The effectiveness of Global Capability Centers (GCCs) in India is increasingly being scrutinized as their numbers soar. Currently, over 500 of the Forbes Global 2000 operate GCCs in India, a rise of nearly 30% since 2021. However, a substantial number of these centers struggle to perform optimally; research by Boston Consulting Group reveals that about 65% of GCCs are only average performers, with an additional 8% falling short of desired outcomes.
One major determinant of success is the integration of network, infrastructure, and compliance into the GCC planning process. Murali Krishnan from Tata Communications emphasizes that these elements should not be left as secondary considerations, as they can significantly dilute the effectiveness of transformation initiatives like AI.
Historically, the GCC model has been driven by cost. Now, the focus has shifted to speed and transformation, requiring a solid digital foundation to ensure success from inception. Anubhav Bhatnagar highlights six major challenges many GCCs face, including the incorrect treatment of network design as an afterthought, premature infrastructure decisions, and a narrow view of compliance.
Mistake 1: Underestimating Network Importance
Mid-market companies often approach their GCC networks with a domestic mindset, viewing network construction as a mere line item in their budgets. However, as many GCCs scale their AI initiatives, the traditional network configurations fall short. For instance, the demands of AI require a departure from conventional hub-and-spoke architecture, necessitating robust east-west data transfer and low-latency connections.
Specialists argue that the modern GCC must adapt its network architecture to meet business requirements in a local context, recognizing that what works in one region may not be viable in another.
Mistake 2: Infrastructure Decisions Made Too Late
A common pitfall is leaving infrastructure planning until the project is underway. Late-stage decisions on data centers, ISPs, and hardware can lead to unnecessary complexity and costs. Wade advises that infrastructure should be conceptualized as a strategic enabler from the onset, rather than a procurement process late in development.
Mistake 3: Treating Compliance as a Simple Checklist
Compliance must be viewed as an integral aspect of the operational framework. New GCCs often overlook critical regulations concerning data residency and cross-border data flows, assuming these to be just legal formalities. The importance of ensuring compliance with local laws, particularly in countries like India, cannot be overstated, especially given potential penalties for violations.
Efficient governance structures must be created to address the nuanced requirements of different regions and ensure robust security measures. Krishnan suggests that the true value companies gain when entering new markets like India lies in partnering with organizations that can deliver comprehensive compliance assurance.
Conclusion: Building for the Future
To avoid common pitfalls, enterprises must think strategically about GCCs as evolving entities. Addressing the key mistakes identified helps create resilient infrastructure that supports AI and other transformative initiatives, fostering an environment where businesses can innovate and adapt rapidly. The architectural decisions made prior to launching a GCC can have lasting impacts on scalability and overall effectiveness.
