value Creator

The journey of GCCs can be broadly categorized into phases:

However, the label “GCC” itself can sometimes be limiting. It often carries connotations of being a support function, potentially hindering the perception of the true value and strategic importance these centers now possess.

The Rise of Global Specialty Centers: A Glimpse into the Future?

Global Specialty Centers (GSCs) represent a more focused and strategic approach to global operations. Unlike the broader scope of many GCCs, GSCs are typically established to house deep expertise in specific domains or technologies. They are often centers of excellence, driving innovation and providing specialized services to the entire global organization.

GSCs can be distinct in its identity, positioning, organizational structures & culture, which allows the parent organization to create differential & specialized vehicles supporting the objectives.

The objectives could be to develop a special vehicle (organization) which just focuses on research & development or innovations whereas the other could be having deep expertise in providing services in an industrialized scale. The former could be looking at niche talent with a ‘fail fast’ / experimental culture while the latter requiring a culture to achieve perfection and zero surprise delivery. In both the scenarios, you could be aiming for ‘Best-in-class’ but form & structure required to build such capabilities differ.

Often, companies attempt to do both and more scenarios under a single management and organization structure, leading to a scenarion where both are not able to deliver to its full potential and the reasons could be many ranging from management styles, culture, expectations, KPIs, policies & processes and even budgeting.

The Convergence: GCCs Embracing the GSC Model

While the evolution from GIC to GSC is dependent upon multiple factors of strategic intent, scale and purpose of the offshore center, the next phase for many mature GCCs will likely involve a convergence with the GSC model. As they continue to build capabilities and take on more strategic roles, they will naturally gravitate towards specializing in specific areas where they can develop deep expertise and deliver significant value.

The concept of Headquarter housing all the Global Leadership (CXO roles) is fast changing and ownership is shifting to GSC units where they are best positioned to take on global responsibilities, owning critical business functions / processes and driving strategic initiatives across different geographies.

Talent plays a significant role in the GIC/GCC/GSC industry and attracting, developing, retaining highly skilled talent with deep domain knowledge and niche expertise suited to the unit is absolutely crucial. A GSC structure allows to access the right talent pool with coherent messaging and defined career path.

Should they continue to be positioned as GCCs?

The answer to this question is nuanced. While the “GCC” label has historical context and recognition, it might no longer accurately reflect the strategic value and specialized capabilities of these evolving centers. This inaccuracy creates a dissonance with both internal and external stakeholders and sometimes leadership too in times of crucial policy decisions.

Accurate Representation: Terms like “Global Capability and Innovation Center,” “Global Center of Excellence,” or even adopting the Global Specialty Center moniker like “XYZ Innovation Center” or “XYZ Pursuits & Commercial Center” moniker can better reflect the enhanced scope and strategic importance.

Talent Attraction: A more strategic and specialized positioning can attract higher-caliber talent seeking challenging and impactful roles.

Internal Perception: A change in nomenclature can signal a shift in the organization’s perception of these centers, recognizing them as strategic partners rather than just cost-saving entities.

External Stakeholder Engagement: A more strategic positioning can enhance credibility and facilitate stronger collaborations with external partners.

However, a complete abandonment of the “GCC” label or concept might not be necessary or practical in all cases. For some organizations, the term is well-established, understood internally and suitable for the scale of operations. The focus should be on evolving the function and perception of these centers, regardless of the label, which is crucial.

Conclusion: Embracing a Future of Specialization and Strategic Value
The next phase for Global Capability Centers is one of strategic evolution, moving beyond cost optimization to become true value creators and drivers of innovation. The principles and practices of Global Specialty Centers offer a valuable roadmap for this transformation.
While the label might evolve, the fundamental shift lies in empowering these global centers with greater autonomy, strategic responsibility, and a mandate for specialization and innovation. By embracing this future, organizations can unlock the full potential of their global operations and gain a significant competitive advantage in an increasingly complex and dynamic world. The journey is not just about optimizing costs anymore; it's about building global hubs of expertise that shape the future of the enterprise.