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How to Choose a Location for setting up a Global Capability Center (GCC)
How to Choose a Location for setting up a Global Capability Center (GCC)

February 7, 2024

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In the illustrious 1950s, William Shockley, the co-inventor of the silicon transistor, set the stage for Silicon Valley’s emergence by founding the Shockley Semiconductor Laboratory. Fast forward to today, and the global business landscape is teeming with opportunities for companies to establish their Global Capability Centers (GCCs) or Offshore Development Centers (ODCs). But with an array of choices, how does one pinpoint the perfect location for GCC setup? We unravel the essential considerations for selecting the right location for your center.

I. Talent Hotspots: Beyond Attraction – Scalability Matters

In a world untethered by borders, companies can chase talent globally, yet the location remains pivotal. Start by defining your team structure aligned with business priorities. Do you lean towards a bottom-heavy or top-heavy approach? Create a talent pyramid, breaking down roles, and proceed to gauge locations that match your needs. Assess talent availability, considering that the actual talent pool may differ from the potential, and focus on scalability. Building a sustainable talent pipeline involves factors like institutional support, partnerships, and government initiatives.

For instance, emerging hotspots like Costa Rica foster a talent pipeline through government initiatives encouraging students to pursue software engineering, promising a continuous supply of skilled professionals.

II. Cost Optimization: ROI in Talent-focused Arbitrage

Today’s offshore centers are not just about cost arbitrage but capability arbitrage. To achieve sustainable returns on investment, organizations must balance accessing top-tier talent with effective cost management. While cost is crucial, consider ease of doing business, government initiatives, ecosystem maturity, and market conditions. India stands out as a prime location for cost optimization, offering over 67% cost savings for large engineering teams compared to the US.

III. Collaborate, Innovate, and Accelerate Faster with a Mature Ecosystem

Ecosystem maturity is critical when establishing a center. Choose locations with a thriving peer presence, major outsourcing partners, proximity to existing collaborators, vendor ecosystems, universities, and start-ups. The LATAM region, boasting the highest number of unicorns globally, exemplifies the benefits of a mature start-up ecosystem. If innovation is a priority, opt for a location rich in entrepreneurial spirit.

IV. Market and Market Conditions: Key Considerations

Proximity to competition, peers, customers, and partners is crucial when evaluating a location. Bazaarvoice strategically chose Bangalore for its global software engineering operations, aligning with the presence of many clients. Geopolitical stability, a cornerstone for long-term business operations, fosters trust and partnerships. Regulatory and compliance factors, such as government initiatives and tax policies, play a role in sustainable growth. For instance, Costa Rica offers a 50% reduction in corporate tax rates for zero-emission technology manufacturing companies.

The Location Dilemma

A location can make or break a global organization’s global expansion plans. It provides access to diverse talent and innovation ecosystems, and serves as a buffer against disruptions. When deciding on a location, focus on talent, cost, ecosystem maturity, and market conditions. Choosing the right location is akin to navigating a complex chessboard, and the right move can set the stage for long-term success.

In the quest for the perfect location, a reliable partner can be a game-changer. Your globalization strategy deserves a strategic ally who has a finger on the industry pulse like no one else.

Check out the full blog on How to Choose a Location for Setting up a Global Capability Center (GCC) here.


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Founded in 2002, Zinnov is a leading global management consulting and strategy advisory firm, with a presence in 10 global locations. Over the last 22 years, Zinnov has partnered with Global Enterprises and Fortune 2000 companies across their value creation journeys to develop actionable insights – across revenue, talent, innovation, scale, and optimization. Zinnov enables companies to develop and optimize a global engineering footprint through center setups, technology and functional Centers of Excellence (COEs), portfolio optimization, partnerships, and real-time data/ insights – through its unique GCC Accelerator Platform (GAP) offering. This multi-lever approach helps Zinnov’s clients achieve higher R&D efficiencies, innovation, and productivity via an immersive and highly networked model. Zinnov’s expertise also includes advising global PE firms in asset shortlisting, target evaluation, due diligence, and value creation for their portfolio companies through a globalization lens.

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