In recent years, Global Capability Centers (GCCs) / Global In-house Centers (GICs) have experienced a remarkable surge in popularity amongst enterprises worldwide, with headlines frequently highlighting the establishment of new GCCs across various regions.

In 2023 alone, over three hundred GCCs were set up in offshore and nearshore locations, and this trend is expected to continue in the near future. This growth is not confined to specific verticals or geographies either, as beyond traditional strongholds like the US and Western Europe, enterprises in regions such as Asia Pacific and Japan are also establishing new GCCs. From an industry vertical perspective as well, we are seeing growth across most major segments including financial services, telecom, media & technology, retail and consumer goods, etc.

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The expanding role of GCCs

The role of GCCs within enterprises has evolved significantly. Initially, GCCs were primarily established for cost arbitrage, overseeing basic support functions such as IT services , back-office operations, and customer support.

However, today’s GCCs have moved up the value chain, delivering a wide array of strategic GCC functions. These include research and development (R&D), product development, digital transformation initiatives, data analytics, and even end-to-end supply chain management.

The evolution of GCCs has been driven by several factors including:

1. Access to global talent: GCCs enable enterprises to tap into talent pools across the globe, particularly in regions known for specific expertise. For instance, India and Eastern Europe have become hubs for IT and software development talent
2. Cost arbitrage: While cost savings remain a key driver, the focus has shifted to achieving cost efficiency without compromising quality. GCCs allow enterprises to optimize operational costs while maintaining high standards of service delivery
3. Innovation and agility: By establishing GCCs, enterprises can foster innovation and agility. GCCs often operate in a start-up-like environment, promoting experimentation and rapid prototyping of new ideas and solutions

A shift in enterprise strategy: Partnering with providers

One fundamental shift accompanying the rapid proliferation of GCCs is the increasing openness of enterprises to partner with providers for setting them up. Traditionally, enterprises focused on growing their GCCs independently or through selective supplier relationships. However, there is now a marked shift towards greater collaboration with providers throughout the GCC lifecycle, including the setup phase. Just a few years ago, less than 25% of GCCs were established with the involvement of providers. Today, that number has risen to around 50%, and we anticipate further growth in the future.

Providers also offer various models to enterprises to support new GCC setups. These primarily include the assisted model, joint venture model, and Build-Operate-Transfer (BOT) model. While the predominant model remains assisted set-ups (support related to initial set-up), the BOT (Build-Operate-Transfer) model – offering support for set-up, scaling, and operation until the center can function independently is rapidly gaining traction. Some of the factors driving adoption of BOT include cost pressures, margin constraints, and talent wars. For instance, while <10% of GCCs were set up using the BOT model a couple of years ago, that figure is now closer to 40%. Combined with the assisted model, these two approaches account for over 90% of GCC setups supported by providers.

Providers have started to capitalize on the GCC market

Providers have also started to realize the growth opportunity with the GCC set-up market, and this has prompted them to adopt a more nuanced approach. Multiple providers have created dedicated business units focused solely on the GCC market, employing specialized sales teams aligned with GCC accounts. The key performance indicators (KPIs) for these teams primarily include revenue growth from the GCC market segment. In general, enterprises have a range of provider partner options, with three segments of providers each offering a different value proposition:

1. Traditional system integrators: These include major players such as Accenture, Tata Consultancy Services (TCS), Infosys, IBM, and Cognizant. These companies have been serving GCCs historically across the life cycle including GCC set-up support, primarily on the services side
2. Big-4 consulting firms: Firms like EY, Deloitte, PwC, and KPMG fall into this category. They have already been supporting the GCC market on the consulting/advisory side and have expanded their service offerings to include managed services within GCC setups in the past few years
3. Specialist providers: These are niche firms that focus exclusively on GCC setups, such as ANSR. They offer specialized knowledge and tailored solutions for enterprises looking to establish GCCs (primarily in the assisted model). However, in general, they do not take ownership of service delivery

Over the past year, providers have increasingly engaged in strategic GCC alliances and partnerships to enhance their presence in this segment. Accenture’s recent investment of US$ 170 million in ANSR and their subsequent collaboration is anticipated to drive disruption in the broader market. Similarly, in 2023, Gloplax and KPMG formed a partnership to better serve their clients in the GCC setup space.

Looking ahead, we expect a surge in collaboration across different provider categories and strategic GCC investments, as providers position themselves to better serve their clients.

The future of GCCs and provider collaboration

The future of GCCs looks promising, with continued growth anticipated across various industries and regions. As enterprises increasingly recognize the strategic value of GCCs, the collaboration between enterprises and providers will become even more crucial.

Providers will continue to play a pivotal role in enabling enterprises to set up and scale their GCCs efficiently.

Key trends to watch in this space include:

1. Adoption of hybrid models: Enterprises may opt for hybrid models that combine elements of the BOT and Assisted Virtual Models, allowing for greater flexibility and customization
2. Emphasis on digital transformation: GCCs are set to spearhead digital transformation initiatives by harnessing advanced technologies such as artificial intelligence (AI), machine learning (ML), and automation. Providers are anticipated to play an increasingly significant role in facilitating this transformation

Conclusion

The growth of GCCs represents a significant shift in the global business landscape. Enterprises are increasingly leveraging GCCs to drive innovation, achieve cost efficiency, and access global talent.

The involvement of providers has been instrumental in facilitating this growth, offering various models and expertise to support GCC setups. Enterprises must carefully assess their options and choose partners that align with their strategic goals. To make an informed decision, especially in the GCC setups space, check out the report: GIC Setup Capabilities in India – Provider PEAK Matrix^® Assessment 2024

This report uses Everest Group’s proprietary PEAK Matrix^® framework to evaluate the capabilities of 24 providers in the GCC space, assessing the overall vision, capability, and market impact of these providers.

To discuss this topic in more detail or for a detailed analysis, please contact Akshay Mathur or Udit Anand.

As Global In-house Centers (GICs) gain prominence worldwide, enterprises are increasingly leveraging providers to optimize their in-house delivery capabilities. This focus has become even more critical in today’s challenging economic environment, where enterprises face significant pressures related to talent and cost management.

Enterprises are engaging with providers in three key areas across GIC life cycle: setting up GICs, through assisted, joint venture, and build-operate-transfer models; carving out existing GICs; and transforming GICs to meet new demands. Notably, the setup space has evolved significantly in recent years, particularly in India, where provider-assisted setups now account for ~50% of all new GIC setups.

• Global In-house Center (GIC) Setup Capabilities in India – Provider PEAK Matrix® Assessment 2024

  

  What is in this PEAK Matrix® Report

  As enterprises navigate the market to identify the ideal partner for their GIC setup needs, they encounter options ranging from major global providers to specialized local firms. This plethora of choices can be overwhelming, making the decision a crucial and strategic one.

  To aid enterprises in making informed decisions, this report utilizes Everest Group’s proprietary PEAK Matrix® framework to evaluate 24 providers’ capabilities in the GIC space. Our analysis covers two critical dimensions: market impact and vision and capability. This research will not only help enterprises find the right provider for their GIC setup needs but also enable providers to benchmark their offerings against the competition, ensuring they meet market expectations and client needs effectively.

  Scope: 

  GIC setups in India, across all service lines and verticals

  Contents:

  In this report, we:

  • Categorize 24 providers as Leaders, Major Contenders, and Aspirants
  • Study providers’ key strengths and limitations

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What is the PEAK Matrix®?

The PEAK Matrix® provides an objective, data-driven assessment of service and technology providers based on their overall capability and market impact across different global services markets, classifying them into three categories: Leaders, Major Contenders, and Aspirants.

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