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Globalization and Global Capability Centers: Trends and Impacts on the Software Industry

Global Capability Center April 3, 2023
Globalization and Global Capability Centers: Trends and Impacts on the Software Industry
Kishor Venkatesh R

Content Developer


A deteriorating macroeconomic environment is compelling the software and technology industry to look for cost-effective operational models.

  • CFOs seek to reduce spending across functions driven by limited budgets and the bid to move from capex to opex.
  • Organizations need to maintain the pace of innovation and cost-effectively derive more value from limited talent.
  • Setting up GCCs is the top-of-mind priority for software and tech companies globally to sustain at lower costs than outsourcing.

  • IT and software consulting industry already account for 23% of the total revenue generated through GCCs, the highest among all the sectors.
  • Software GCCs use talent intelligence to scout for talent, analyze costs, study talent pipeline and supply, analyze talent ecosystem, and assess talent hotspots.
  • Tech companies target setting up GCC in Bengaluru to leverage a robust ecosystem and provide innovation excellence and digital transformation.
  • Download the report.

    Global Capability Centers (GCCs) are offshore or nearshore centers operated by a parent company in a different country. They provide R&D, IT services, engineering, and business services. 

    In the past few years, GCCs have evolved and moved up the value chain as a center of excellence. They perform various tasks, including automation, innovation, and analytics, and develop advanced digital competencies for the parent organization. 

    The rise in GCCs stemmed from globalization. Technology and software companies have become more adept at navigating the challenges of globalization and have used GCCs to stay competitive. 

    Tech companies like Google, Apple, Amazon, and Microsoft have leveraged globalization and have established a global presence, with operations in multiple countries. They have used their global reach to develop new products and services to meet global customer demands. 

    Overview of Software GCCs 

    GCCs have become popular in the software industry due to software development’s highly collaborative and knowledge-intensive nature. 

    Due to the nature of software development, the GCC model fits the software industry exceptionally well. Software development is a highly collaborative, knowledge-intensive endeavor that necessitates a skilled and knowledgeable workforce. 

    1. The ability to control and manage the entire software development lifecycle, from conception to delivery, enables software companies to maintain complete control over their intellectual property and ensure that their products and services adhere to the highest quality and security standards. 
    2. They provide software companies with a committed and highly skilled workforce that can work closely with the parent company to develop new products and services that meet the demands of the global market. 
    3. As customer support is a key differentiator, GCCs can provide global support around-the-clock. With GICs located in different time zones, software companies can guarantee their customers prompt and effective support regardless of their location. 

    GCCs, established in countries such as India, China, and Eastern Europe, have fostered innovation, efficiency, and competitiveness among their parent companies. 

    The below infographic shows how a GCC is beneficial to large businesses:

    India is Emerging as the GCC Hub for the Tech Industry 

    Software and technology companies are establishing GCCs to access a skilled talent pool and gain cost benefits by leveraging lower labor costs in India. Let us learn why India has become a GCC hub: 

    1. Home to large corporations – Some of the world’s largest tech companies, like Microsoft, IBM, Oracle, and Google, have established their GCCs in India, capitalizing on the talent pool and the affordability of developing innovative software solutions. 

    Many global startups follow their lead and establish their GCCs in India. 

    For instance, Twilio’s new India GCC is developing and scaling the company’s cloud communication products and services, including Voice, SMS, Video, and Chat. VMware is responding to the demand for mobile and cloud solutions and is focusing on product innovation and engineering. 

    2. The emergence of tech hubs – India has witnessed the emergence of tech hubs in Bangalore, Hyderabad, Pune, and Chennai, attracting many companies. These hubs have world-class infrastructure and supportive government policies favorable for ecosystem growth. 

    3. Growth of startup ecosystem – India has seen significant growth in the start-up ecosystem, with several start-ups gaining recognition for innovative solutions. This has led to new GCCs focused on innovation, R&D, and product development. 

    4. Growing demand for digital transformation – India’s GCC was able to answer the call to accelerate digital transformation, with companies looking to develop and deploy new innovative digital solutions quickly and cost-effectively. 

    5. The forefront of new technology – Automated business functions and processes, cloud conversions, data engineering, artificial intelligence, blockchain, and machine learning is now at the forefront. India has a growing talent pool for these skills. 

    Big data and the cloud are the most adopted technologies by software GCCs in India, followed by cybersecurity, enterprise resource planning, enterprise mobility, and digital transformation. 

    6. Possibilities of strategic ecosystem partnerships – GCCs leverage smart and beneficial partnerships with start-ups to develop new business models and foster innovation, contribute to nation-building by lending technical expertise to public organizations, and encourage academic study of emerging technologies. 

    Advancement of GCC Talent 

    The automation-driven transformation has made it imperative to create a future-ready workforce aligned with fluctuating customer needs. 

    As GCCs are adopting new technologies and leveraging the thriving ecosystem, immediate action is required in three areas to address talent needs in the workplace: 

    • upskilling, reskilling, and talent mobility; 
    • building in-house expertise and skills; 
    • and offering new, challenging roles. 

    Additionally, India will assume a larger proportion of global roles and metrics. GCCs must be strategic about utilizing India’s young tech talent on a global scale. 

    Draup conducted a detailed analysis of the global capability center trend globally. Its report has key talent insights for emerging GCC locations, especially in India. 

    The report covers why India is a favorable destination for GCCs, set up and talent strategies to expand GCCs, and talent intelligence on GCC hotspots of various Indian cities, including talent hotspot analysis, service provider analysis, and key focus areas. 

    Draup for Talent helps talent management analyze millions of data points to hire candidates. It gathers actionable insights into candidates’ skills and experience to enable data-driven recruitment decisions.

    Lead the future with talent intelligence. Get in touch with us today.