Why Your GCC Salary Estimates Are Failing—and What It’s Costing You

During a recent discussion, a professional I know shared a remarkable story about her career growth. She had been working as a data analyst at a mid-sized GCC, earning a stable but unremarkable salary. Over a period of just 10 months, she decided to upskill herself, focusing on gaining a working knowledge of AI and its applications—skills that were becoming increasingly relevant in her industry. While she didn’t transform into a technical AI expert, her understanding was practical enough to apply AI concepts to her existing role.

The result? A competing organization recognized the value of her enhanced skill set and offered her a 70% salary increase to join their team. This dramatic leap wasn’t just a reflection of her new skills but also highlighted the soaring demand for talent equipped to navigate the intersection of business and emerging technologies.

This example is a testament to how quickly market dynamics can shift and why GCCs must prioritize accurate salary estimation and proactive talent strategies to remain competitive. When individuals can command such premiums for upskilling, enterprises must ask themselves: Are we aligning our talent strategies to market realities?

Context

The Global Capability Center (GCC) model is a cornerstone of modern enterprise strategies, offering a unique blend of global talent, innovation, and cost efficiency. However, salary estimation—a critical aspect of GCC planning and operations—remains a significant challenge, often underestimated during the initial stages. Misaligned salary projections can disrupt budgets, delay hiring, and hinder a GCC’s ability to scale effectively.

Typically, 60-70% of a GCC's operational expenditure is attributed to salaries and employee benefits. This figure can vary depending on the industry, location, and the maturity of the GCC, but it underscores why accurate salary estimation is critical for financial planning and operational success.

This article explores the root causes of salary estimation challenges and offers practical, actionable strategies to address them. It also delves into the role of recalibration—an often-overlooked but essential practice to retain and nurture talent in a rapidly evolving business environment.

The 7 Gaps (There could be more!)

1. The Planning-Execution Gap

Salary estimation typically begins during the GCC’s business case development phase, relying on high-level benchmarks and projections. While these estimates offer a starting point, they often fail to align with the realities of execution.

Why It Happens:

• Hyper-Localized Variances: Salary benchmarks often overlook micro-market differences. For example, salaries for the same role may differ between technology hubs due to varying talent supply and demand.
• Time Lags: By the time a GCC transitions from planning to execution, several months—or even years—may have passed, making initial estimates outdated.

Consequences:

This disconnect can lead to unanticipated budget overruns, delays in talent acquisition, and difficulty meeting initial operational targets.

Solution:

Bridging the gap requires real-time market intelligence, agility in budgeting, and ongoing alignment with talent acquisition teams to ensure projections remain relevant.

2. Rapid Evolution of Technology and Skills

Technologies evolve faster than ever, creating new opportunities but also reshaping talent demand. GCCs often struggle to keep their salary benchmarks in sync with these shifts.

Examples of Emerging Technologies:

• AI/ML Development: Skills in artificial intelligence and machine learning are increasingly sought after across industries.
• Cybersecurity: As digital threats grow, specialists in data protection, compliance, and governance are commanding higher salaries.
• Cloud Technologies: The rapid adoption of cloud-native tools and platforms has driven up demand for DevOps engineers and cloud architects.

Why It’s a Challenge:

Roles that were once niche or experimental have become mainstream and critical to enterprise success. This has led to steep increases in salary expectations, with market rates for some roles rising by 20-40% in a single year.

Solution:

GCCs must build a future-ready workforce by proactively investing in upskilling and reskilling initiatives. Collaborating with learning partners and creating in-house training programs can help mitigate the cost of hiring from the market.

3. Talent Scarcity in Competitive Markets

In regions with high GCC density, talent scarcity often leads to inflated salaries and prolonged hiring cycles.

Key Drivers:

• Bidding Wars: Enterprises frequently compete for the same limited talent pool, particularly in high-demand skill areas.
• Premium for Niche Skills: Specialists in fields like data science or blockchain development are often poached with offers well above market rates.

Solution:

GCCs can mitigate talent scarcity by adopting a multi-pronged strategy:

1. Partnering with universities to build a pipeline of entry-level talent.
2. Offering unique Employee Value Propositions (EVPs) to attract and retain professionals.
3. Creating flexibility in compensation packages to account for high-demand roles.

4. Unrealistic Role Expectations

Enterprises often design roles with exhaustive requirements, hoping to combine multiple responsibilities into a single position. While this approach may appear cost-effective, it frequently backfires.

Consequences:

• Unfilled Positions: Unrealistic job descriptions deter qualified candidates.
• Salary Premiums: Candidates capable of fulfilling these demands expect significantly higher compensation.

Solution:

Design roles with clear, focused responsibilities. If specialized skills are required, consider separating responsibilities into multiple roles and building internal talent pipelines through training.

5. Static Nature of Salary Benchmarks

Salary benchmarks are often based on static data, such as annual reports or surveys, which fail to reflect the dynamic nature of talent markets.

Why This is a Problem:

• Lack of Timeliness: Reports from the beginning of the year may not account for demand surges later in the year.
• Averages vs. Specifics: Static data often represents averages, which may not apply to niche or high-demand roles.

Solution:

Invest in tools and platforms that provide real-time market insights. Subscriptions to talent analytics services or working with practitioners with on-ground expertise can help GCCs stay ahead of salary trends.

6. Impact of Macro-Economic and Policy Changes

External factors such as inflation, cost of living, and government incentives also influence salary trends.

Examples:

• Inflation: Rising living costs in Tier-1 (and now Tier-2) cities directly impact salary expectations.
• Government Policies: Incentives under various Government GCC policies have attracted more enterprises, intensifying competition for local talent.

Solution:

GCCs should account for these factors by incorporating flexibility buffers into their budgets and revisiting salary bands quarterly to remain competitive.

7. Recalibrating Roles to Retain Talent and Build Competencies

For established GCCs, role recalibration—aligning roles with current and future skills—is an essential strategy to retain talent and reduce reliance on external hiring.

Why It’s Crucial:

1. Future-Proofing: Recalibration ensures roles evolve with technology and business needs.
2. Retention: Employees feel valued and motivated when provided with growth opportunities.
3. Cost Efficiency: While recalibration may initially increase costs, it is often cheaper than hiring externally.

How to Recalibrate:

• Skill Mapping: Regularly assess employee skills against future requirements.
• Training and Upskilling: Offer programs to bridge skill gaps.
• Role Redesign: Update job descriptions and compensation to reflect new responsibilities.

Strategies to Address Salary Estimation Challenges

1. Leverage Real-Time Data: Use dynamic tools for accurate salary insights.
2. Segment Roles Strategically: Define core, critical, and niche roles with tailored salary bands.
3. Adopt Agile Budgeting: Update salary bands periodically to reflect market realities.
4. Collaborate with Practitioners: Engage experts with hands-on GCC experience.
5. Invest in Recalibration: Proactively align roles with evolving business needs to retain talent.

Are you ready to recalibrate your GCC strategy? Let’s discuss in the comments!