High-performance GCCs

Are you realizing the tprueotential ofyour Global Capability Center (GCC)?

Strategies and actions that are enabling high-performance GCCs to drive business value and growth

High-performance GCCs are strategic hubs that are integrated with their parent organizations. Their teams are empowered and enabled to deliver significantly to company's overall strategy.

Introduction

Global Capability Center (GCC) has been a strategic model adopted by companies to leverage India for more than two decades.

With technology at the heart of transformation, companiesare building technology foundation by increasingly adopting the GCCmodel to tap into the global talent.

In spite of that, only a few companies are able to truly realize the true potential of their GCCs.

One question we frequently encounter, during ourengagements with clients, is:‘how do we realize the true potential of our GCC?’.

There isno one silver bullet.

Clarity of strategy, leadership sponsorship, operating model, organization culture, empowered and integrated teamsand many otherfactorsform critical elementsto getting thisright.

In thisreport, we provide insightsinto how valuecentric companiesare realizing the true potential of theirGCCs.

Three categories of GCCs

Optimizers

These GCCsdeliversignificant cost optimization by supporting variousactivitiesof theirparent’sIT orengineering organizations.

Based on the outcomes delivered, GCCs can be categorized into . 3 distinct categories

Creators

These GCCsdelivervalue by taking considerable ownership and accountability forboth back-end and businesscritical systems, aswell asplatforms/products.

Innovators

These GCCsdelivervalue by generating new ideas/businessmodels/o eringsto transform theirbusinessand sometimes disrupting theirindustry.

How are the three GCC categories di erent from each other?

Key areas of di erence Optimizers Creators Innovators

Primary Driver

Cost savingsthrough accessto lowercost resources

Ownershipand Accountability

Delivervalue creation

Drive innovation and create revenue

Ownership and decision making restswith the parent organization

Reasonable to significant ownership and accountability with GCCleaders

High level of ownership and accountability with GCCleaders

•Juniorto mid-level engineers

•Engineering graduateshired from tier-2 and tier-3 schools

Talent Hired

•Juniorto senior-level engineersand non-engineerswith domain expertise

•Graduateshired from tier-1 and tier-2 schools

•Juniorto senior-level engineersand non-engineerswith domain expertise

•Talent with start-up experience

•Graduateshired from tier-1 and tier-2 schools

•PhDswith certain specializations

Attrition Levels

Compensation

Highover20% -

Low to High

Low 12–17%

High (including RSUs/stock options)

Low 11 - 13%

High (including RSUs/stock options)

What nature of work is delivered from di erent categories of GCCs?

Optimizers

•Software development

•Applications/Product support

•Data engineering/ analytics

•Product maintenance andbugfixing

•DevOps/Operations

•UX/UI

•Businessprocesses

Creators

•Applications/Platform/ Product ownership

•Applicationstransformation /majorproduct/platform feature releases

•Applications/Product/ Platform roadmap ownership

•Applications/Platform/ Product ownership architecture

•Product management

•Complex AI/ML based solutions

Innovators

•New product/platform/ applicationsideas, POCs and design

•Revenue creating and cost savingsinitiativesand ideas

Changing strategy

mid-way is tough:

GCCsoperating as Optimizersfind it di cult to move up the value chain without going through an enormoustransformation that encompasses transformingstrategy, organizational mindset, leadership, operating model, culture and otherfactors.

Ensuring alignment across the organization:

Having a clearly articulated vision and purpose pre-emptsconfusion and lack of alignment across organization. Forexample, seniormanagement’sintent fordelivering high value from GCCmay be interpreted by rest of the organization as strategy fordeliverylower at cost from GCC.

Why clarity of vision and purpose that drives longterm GCCstrategy is essential?

High-performance GCCs clearly articulate their vision and there is organizational alignment with the vision

The following are common characteristics of these GCCs

An organization structure that enables strategic alignment

Role of the GCC head as enabler of continuous evolution and transformation

GCCteams empowered with high level of ownership and accountability

A culture of customer centricity

Ability to attract, nurture, and retain high-performing talent

“Defining the core purpose and strategy forlobalnnovation/ GI CCapabilityentersisessential as they guide the operating model and the choice of leadership, while shaping the organization culture. Organizationswillfind it di cult to drive innovation if they build theircenterswith cost optimization objective.”

DIETER GERDEMANN

Partner&

Kearney

Managing Director

An organization structure that enablesstrategic alignment

Growth Phase Set-upPhase

During thisphase, companiestest waters and learn to work in a di erent mode with teamsat GCCs.

The teamsat the parent organization have complete ownership of work while the GCCteamslearn by shadowing them.

Activitieslike quality assurance orsupport areforthephase. preferredSet-up

The GCCactsasa common pool of talent, delivering work fordi erent businessunits at the parent organization while providing enhanced productivity due to 24/7 support and time zone gains.

Aftera successfulphase, many Set-up businessunitsat parent organization start transferring greaterchunksof work to GCC. With GCCdelivery increasing, business unitspreferto have vertically integrated dedicated teamsled by dedicated leaders.

Mature Phase

During thisphase the vertical integration of individual businessunit teamsisfurther strengthened and each businessunit at GCCmore orlessworksautonomously where not only work but responsibilities are transferred.

There are three distinct phases of GCCevolution on their maturity journey

An organization structure that enablesstrategic alignment

The organization structure evolution of high-performance GCCs

Horizontal Structure:

In thephase GCCisconsidered asone Set-up businessunit reporting into the GCChead, who interfaceswith variousbusinessstakeholdersat the parent organization.

Hybrid Structure:

In the growth phase the horizontal organization startssplitting into vertical organizationsas some businessunitspreferto have dedicated teamsand leaders.

Vertical Structure:

In the mature phase each team at GCC isintegrated withrespective teamsat its parent organization.

An organization structure that enablesstrategic alignment

The organization structure evolution of high-performance GCCs

Phase I:Set-upPhase II: GrowthPhase III: Mature

Horizontal Organization StructureHybrid Organization StructureVertical Organization Structure

•One trusted leaderassingle point of contact forbusinessstakeholdersat parent organization

•Ability to test the model

•Easy to launch

•Issuesrelated to span of control

•Lowerproductivity asguidance and decision support from leaderisrequired by teams

•Key businessunitshave dedicated vertically integrated teamsat GCCand are able to operate independently

•Highly productive vertically integrated teamsable to operate independently and pursue objectivesrelevant fortheir groups

•Businessunit focused silo mentality

•Decision making bottleneckspersist

•Risk of silo mentality needsto be managed and addressed

“GCCleadersmust navigate multiple complexitiesthat are unique to thismodel. To ensure strategic growth, they need to enable continuousinnovation while building trust with global leaders. Unlocking value by tapping into a global talent pool iscore to the GCCleaders’role, and ensuring accountability and ownership are developed into the cultural fabric.”

ASHISH SINHA

MDAPAC& MEAEpsilon

Role of

the

GCC head asenabler of continuous transformation

The role of the GCChead (orcountry/ regional head) isever-evolving and critical to accelerate the GCC’stransformation.

Ratherthan operationally manage delivery, GCChead needsto play the role of facilitator and enablerforindividual businessunit heads who are responsible fordelivery.

The GCChead bringstogetherteamsby translating overall businessobjectivesand goalsinto a common purpose forteams.

The GCChead also playsan important role asthe face of the company and in promoting the brand while engaging with the broader ecosystem.

Role of the GCC head asenabler of continuous transformation

Phase I:Set-up Phase II: Growth Phase III: Mature

The role of the country head isto facilitate setting-up GCC infrastructure, interface with stakeholdersat parent organization, hire talent, oversee delivery and manage operations.

The responsibility of delivery management istransferred from the GCChead to businessunit leads, however, there isstill considerable level of involvement in decision making.

There isgreaterfocuson facilitating growth and supporting variousbusiness units, aligning GCCwith businessgoals, creating a brand and hiring talent.

The GCChead’srole evolves into aligning the GCCwith overall businessobjectives, nurturing GCCculture, developing talent, positioning appropriately in the market to attract talent.

At high-performance GCCthe role of the GCChead continuously evolves

“Value-centric companiesenable theirteamsat global centersby providing business, customerand product/applicationscontext. Furthermore, teamsare empowered to operate autonomously and make decisionsto solve customer problems. Cloud technologies, microservicesarchitecture, DevOps, etc. are the building blocksthat enable and empowerteams.”

SEBASTIAN WERNER

CEO

GCCteams empowered with high level of ownership and accountability

What does ownership entail

•Understanding (strategic) businessgoals

•Deep understanding of the domain

•Understanding of customerneedsand expectations

•Ability to compare and contrast the with competing products

•Product/solution future vision and roadmap

•Architecture evolution

What does accountability entail

•Responsibility fordelivering agreed resultsand performance

•Addressing any customerorteam escalations

•Shared businesstargets/joint leadership forP&L

•Acquisition of skills/capabilities

•Product/solution performance/quality

High-performance GCCs empower teams with accountability which in turn enables the teams to take more ownership

Examples of approaches adopted by various companies to vest ownership in India.

Exampleways of dividing up work between the parent organization and GCC

Ownership of customer solutions/products

Ownership of competency

Ownership of specific microservices

Ownership of product line

GCCteams empowered with high level of ownership and accountability

Set-up PhaseGrowth

PhaseMature Phase

Product Conceptualization

Product Management

ArchitectureDesign and

Development Testing Support

Product/solution

Conceptualization

Product Management

Development Testing Support

Product/solution

Conceptualization

Product Management

ArchitectureDesign and

Development Testing Support

Development Testing Support

Rolesand responsibility split leanstowards parent organization

ArchitectureDesign and

Development Testing Support

Some critical rolesestablished at GCC, with some degree of ownership and decision making. Teams globally report to the product/solution owner.

Product/solution

Conceptualization

Product Management

ArchitectureDesign and

Development Testing Support

The GCCisself-su cient and contributesto specific customersolution while taking ownership and accountability.

There is parity of responsibility and roles between parent organization and GCC

The accountability spans across a variety of products/applications.

What kind of products/ applications are GCCs accountable for?

Sunset

Products/applicationsthat are planned forretirement

Mature

Products/applicationsare mature and stable with limited new features being added

High Potential/Innovation

Products/applicationswith high potential and strong market demand

“CC A strategicapabilityenter playsa vital role in enabling global enterprisesto operate seamlessly, especially during challenging times. Providence India not only o ered itsparent organization the 24/7 operationssupport it needed during the pandemic, but also built core capabilitiesto accelerate key digital transformation programs,

helping Providence enhance productivity and bring care closerto patients. Today, asa healthcare global innovation center, we are building new productsand platforms, and providing enterprise services that help US health systemslike oursincrease operational e ciency, enable more personalized care, and improve patient experience.”

GR REDDY

Vice President - Enterprise Services Providence India

A culture of customer-centricity

GCCs

Teams are enabled with customer context

High-performance GCCsbelieve that customercontext is essential forteamsto design and deliversolutionsthat are aligned with solving customerproblems

Platforms to share new ideasopinions and

Teamsare enabled to openly deliberate overcritical topicsand contribute to solutions, processes, operating model and othertopics

GCCteams are empowered with decision-making within their specific charters

By democratizing decision-making, high-performance GCCs tap into organization-wide creativity and stimulate productivity

Focus on team well-being/flexible work environment

Talent-centricbenefitsand policiesare o ered

Teams at high-performance

are enabled and empowered

A culture of customer-centricity

Best Practices

Product and customer context provided to teams

Decision making/autonomy within their specific charters

Platforms to share new ideas and opinions

Integrated teams and roles

Focus on team well being/flexible work environment

COMMUNICATION

A culture of customer-centricity

•A product management team based at GCC

•Open channel of interaction between product managersand engineers

•Internal platformsand portalsforsharing product/applications vision, knowledge and roadmap

Well-defined formal channelsand platforms exist that enable teams at GCCsto share their ideasand opinions

Well maintained documentation existsfor both functional and technical aspects

In addition to standard ones, KPIsthat link engineers’contribution to customervalue delivered aremeasured in both quantitive and qualitive termssuch as

•How many new featureswere added

•How featuresare rated/ adopted by customers

In some cases, ownership customer/ accountability isgiven to leadersat GCC.

Knowledge Sharing Customer Ownership New Ideas& Opinion Documentation KPIs

High-performance GCCs are enabled with customer context and centricity

Access to business and product/service knowledge enables team empowerment

Sales

Product Knowledge/ Customer Insights Portal

•Knowledge

•Updates

Product Manager

•New featuresinformation

Engineering Team

•Roadmap information

•Customercontext and impact

•Questions

•Ideas

•Opinion

Team Member

GCCTeams

Parent

•All teamsfromandcome togetherfor ParentGCC 2 dayson a quarterly basis(typical size of participantsisbetween 170-200).

•Planning meet held one day in thetime zone Parent and anotherintime zone GCC.

Support

Development Team

Product managers/owners

User Stories

Customer Insights

Q&A Features

Roadmap

•Providesextensive insightsinto broaderaspectsof product and specific aspect that help in forecasting and sprint planning.

Achievements/Objectives/Target Outcome

•Understanding of businessand product vision and goalsby all teams

•Interactionsand communication between variousteams

•Ascertain commitments, dependencies, risksand opportunities

•Team-building, alignment and roadmaps

Sales

Delivery

Product Management

Big Room Planning is another channel to enable teams with business and product/service knowledge

•Forthe solutionsthat GCCisaccountable for, GCCleadsare empowered to make decisions about product/solution/application roadmap, enhancements, new featuresetc.

•Emergence of autonomousengineering unitswith self-managing scrum teamswho are empowered to decide how to achieve objectives.

High-performance GCCs are empowered to make decisions

Product managers based in India: 2 models adopted by GCCs

India

Many companieshave product management team, that supportsparent organization, based at GCCs.

Though many companies' vision isto enable thismodel, only a few have been able to operate in thismodel.

Spotify organization model adopted

Changesin the squad isassessed forimpact on velocity and committed stories

•Autonomousand self managed teams

•Line management iseliminated

Squad lead focuses:

•Domain

•Innovation beyond backlog

•Decidesand prioritizes

WHAT needsto be done

Scrum lead focuses:

Dedicated agile coach for squad

•How can the storiesbe delivered e ciently

A story point completion ratio metric isextensively used to track e ectivenessin estimation, planning, and identify external issuesimpacting the ratio e ciency.

SquadSquadSquadSquad

Chapter Chapter

Tribe Lead Agile Coach

Tribe

Pursuing appropriate KPIs and processes ensures customer centricity

“Globally, the common theme acrossenterprisesiscost reduction and increasing productivity. Thiswill come on the back of AI and cloud adoption. India iswell poised to take advantage of fuelling this growth asa result of availability of highly skilled talent.

AsIndia becomesthe hub for product development, talent reskilling and upskilling becomesincreasingly important. While we see an exponential increase in innovation and product-based companies, there isan urgent need to bridge the skill gap to scale up the product

ecosystem. It would be prudent foreducational institutionsaswell as organizationsto develop programsthat o er experiential learning in line with market demands, and ensuring that the learningfinds applicationsin the real world.

Organizationsthat fosteran environment of constant learning and handson experience are not only likely to retain talent but also emerge asmarket leaders than those that don’t.”

RAMKUMAR NARAYANAN VP, Technology and Managing Director VMware

Ability to attract, nurture, and retain high-performing talent

High-performance

GCCs o er compelling value proposition, that embodies the core ethos of the company that drives talent engagement, attraction and retention.

Work itself

•Scope forcreating an impact forcustomersand business

•Responsibilityaccountability and

•Sense of achievement

Employee Value Proposition that clearly articulatesthe promise that GCCmakesto current and future employees

A culture of global inclusiveness and crossdeploymentsat Parent and GCC

Compensation that drives performance

•Base salary

•RSUs/ ESPOs

•Bonus

•Benefits

Ability to attract, nurture, and retain high-performing talent

Background of talent hired

Optimizers

Talent with experience in IT servicesindustry and predominantly with a non-computerscience engineering degree

CreatorsInnovators

Talent with product/platform/ domain background and typically with computerscience degree

Talent with product/platform/ domain/start-up background and with computerscience degree/PhDs

Schools hired from

Acquiring expertise in latest technologies

Talent motivated by GCCleadership focus

People management and driving e ciency

Development of products/ solutions/platformsand to create impact forcustomers

Ability to experiment, develop proofsof concept and R&D

Accountability and value creation

Innovation and revenue creation

High-performance companies understand aspirations of talent and o er suitable work, environment and benefits

Tier1 and tier2Tier1 and tier2

Tier3 and tier2

Ability to attract, nurture, and retain high-performing talent

High-performance GCCs look beyond tech skills when hiring talent

Overview of key elementsof selection criteria

Main initiativesfor hiring

Candidate Vision

Clarity of thought and ability to articulate future vision forself

Drive and curiosity

To learn about new products/platforms, domain, technologies, businessstrategy, performance etc.

Valuesand Culture Fit

Alignment with core organization valuesand culture

Empathy

Thinking from customerand end-userperspective

Capabilities

Capabilities, experience and aptitude forthe role

Broadening the innovative capabilities by hiring talent with di erent backgrounds

A very well focused graduate hiring program and creating a brand at select schoolsacrossIndia

Targeted hiring from companiesin specific domains

Hiring through referral program

Ability to attract, nurture, and retain high-performing talent

High-performance GCCs

o er a variety of rewards and recognition programs

Engineering Performance Rewards

Incentivizing developersand leadsfor performance, innovation and ideasthrough awardssuch asStarof the Sprint, etc.

Global Recognition

The best performersare recognized and featured on global platformsand websitesand get an opportunity to interact with leaders

Publications/Events

Encourage teamsto publish and organize/participate in relevant tech and domain related events

Ability to attract, nurture, and retain high-performing talent

High-performance GCCs o er opportunities for career progression

Global Opportunities

Opportunitiesto work at global locations and also medium-term rotation to global locationsforbusinessand solution/product knowledge acquisition

Individual Contributor Track

A well-defined individual contributorgrowth pathsto attract and retain seniortalent Opennessand encouragement to change roleswithin the organization

Role Change Options

Ability to attract, nurture, and retain high-performing talent

High-performance GCCs promote a culture of collaboration and learning

Collaboration Tools

Use fortoolssuch asGitBucket to enable collaboration between engineers

BrainstormingDemos and

Demosby variousteamson theirtasksand how theyfit into userstorieson a regular basisand brainstorming on varioustopics

Rotating Role of Scrum Masters

The role of scrum mastersare rotated amongst teamswithout a dedicated scrum master

Learning new skills

Variousopportunitiesare provided to learn new skillsand personal development.

Ability to attract, nurture, and retain high-performing talent

Sprint Managementand

Time to Experimentation

Time isallocated to each team memberfor new ideasand innovationForexampleat a GCCafterevery 5 sprints, 2 weeksare typically provided for developerstowork on pre-approved pet projects.

Infrastructure for Experimentation Investment in New Ideas

Teamshave accessto varioustechnology infrastructure whether spinning upvirtual machinesoraccessto development/testing environments.

Proactive investments are made to promote and nurtureout-of-thebox thinking and ideas that have potential for creating customer impact.

DevelopersRole asArchitects

Developersare encouraged to work on varioussolutions/ platformsto acquire cross-functional knowledge which forms the basisforthe role of an architect.

Encouraging Developers to Work on Support

Experience in support enablesdevelopersto be closerto the enduserof the product/ solution/application.

High-performance GCCs encourage experimentation and to work on di erent stacks

“India'srole within the global talent supply chain iscritical. Recent industryfindingshave highlighted that the Indian GCCshave added over150,000employeesin the last 12 monthsto reach an estimated headcount of 1.6million by the end of FY23. Thistalent can play a critical role in enabling companies to become agile and to adapt to market changes, and drive innovation. Hence, upskilling and reskilling iscrucial forGCCs.”

SRIKANTH IYENGAR

CEOWorkforce DevelopmentupGrad

Authors

Amarjit hasa broad range of experience spanning CIO advisory, software engineering and delivery, and technology management. He has supported and advised various GCCson theirstrategic initiatives, especially in the areasof organization structure and operating models. Amarjit isbased in Pune.

Deepika has15 yearsof experience in IT delivery and marketing SaaS platform. Deepika supportsGCCsby overseeing implementation of complex transformation programs, including GCC go to market initiatives. Deepika isbased in Shimla.

Sathish played an integral role in the inception and expansion of development centerfocused on applicationsand support at Motorola India. Overthe course of ten years, he oversaw the transition processand led the knowledge transferfrom the organization'sheadquarters. Thisencompassed the creation of teamsand successful project delivery. More recently, Sathish hasbeen involved in managing and overseeing implementation of large IT programs. Sathish isbased in Bangalore.

Sridhar’sjourney with global delivery/ capability centersbegan in 1996with Motorola in Bangalore. Subsequently asproduct engineering lead at Oracle in the Bay Area, Sridharwasinvolved in knowledge transition to Oracle India Development Center. Forthe past 15 years, Sridharhassupported variousenterpriseswith strategy, transformation and improvement of theirglobal delivery/ capability centers. Sridharisbased in London and Hyderabad.

Amarjit Singh

Sridhar Vedala

Sathish Nanu

Deepika Singh

We support enterprises realize substantial business value from their Global Capability Centers and Innovation Hubs by helping them with strategy, transformation, performance improvement and alignment of teams.

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