Future of GCCs: The Digital Dilemma

Are they Soaring High or Plummeting to the Abyss? Welcome to another though-provoking Edition of Insights Tale!?

? We're diving headfirst into the buzzing world of Global Capability Centres (GCCs), where the future seems to be swaying between two contrasting directions. Is it a tale of continued ascension, or are we on the precipice of decline – we do a critical analysis of the industry, happenings, and the latest news that are shaping the GCC landscape.?

A Future in Flux?

The GCC landscape has been like a rollercoaster ride lately – the verdict on GCCs' destiny isn't unanimous.??

According to a recent report by the Everest Group, the global market for GCCs is expected to reach $200 billion by 2025. The US market is expected to account for a significant share of this growth, with a CAGR of 12%. Some experts believe that these centres are destined to reshape the future, while others raise eyebrows, suggesting a potential decline. Let's take a deep dive into both sides of the coin.?

The GCC Proponents?

GCCs are slated to emerge as the silent heroes of the next decade, driving innovation and transformation. Proponents argue that these centers are poised to become catalysts for business growth, propelling industries to new horizons. Here's why:?

Evolution Beyond Cost Efficiency: The narrative of GCCs merely being cost-saving havens is evolving. Organizations are leveraging their capabilities in favourable territories to derive the following benefits:?

• Lower real estate costs?
• Favourable exchange rates??

• Lower operating costs.??
• Special economic zones (SEZs) set up by Governments to provide access to various tax incentives and other benefits.??
• Policies to promote innovation and R&D, have helped GCCs to develop cutting-edge technologies and services.??

Data Dominance: In a data-driven era, GCCs are stepping into the spotlight. The independent-integrated structure allows them to be champions of industries and provide tailored and specific competencies by leveraging data analytics, AI, and machine learning, these centers are turning into powerhouses for deriving insights that steer business strategies.?

Fact: McKinsey's Industry Report on Data Analytics states that 70% of leading organizations rely on their GCCs to provide critical data analytics support for decision-making.?

Reduction in global executive?management bandwidth: GCCs take care of arguably the two most important attributes of Business excellence – Turn Around Time and Agility.??

They significantly reduce the bandwidth of functions that the global?executive management has to carry out,?and ensure that tasks are navigated seamlessly. GCC organizations are taking the drivers’ seat in delivering insights to the organization and are becoming more closely aligned to the C-suite. Overall, what’s clear is that shared services centers (SSCs) and GCC models are becoming more agile, digital, and cost efficient, as they seek to provide a better customer and employee experience.?

Ecosystem Synergy: GCCs are not solitary entities anymore; they're forming symbiotic relationships with startups, academia, and local communities. This collaboration fuels the exchange of fresh ideas and nurtures a dynamic innovation ecosystem.?

The 2023 Global Shared Services and Outsourcing Survey from Deloitte shows that over 40% of GCCs have established partnerships with local universities and research institutions, fostering a rich exchange of ideas and talent.?

Apart from expanding the traditional functional scope, GCC are accelerating digital capabilities like automation, analytics, and reporting to become more customer-centric. These GCC organizations are also promoting the social responsibility & diversity agenda and supporting a range of ESG processes.?

The Decline Dystopia: Skeptics Speak?

While some raise their glasses to toast the success of GCCs, skeptics remain grounded, citing several factors that might slow down this momentum:?

Geopolitical Shifts: The ever-changing global geopolitical landscape could impact the dynamics of GCCs. Trade tensions and regulatory changes might alter the equation, making some organizations reconsider their offshore ventures.?

Global Services Location Index 2023, notes that 28% of GCC leaders express concerns about the potential impact of geopolitical shifts on their operations.?

Talent Tug-of-War: As GCCs proliferate, the competition for top-tier talent heats up. Attracting and retaining skilled professionals can be a challenging endeavor, potentially undermining the centers' potential.?

Recent data from the GCC Talent Dynamics Report indicates that 65% of GCCs are actively investing in employer branding and talent retention strategies to stay competitive in the talent market.?

Localized Resurgence: Some markets are witnessing a localized resurgence of expertise and capabilities. This might sway the focus from a centralized GCC model to tapping into local talent pockets.?

Market analysis by Tech Trends Today reveals a 12% increase in localized tech expertise hubs, prompting a rethink on the effectiveness of the centralized GCC approach.?

GCC Chronicles?

Time to sprinkle on you the latest happenings in the GCC realm:?

Tech Titans' Expansion:?

There are a number of reasons why Silicon Valley heavyweights are setting up GCCs are in emerging tech hubs.?

First, the cost of labor is lower in many offshore locations, such as South-east Asian countries. This can save businesses significant money on their data analytics costs.?

Second, GCCs have access to a large pool of skilled data scientists and analysts. This is because many developing countries have invested heavily in training in the field of data science, cybersecurity, and cloud technologies.?

Third, GCCs are able to leverage the latest AI and ML technologies. This is because they have access to the same cloud computing platforms and tools as businesses in the US. Enlarging footprint of hyperscale cloud providers have made data accessibility faster, secure and wide reaching.?

Reskilling Renaissance:?

In the face of potential talent scarcity, many GCCs are championing reskilling initiatives. They're nurturing their existing workforce with the skills needed to embrace emerging technologies.?

By prioritizing upskilling of teams, through Skill Assessments, Company Sponsored Educational Courses, Bootcamps, Cross team projects/opportunities –these centres are boosting engagement, productivity, and innovation.?

Employee experience enhancements have led to a 15% increase in cross-functional collaboration and a 25% reduction in employee turnover, as noted by the GCC WorkCulture Insights Report.?

The Data Gold Rush:?

Data has never been more valuable, and GCCs are sitting on gold mines. Companies are doubling down on these centers' data prowess, using their analytics acumen to strike strategic insights and competitive advantage.?

According to the GCC Data Trends Report, organizations leveraging GCCs for data analytics have witnessed a 40% reduction in time-to-insight, leading to faster and more informed decision-making.?

Synchronization for Sustainability:?

Sustainability isn't just a buzzword. ESG and Sustainability initiatives are fast becoming very technology and data-heavy domain for organizations that have announced clear Net Zero goals.?

GCC’s often house all functions of an organization and since ESG touches all aspects of the organization, the GCC may be a great place to set up specific tech CoE that can leverage cross-functional data, resources, and skills.? ?

The Sustainable GCC Index ranks GCCs based on their eco-friendly practices, with a 30% increase in the number of centers participating in sustainable initiatives over the past year.?

The Way Forward: Where Do We Stand??

As the GCC landscape is evolving, with every challenge comes an opportunity, and GCCs are certainly no strangers to this mantra. To thrive, GCCs need to be dynamic, adaptive, and open to change. Only time will tell whether they'll emerge as the future architects or adapt gracefully to the changing tides.?

So, what's your take on the GCC saga? Are they steering us toward an innovation-fueled tomorrow, or are they on the brink of a new era? We'd love to hear your thoughts!?

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