Global Capabilities Center Strategic Frameworks- Part I- GROW for Early Stage GCCs

I have spent 33 years in the corporate world. During my career, I was responsible for P & L for Industry verticals in technology & IT services firms and in various leadership positions in a Global Capability Center (GCC). Strategy and P & L management are like Siamese twins, so strategy meetings at a P & L group were natural. I was also involved in many strategy offsites and discussions while working at the GCC. Many valuable things got discussed during those sessions, which resulted in advancing the center in meeting its goals. But there was a lurking thought in my mind about what constitutes a strategy in a GCC. In fact, by extension, what constitutes strategy even in the parent's cost center divisions such as IT, business operations, finance, HR, and other support functions? Should they have, in the first place, a strategy for their groups? Or should a firm have only one strategy at the corporate level/ regional P & L level?

I have thought deeply about this question in the last four years of consulting. While there is no absolute answer to this question, I believe strategy is indeed needed in cost center functions and, by extension, GCCs. I am delighted to present my thoughts through this three-part article.

My friend Rajesh Pandit (Rajesh was my dear colleague, good friend, IIM Professor, and an ace consultant) and I recently met. We concurred that a few things constitute a strategy- The element of winning, competition, uncertain factors, and broad guidelines for converting to plans.

GCCs in India can be of many types, such as

-???????IT, Operations, and Analytics functions of an organization

-???????Product Engineering Groups of large Software/Hardware Firms

-???????Design and Engineering Groups of large manufacturing firms doing CAD/CAM/CAE/EDA/ Pharma R & D/Biotech etc.,

All these centers go through maturity cycles. Many consulting firms have done great work on the journey of GCCs and maturity models.

I am presenting three stages of maturity from a life cycle perspective.

The three stages are.

-???????Seeding and early growth stage

-???????Seeking Autonomy

-???????Striving to be a strategic Partner

I have covered the strategy framework for stage I in this article, and I will cover the strategic frameworks for the following stages in subsequent articles.

Characteristics of Seeding and Early Stage GCCs.

The firms that have set up centers over the last three to five years, including the ones that started in 2023, fall in this category. The reasons for setting up centers in India are well established, like access to the vast talent pool, significant cost advantage, and the proof of the success of 1500 + GCCs of firms already operating in India.

Most of these firms have a target of, say, getting to a headcount of 500 or 1000 in one year, establishing the office & all support functions, and handling the work effectively. These firms' executives typically would visit many existing centers and understand best practices. There is an opportunity for these firms to learn a few methods from their seasoned peers and leapfrog in other areas rather than taking a cookie-cutter approach of latching on to what was done in the past by these centers as a golden rule.

The strategy for a center has to be highly customized to be appropriate for its context.

The framework I suggest is GROW.

GROW Framework

G- Global work placement: This is the most critical aspect when starting a center. Typically, the group in the parent firm responsible for setting up the center is busy enlisting support from different IT and operations groups. The KPIs that are defined will make them push for numbers. But it may be worthwhile to develop a robust framework for work placement in India and what remains in the parent location. Due to changing business priorities and imperatives, we may need to revisit the work portfolio and the placement appropriateness. Still, it is good to start with a framework.?

R- Recruitment strategy: There are headcount targets that will push the team into action sometimes without being thoughtful. Sometimes, what peer does and what benchmark data shows would be the basis for the recruitment approach. While all the data collected from the market would be helpful, the firm needs to evolve a homegrown fit-for-purpose recruitment strategy. The strategy will outline what kind of talent we need in the firm, given the work, and how it will evolve over the next 3-5 years. This exercise will inform us how and where we will source talent. We have to align the operational aspects of recruitment to the defined strategy.

O- Optimizing the talent: We must plan to grow the talent across functional, business domains, behavioral, technical, and leadership skills so that the focus is on institution-building rather than setting up low-cost labor groups. The technical aspect of the training is always addressed due to the compulsions of execution. The other elements may get addressed in a sub-optimal manner in many organizations, leading to a capability gap as the center matures. The role and aspiration-driven learning could be the core of developing talent. The L & D function and business leaders must jointly harvest talent so that it factors in the capabilities required over time and enhances employee engagement. The L & D division must operationalize the designed approach with internal staff and external consultants.

W- Winning with Ecosystem: Partnering with Indian ecosystems like service providers, startups, Industry bodies, and academics is necessary to bring the best of India to the firm. The firm gets insular when focusing only on internal operations and hence may miss having an Industry/ Functional/ Technology point of view. Integrating with the ecosystem with a larger purpose is vital to advancing the firm's and GCC's goals.

Alignment with Strategy Principles

Let us revisit the four principles of the strategy and understand how GROW framework fits the bill.

W- Winning- The GCCs should win in helping the firm to succeed. The winning is about how well the GCC contributes to the firm's goals than merely meeting the headcount target.

C- Competition – There are two dimensions to competition. First, the actual competition is the firm's competitor, and the GCC should help in the firm's competitive positioning. Second, the GCCs need to have a competitive edge in the focus areas vis-à-vis the other options in the marketplace for their services.

U-Uncertain factors – There are many uncertain factors – What work would be suitable in GCCs? Would we be able to recruit the talent we intend? Do we have resources to train the talent? And how do we pick the right partners in the ecosystem? Sometimes, it will be akin to searching for a needle in a haystack to locate appropriate partners.

G- Guidelines for Implementation. The framework should inform the action- The kind of work that has to come to India, the colleges we go to recruit freshers, the competitive and sustaining skills and the corresponding recruitment & development model, the leadership competencies required, and the choice of partners that make sense for the GCC. The framework should be the guideline for the set of actions.

Thus, GROW is a strategic framework for the GCCs in the "seeding and early growth” stage. But this needs to be tailored to the firm’s context.

Compassmet Consulting LLP is a boutique consulting firm focusing on strategy, business domain & technology programs, and leadership programs for GCCs, IT & BPM Service providers, and Technology firms. www.compassmet.com details the services provided.