GCCs Then and Now: Tracing the Evolution from IT Support to Tech Innovation Hubs

Once regarded as a support function, technology has evolved rapidly in recent years and is now integral to the core of every business as companies embrace digital innovation to meet new consumer expectations.

With tech leaders expecting artificial intelligence and machine learning to be critical revenue and innovation drivers in 2022, a growing number of multinationals are turning their Global Capability Centers into extended tech innovation hubs.

Historically viewed as an attractive source of ‘cost arbitrage,’ the raison d’etre of a GCC is now changing to one of ‘skills arbitrage’ or ‘intellectual arbitrage,’ with more recent GCCs set up to deliver tech skills at scale, drive product innovation at a cost advantage and emerge into Global Innovation Centers.

That development is hardly surprising, as an in-depth study has found the ability to scale a product or business quickly to gain market share is one of eight key characteristics that separate innovators from laggards. Some of the other elements include the ability to build an external ecosystem as well as a company culture that supports innovation. Given these considerations, GCCs are primed to help companies achieve their innovation ambitions.

Nowadays, Global Capability Centers (GCCs) can support a range of critical business goals. They serve as ‘centers of excellence’ specializing in areas like data analytics; as product or process innovation hubs; or they perform broader functions using the technology required for hybrid work.

As companies increasingly realize that skills and innovation can traverse geographic boundaries, and diversity in leadership has a positive impact on innovation, they are leaning on their GCC teams more and more to lead innovation efforts.

Take for example global reinsurer Swiss Re. While it had over a century’s experience in its core underwriting and risk management business, it was a novice when it came to embedding technological innovation into its digital transformation strategy. Swiss Re decided to rely on its India GCC and leverage GCC-as-a-service to drive digital innovation, and deployed several startup accelerator schemes as well as Shine, a social innovation program. “Shine” gave Swiss Re’s India GCC employees opportunities to work with social entrepreneurs to identify problems that can be resolved with the use of technology.

The tangible returns from Swiss Re’s investments were clear. Not only did the Shine program result in affordable drinking water for low-income families, but the startup accelerator initiatives also brought about new insurance products and established Swiss Re as an innovative industry leader.

Needless to say, with GCC innovation hubs such as Swiss Re’s proving their immense potential, companies can fully harness employees’ innovative skills and capabilities by cultivating “intrapreneurs” within their GCCs.

Build an Intrapreneurial Culture with Global Capability Centers

The birth of iconic products such as 3M’s Post-It Notes, Google’s Gmail, Google Maps and Adwords, as well as Apple’s iPhone, are testimony to how successful intraprenurship can enable companies to innovate and become industry leaders. Promoting a similar culture of innovation at GCCs can be achieved by implementing several key principles, the first of which is defining the GCC’s strategic role within its parent organization.

Articulating clear strategic goals for the GCC provides a strong foundation for success. That clarity helps GCC employees identify and pursue projects that are aligned with the company’s broader commercial objectives and as a result see a higher chance of success.

Being strategic about how the Global Capability Center can contribute to the company’s business targets also makes it easier to attract the right candidates. Hiring people with the hunger to succeed, and who also possess the relevant educational credentials and experience to do so, will ensure that employees have the entrepreneurial mindset and skills needed to thrive.

Further, a deliberate approach to innovation and the growth opportunities it brings to employees will boost talent retention, a pertinent point demonstrated by a large-scale employee survey that indicates the lack of professional and career growth opportunities as one of the six main reasons employees leave.

Finally, equipping internal teams with the right tools, GCC solutions, and workspaces that facilitate collaboration and productivity are also essential ingredients to foster an innovative culture.

Above all, cultivating intrapreneurship is not only about giving employees room to turn brilliant ideas into products or services. It also involves rigorous training, support, and education – and giving employees sufficient resources to turn ideas into prototypes.

Investments in building an enterprising culture will yield results in more ways than one. Besides cultivating an entrepreneurial mindset within the GCC, this approach will also cultivate the skills required to collaborate with agile startups and other outside partners to further accelerate innovation.

Partner with Startups using GCC-as-a-Service

Indeed, corporate-startup collaboration is an important and viable strategy for companies looking to extend the boundaries of their innovation capabilities. For such collaborations to flourish, however, global organizations need to establish the right processes and culture by leveraging GCC-as-a-Service.

Creating a formal program for scouting promising startups, evaluating them for suitability, and acquiring and funding these collaborations is a good place to start. A programmatic approach with well-honed processes will give companies the ability to scale their innovation capacity quickly and emerge into global innovation centers while ensuring each partnership aligns with their broader growth strategy.

In particular, companies have to recognize that scaling innovation requires an ecosystem that brings together the best talent to create products and solutions that are fit for purpose.

Large organizations will also have to adopt a flexible approach when partnering with startups, which tend to move and adapt at a much quicker pace. Fostering an agile culture within Global Capability Centers is critical for preparing GCC teams to work well with their startup counterparts.

Regardless of the partnership strategy companies decide to adopt, creating a win-win situation between all companies involved should be a top priority. Telstra, a leading telecommunications company, is a fine example of how corporate-startup partnerships can succeed. Telstra’s GCC in India adopted a corporate innovation program by leveraging innovation consulting services where the GCC identifies business challenges and looks for suitable startups to develop joint solutions. This startup-led initiative, together with its culture of intrapreneurship, has enabled Telstra to achieve both product and process innovation. Some of the successes include the development of MyTelstra App, which comes with voice recognition and AI capabilities, and the creation of a new enterprise software integration solution that shortens the time taken for the integration process by more than 60%.

Telstra’s success illustrates how organizations can effectively leverage the carefully curated startup ecosystem of their GCC partners.

Selecting the Right Partner to Build GCC Innovation Powerhouses of the Future

As more global enterprises rely on GCCs to serve as their innovation hubs, choosing a suitable GCC partner is becoming ever more critical. The key considerations involved in selecting a GCC partner include its ability to encourage collaborative and entrepreneurial organizational cultures as well as the size of its broader innovation ecosystem.

More importantly, an ideal GCC partner should also have the global network and resources to help companies build and manage GCCs in any location using the build operate transfer model that fits their corporate strategy, be it in established GCC hubs like India or emerging ones in Poland, Colombia or the Philippines.

Looking ahead into the next decade, companies can expect to realize their enterprise innovation goals, transform into Global Innovation Center faster and with less effort if they find a GCC partner that meets all these essential criteria – a partner that, in sum, truly grasps how GCCs have exchanged their old IT support role for a new role as revenue growth drivers and innovation hubs.

As the GCC’s role evolves, companies have to measure their GCC’s success based on its contribution to value creation as opposed to the traditional lens of cost reduction. Taking that approach will allow GCC teams to become more tightly integrated into the broader organization and eventually grow into an indispensable part of the company.