The Global Capability Center (GCC) story is one of stunning momentum. According to Everest Group’s research, more than 500 companies have set up GCCs in last 12-15 months, more than 1,500 since COVID, with India cementing its status as the primary go-to destination for enterprise capability.
Yet, hidden beneath the headlines is a pattern too many refuse to acknowledge: a growing number of small- to mid-sized GCCs (<500 Full-Time Equivalent (FTEs)) stall out within 2-3 years.
Why? Because while companies know how (or find support) to set up a GCC, they don’t always fully understand why they’re doing it – or what it should evolve into.
This is sometimes an execution problem. But often due to failure of strategic vision, leadership alignment, and organizational clarity.
The GCC mirage: Eight Real reasons why GCCs lose their way
- Headcount ≠ Strategy
Scaling FTEs is easy. Scaling value is not. When growth is measured only in bodies and not in business impact, irrelevance is inevitable
- No strategic vision for the GCC
Too many centers are launched with tactical goals (“take cost out from the function”) and no long-term aspiration. A GCC without a bold purpose quickly becomes a glorified low-cost staffing project
- Business case remains fiction
We have seen several GCCs where initial enthusiasm fades, benefits aren’t tracked, and business sponsors move on. The GCC ends up fighting for relevance with no scoreboard to back it up. Once work moves offshore, arbitrage benefit is part of budget planning and not sufficient to sustain high profile for GCC
- Execution issues seen as model flaws
Missteps in implementation often expose deeper issues- fuzzy mandates, poor sourcing decisions, lack of leadership, or no plan for integration. People blame the model when the execution was flawed. Next thing you know – someone wants to outsource it to providers again!
- Mindset misalignment between enterprise and GCC
Enterprise leaders want “value and transformation.” GCC leaders are told to “stay in your swim lane.” The result? Frustration, confusion, and a tug-of-war over identity. Also, GCC leaders should acknowledge that not all transformation (even if massive in context of GCC) excites business leaders equally
- Wrong People at the Helm
Some leaders are operators. Few are visionaries. When leadership lacks enterprise clout, transformational ambition, or contextual depth, the GCC becomes a low-impact outpost.
- Fragmented and subscale
Moving scattered, sub-scale teams without a cohesive operating model leads to entropy, not scale. Subcritical mass = suboptimal outcomes. Talent model fails and GCC stagnates. Next victim is performance, and everybody starts questioning the model again
- Hype vs. Reality
Sold as innovation hubs, many GCCs end up running reports and managing Service Level Agreement (SLAs) (many don’t even enforce proper SLAs). This erosion of credibility is hard to recover from
India’s GCC market Is booming – But labor arbitrage cannot be the end goal
Yes, India is among the best global talent destinations in terms of breadth and depth of talent but let’s face it, for large parts, it is becoming the labor arbitrage capital of the world. Offering cheap labor is not a sustainable strategy. Artificial Intelligence (AI) and next set of technology transformation is here. Operations will shrink over coming years and Systems of Action will take over as functional roles get redefined.
The question is: will your GCC cease to exist, struggle to survive, or embrace and lead this change?
Indian GCC leaders must urgently define a value proposition rooted in innovation, agility, domain depth, business impact, and resilience. If your GCC is not explicitly solving business problems or creating a competitive advantage – focused on CEO’s priorities – its future is fragile. Look beyond your scale and labor arbitrage benefits, it’s not a winning strategy.
GCC leaders need to rewrite the playbook: Build bold, or don’t bother
At Everest Group, we have a reputation of helping clients with their sourcing model strategy – both outsourcing and GCC decisions – based on merit, without any downstream objectives. Reflecting on my learnings from working with leading global companies and their GCC journey, here’s eight ways GCC leaders can flip the script – not just operationally, but philosophically.
- From setup to significance
Stop celebrating “launch.” Start designing for legacy. What role will this GCC play in shaping your business 5 years from now? Check out our GBS in One Page research to explore the art-of-the-possible research to explore art-of-the-possible
- Lead with strategic vision
Make the GCC’s purpose unmissable – internally and externally. Tie it to transformation, not just support. Articulate what success looks like in the long term. Watch our recent webinar to uncover key trends and disruptions that will shape the future GCC/GBS landscape
- Align mindsets, not just metrics
If a HQ wants transformation and the GCC delivers only efficiency, misalignment is inevitable. Bring leaders together to align on ambition, operating model, and accountability. Write to us to access our exclusive GBS Leaders Mindsets Toolkit
- Be brutal about leadership and the Employee Value Proposition (EVP)
Don’t settle. You need leaders who can shape strategy, influence global stakeholders, and attract world-class talent – not just run a cost center. Building the right EVP is key to attracting and retaining top talent. Check out how Top GBS Employers do it
- Build capabilities, not just functions
Ask: what can this GCC do better than anywhere else? Own end-to-end capabilities – not fragmented roles. Think platforms, not processes. Wondering what Global Centers of Excellence can GCC house, check out our report
- Hardwire integration
IT, Ops, and Business must operate as one team – not three departments in one building. Design for collaboration, not co-location. Access our GCC Persona framework
- Invest in the future
Small centers still need big thinking. Fund skill-building, automation, and transformation. Don’t starve your way to mediocrity. Read about GCCs who led from the front
- Measure the right things
Track influence, innovation, and impact – not just headcount, SLAs, and cost. If you don’t measure value, no one will believe you’re creating it. See how leading GCC are doing it
Let’s acknowledge the reality: You don’t get the GCC you want, you get the GCC you build!
Your GCC reflects your intent. If your ambition is limited to savings, survival will be your biggest achievement. But if you build your GCC with clarity, courage, and conviction – you’ll unlock an engine of competitive advantage for your company.
Agree? Disagree? Are you building a GCC and facing these challenges firsthand?
Share your thoughts. Let’s challenge the status quo and build the next generation of capability centers that actually deliver on their promise.
To discuss more, contact me at [email protected]
