Navigating Uncertainty: The Global Capability Center (GCC) Approach

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Navigating Uncertainty: The Global Capability Center (GCC) Approach

Zinnov

@Zinnov Consulting

January 11, 2024

Global Capability Centers GCC

369

Running a business in today’s volatile times can feel like walking a tightrope, with the world shifting dynamically across technology, regulations, and talent availability. From pandemics to geopolitical tensions, external disruptions pose significant challenges. In our 21-year experience of helping companies successfully navigate these challenges, we’ve found that setting up Global Capability Centers (GCCs) is a go-to strategy for de-risking businesses.

Understanding GCCs

GCCs, previously known as Global In-house Centers (GICs) or Global Captive Centers, are strategic initiatives where companies establish dedicated units in different locations, often offshore, to handle specific business functions. These centers, ranging from small specialized teams to large-scale operations, have become crucial in today’s business landscape.

In a world beset by supply chain disruptions, changing regulations, and macroeconomic upheavals, businesses need agility, resilience, and innovation to stay competitive. GCCs play a pivotal role in helping companies minimize risks, enhance efficiencies, optimize operations, and ensure long-term sustainability. They act as safety nets, similar to those for tightrope walkers, providing businesses with strategies to weather external disruptions.

Access to top global talent

One key advantage of GCCs is their ability to provide access to top global talent. Located in talent-rich regions like India, Poland, and Mexico, GCCs allow businesses to tap into specialized technical and industry expertise. This not only diversifies the workforce but also reduces the risk associated with skill shortages. Access to elite skills in areas like Generative AI, Machine Learning, Big Data, and Cloud Computing becomes a crucial de-risking strategy, ensuring companies have scalable access to top talent.

Risk diversification

Operating in multiple locations helps in risk diversification, especially across international borders. This approach reduces the impact of political, economic, and geographical challenges in one location by allowing other centers to step in and ensure business continuity.

Incubate innovation

GCCs also serve as innovation hubs within large corporations. Enjoying more autonomy, these centers can experiment with new technologies, processes, and business models, acting as sandboxes for new ideas. The distance from headquarters enables GCCs to take risks that might not be feasible at the company’s main location, fostering the development of new capabilities and expertise.

Consolidate key functions

Consolidating key functions is another way GCCs de-risk businesses. By centralizing capabilities such as IT, Finance, HR, and Analytics, companies minimize redundant efforts, promote collaboration, and concentrate scarce expertise. This approach, especially in the Global Business Services (GBS) model, helps institutionalize key business functions, ensuring a multi-hub organizational structure.

Enhance operational resilience

Operational resilience is enhanced by designating specific sites for crucial operations, enabling robust business continuity plans. Concentrating talent and tools in GCCs facilitates rapid emergency response, ensuring that critical capabilities are preserved and maintained at alternative sites during disruptions.

Enable cost efficiencies

Cost efficiencies are achieved through GCCs by eliminating redundancies in people, processes, and technologies. Centralization drives efficiency through standardization, automation, and shared services, reducing operational expenses and mitigating financial risks associated with fluctuating expenses.

Allow scalability and flexibility

Moreover, GCCs offer scalability and flexibility, allowing businesses to adapt to changing demands and market uncertainties. Our GCC Accelerator model, with its plug-and-play infrastructure, enables companies to scale operations quickly and exit when necessary, reducing capital expenditure and providing agility in global operations.

As more GCCs mature and demonstrate their ability to ensure business continuity even during crises, they have become the go-to strategy for de-risking businesses. These centers provide organizations with control over critical functions, flexibility, and resilience in an increasingly complex business landscape. Strategic planning, diligent execution, and a commitment to ongoing improvement are crucial when setting up a GCC, making it a key asset for the long-term success and resilience of any business in the global market.

GCC Global Capability Centers Global Capability Center

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Zinnov

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.