Why MNC Executives Need to Look Beyond the Hype Around Global Capability Centers

NEW YORK, Aug. 12, 2025 — In the last over one-decade, Global Capability Centers, or GCCs, have projected to have the most powerful transformative potential, leaving a strong global footprint.

Top executives of multinational companies now need to realize that while GCCs have offered great opportunities, there are also huge challenges associated with them.

The mushrooming growth of GCCs is witnessing an all-time high popularity. From being at the center stage at World Economic Forum to Government of India earmarking a special budget, GCCs have arrived in the true sense.

Notably, a sizeable number of GCCs, during the last three to five years have been set up by mid-sized companies and are micro/nano centers with less than 100 Full-Time-Equivalents (FTEs).

Globally, there is a strong buzz that while a rosy picture of GCCs is being painted, is there any critical analysis of this model. Looking at GCCs through a more practical prism, should in no ways discourage executives from setting up these centers.

However, it becomes imminent that executives evaluate the entire process of GCCs in order to ensure they do it for the right reasons and in the right manner.

GCC Nuances Executives Should Keep in Mind

GCC via-a-vis Vendor Management Challenge: The management approach to be adopted for GCC is quite different. The fundamental managing of a GCC varies from managing an outsourced vendor.

Both the models have performance metrics but the enforcement mechanism differs. The concept of penalizing one’s own entity is non-existent.  The focus should rather be on building shared purpose, alignment, and value creation.

Partner as Compared to Servant Mentality: Many organizations find it difficult with the transition from looking at GCCs as transactional service providers to true strategic partners. If Human Quotient (HQ) leadership continues to treat the GCC as a back-office rather than an integrated business function, its potential remains untapped.

Autonomy and Alignment Balance: In view of the widespread presence of GCCs, there is a great need to empower them with powers for decision-making while maintaining alignment with enterprise-wide objectives. Lack of clarity in terms of strategic intent leads to an imbalance on both sides. While GCCs feel underutilized, the headquarter leadership sees a limited Return on Investment (ROI).

What are the Leadership and Talent Challenges?

An operations model that creates an overdependence on leadership based in headquarters is a hurdle for local decision-making, which slows down agility.

While there is no dearth of experienced talent pool in India but human resource is not of the same quality in all offshore locations, especially when with more than 300 new GCC are set up each year. Lack of desired human capital not only impacts the ability to find the right leadership but also impacts the ability to retain and grow strong middle-level leadership talent.

Some GCCs are confronted by unclear mandates, that pave way to conflicts with business units. A disconnect between GCC leaders and their Chief Experience Officers (CXO’s) perspective on their role and the value of GCC is beyond expectations and causes frustration at both ends.

While large talent polls and a rich demographic dividend have been boasted with regard to GCCs, there are several areas of scarcity in niche skills and task-ready talent in the market.

There is a tendency that companies overestimate the availability of skilled professionals, causing hiring delays and unplanned training costs.

The hubs of GCCs which attract many companies India, Poland, or the Philippines, due to their lower labor costs. In reality, these are highly and increasingly competitive markets that experience high attrition rates, sometimes exceeding 15 percent annually in tech roles and even higher for operations roles.

In a limited talent pool, when companies scramble to hire the best professionals, pay packages skyrocket diluting the cost advantages.

There is a huge challenge for GCCs to have a right balance between integrating with the global culture and respecting local workplace dynamics. Ignoring this can cause disengagement, drop in productivity, and a potential threat to reputation.

GCC Boom and Influences

Market research reveals that GBS/GCC’s brand perception is volatile and requires continuous readjustments. Besides, companies also need to be wary of the erosion of cost advantages in three to five years of setting up, mostly due to spending on real estate, compliance, cybersecurity, and operational inefficiencies.

The lack of investment in capability building, reduces GCCs as low-value cost centers instead of innovation hubs.

GCCs which deal with sensitive customer data face huge risks of exposure if security is not prioritized.

While automation and AI reduces costs, excessive reliance without governance can result in flawed decision-making and customer dissatisfaction.

A compliance with multiple regulatory frameworks across different jurisdictions is also a challenge for GCCs. The inability to meet compliance requirements can result in financial penalties, operational disruptions, and reputational damage.

This also applies for taxation related policies as many countries have taxation sops to woo GCCs, which could be revised abruptly without any prior notice. 

Global capability centers can deliver real impact, but only when leaders focus on practical outcomes and address operational realities.

Inputs from Saqib Malik

Editing by David Ryder