There was a time when businesses used to choose Global capability centers for support services, but today, these GCCs have become a vital asset for optimizing various business operations, enhancing efficiency, and driving global growth. Setting up a Global Capability Center or an offshore development center enables an organization to focus on other strategic initiatives while leaving their IT services, R&D operations, finance, and other processes to a GCC. 

A GCC is an operational hub established by any company in a different location (generally, a different country) to run their specific business operations. If you are an organization or business that is planning to set up a GCC and want to know GCC best practices, this blog is exclusively for you. 

It highlights best practices for setting up a GCC. To ensure you understand everything in detail, the blog also covers types of GCCs, challenges you may encounter when setting up GCC, and a lot more. 

Without a further ado, let’s start!

What is a GCC

As aforementioned, a Global Capability Center is an operational hub or an extended hub established by a company in a different location to perform their critical business functions. It is different from the traditional outsourcing as it provides the company with greater control over the processes that a GCC runs. 

Examples of a GCC

Microsoft, a global tech leader, has its GCC in India. MSIDC performs the company’s critical functions, including product development, engineering, and research.

Wells Fargo is another example of businesses that have set up their global capabilities centers. The GCC of this financial service company performs a myriad of functions, such as operations, customer support, finance, and more. 

Types of Global Capabilities Center (GCC)

A GCC is classified based on the operations and functions it performs. So, before you know how to set up a GCC in India or any other country of your choice, let’s look at their different types. 

Shared Services Centers

Shared service center aims to streamline and optimize business processes such as accounts and finance, human resources, and IT. 

Research and Development Centers

As the name suggests, the main purpose of this type of GCC is to create new products and ensure timely advancement of technology to improve processes within the organization.  

IT Service Centers

Also known as knowledge center, this type of GCC supports a company’s tech infrastructure, software development, business intelligence, and enterprise systems. 

Engineering Centers

An engineering center or GCC handles engineering design, simulation, development, and testing for various industries, including manufacturing and aerospace.  

Customer Support 

Companies set up a customer support GCC to exclusively handle their customer service operations, including interaction with customers, offering them technical and after-sales support. 

Also Read: Types of IT Outsourcing: How to Choose Your Provider Based on Your Needs

How to Set Up a Global Capability Center

Before exploring some proven practices for establishing an offshore development center, it is crucial to go through the process of setting up a GCC. Below is the step-by-step process to set up a GCC:

#1 Assess Your Business Needs

The first step is to assess your business needs and determine why it requires a GCC. In other words, list the reasons why you need a global capability center. These reasons could be reducing cost, accessing top talents, expanding to new markets, or simply optimizing processes. 

For a better ROI, it is imperative that you quantify the expected results in terms of cost, productivity, or time-to-market. For instance, by setting up a GCC, you aim to reduce operational costs by 35%.  

Thoroughly analyze your current operations to identify which processes or operations (finance, IT, human resources, etc.) you want to set up a GCC for. Consider all the factors like complexity and dependency of these functions on other business processes. 

#2 Select a Location to Set Up a GCC

The second step in the process of “how to start a GCC” is choosing the right location. Consider factors like talent pool, labor cost, infrastructure, legal and regulatory requirements, time zone alignment, and more to prepare a list of potential locations for establishing your GCC. 

If possible, visit these locations to carefully evaluate infrastructure and connect with reputed partners that can help you build a GCC successfully. Choose the location that best fits your requirements and GCC goals. 

#3 Legal and Regulatory Compliance 

It is the most critical step in the process of setting up a GCC. Establish a legal framework, get necessary licenses and permits, understand and comply with regulatory requirements and laws, implement strict data security measures to ensure data privacy and security, and ensure tax compliance. Besides, employ safeguards to protect your intellectual property. 

#4 Set Up Infrastructure

Buy or lease an office space considering your specific GCC requirements. Establish a reliable and secure IT infrastructure, employ cybersecurity measures, get required equipment and supplies, and, most importantly, set up a secure communication system to facilitate seamless communication between your GCC team and your existing professionals.

#5  Talent Acquisition 

Based on the functions to be performed at the GCC, recruit the right talent by firstly creating a recruitment strategy, finding reliable modes to hire candidates. Conduct thorough interviews to shortlist and then hire qualified candidates. 

Make sure you provide training to the onboarded employees to help them understand your work culture, ethics, and goals. Besides, build strategies to ensure seamless process transition and knowledge transfer with well-defined documentation. 

#6 Performance Management

Clearly mention all roles and responsibilities for managing GCC. You can even implement performance management tools to ensure tracking the performance of each professional working at the GCC. Conduct regular reviews to identify areas of improvement and build new strategies for performance optimization. 

10 Best Practices for Setting Up a Global Capability Center Successfully

Let’s delve deeper into the ten proven practices for setting up a GCC. 

#1 Ensure GCC’s Alignment with Your Business Strategies 

While setting up GCC in India or any other location, make sure its objectives are clearly aligned with your overall business strategy. This means the GCC should also work to achieve one common organizational goal and drive the company’s growth while keeping it competitive. 

#2 Comply with Laws and Regulations 

When setting up GCC, make sure you are aware of the local laws and regulations. Even a single mistake in complying with these laws can impact the successful establishment of your offshore development center. 

#3 Pay Attention to Talent Acquisition and Retention 

Whether it is a full-fledged organization or a global capability center, the success of both majorly depends on its team of professionals. Therefore, focus on recruiting the right talent depending on the functions a GCC is supposed to perform. 

Offer competitive salaries and benefits to attract new talent. Also, build effective and fair human resources management strategies to retain the talent. Provide them regular trainings and opportunities for career growth and development. 

#4 Establish Clear Communication 

Clear communication is imperative as the GCC team will work in some other location. Make sure you set up multiple communication channels to ensure effective communication and collaboration within teams and with the parent company. It would also give your GCC team a sense of belonging and inclusivity.

#5 Invest in the Right Technology and Infrastructure

Infrastructure and technology set the foundation of an Offshore Captive Center’s success. Make sure you have the robust infrastructure, next-level communication and collaboration tools, top technology equipment and systems for the smooth functioning of your GCC and successful running of your business processes. 

Focus on standardizing and automating processes that are repetitive and consume a lot of time. Leverage technologies like AI and others to bring business intelligence and save time, effort, and cost of running operations. 

#6 Focus on Innovation 

Pay attention to the work environment of your GCC. Make sure it is positive enough to empower employees to experiment and bring innovation. Set up provisions where employees can openly put their opinions for the betterment of your global capability center. 

#7 Implement Robust Security Measures

Data security and privacy are of the utmost importance, therefore, it is imperative that your GCC has strong security measures to keep cyber threats at bay. Implement data encryption techniques and comply with data regulatory requirements of the particular country or location where your GCC is located. 

#8 Develop Strong Leadership or Management 

Make sure you hire or place a strong leadership or management team in your GCC that can effectively manage and monitor different operations while ensuring that the offshore captive center meets its objectives. 

#9 Establish Performance Metrics

One of the GCC best practices is to create and track key performance indicators or employ a tool to monitor the performance of your GCC team. It would help you know which employees are performing great and whether GCC is meeting your business goals. 

#10 Design Comprehensive Training Programs 

This is a proven GCC best practice that not only benefits your GCC employees to work efficiently but also your organization to ensure the team is well-trained and has the required skills and knowledge to perform expected business functions. 

Challenges You May Encounter While Setting Up a GCC

Here is the list of challenges that a business may encounter while setting up GCC or global capability centers: 

Infrastructure and Operational Challenges

Poor infrastructure, such as not setting up the right equipment, poor network connectivity, and irregular power supply can become a roadblock to the successful building of your GCC. Apart from this, there could be several operational challenges like mis-alignment of GCC culture with the parent company’s culture. 

Lack of Knowledge or Compliance with Laws and Regulatory Requirements

Another major challenge that businesses may encounter is not being able to understand complex legal frameworks, labor regulations, data protection laws, and tax laws. Lack of knowledge or adherence to these laws can be tough for a company looking to set up a GCC or global capability center. 

Not Hiring the Right Talent

Finding the right talent or professionals with specialized skills such as artificial intelligence, big data, Metaverse, project management, product development, and others can be challenging and impact the business operations of a Global Capability Center.  

Poor GCC Management Strategies

Not defining your GCC objectives, strategies, roles, and responsibilities of your GCC team clearly can impact the functions of your Offshore Development Center. This may also affect your GCC team morale and their performance. 

To overcome these challenges, follow the best practices for setting up a GCC given in this blog. Besides, connect with a reputed partner that knows the intricacies of setting up a Global Capability Center and helps you establish the one for your organization successfully. 

You may want to read: Common Mistakes to Avoid While Selecting Software Outsourcing Partner.

Conclusion 

Setting up a Global Capability Center can be a great way for a business to optimize operations and bring innovation and profitability. From IT, R&D, and engineering, to customer service, they can choose to set up a GCC for any of the operations. 

A GCC renders immense benefits in terms of cost, seamless access to specialized skills, strong infrastructure, and more. However, setting up a GCC successfully can be a real challenge for companies. They may encounter problems like talent acquisition and retention, compliance with regulatory requirements, and more. This blog spills the beans on some effective ways or best practices a business can follow to successfully set up a global capability center.  

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