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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


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

  • CFOs seek to reduce spending across functions driven by limited budgets and a bid to move from capex to opex.
  • Organizations must maintain the pace of innovation and cost-effectively derive more value from limited talent.

  • Software firms worldwide prioritize setting up GCCs over outsourcing to lower costs.

  • Software consultancy GCCs generate 23% of the income, the highest of any sector.
  • Software GCCs use talent intelligence to scout for talent, analyze costs, study talent pipeline and supply, analyze talent ecosystem, and assess talent hotspots.
  • Download the report for more insights.

    Global Capability Centers (GCCs) are offshore or nearshore centers that provide R&D, IT services, engineering, and business services to the parent company. 

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

    The rise of GCCs stemmed from globalization. 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 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 

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

    1. The ability to control the software development lifecycle enables companies to control intellectual property and adhere to their products and services’ quality and security standards. 
    2. They provide companies with a highly skilled workforce 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 effective support to global customers with prompt responses. 

    GCCs in India, China, and Eastern Europe have fostered innovation, efficiency, and competitiveness for 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 companies are establishing GCCs in India to access its inexpensive but skilled talent pool and gain cost benefits. 

    Let us learn why India has become a GCC hub: 

    1. Home to large corporationsMicrosoft, IBM, Oracle, and Google have already set up their GCCs in India to capitalize on the talent pool and the affordability of developing innovative software solutions. 

    Many global startups have followed their lead and set up their GCCs in India. 

    For instance,

    Twilio’s new India GCC is scaling the company’s cloud communication products and services, including Voice, SMS, Video, and Chat. 

    VMware’s GCC is responding to the demand for mobile and cloud solutions and focusing on product innovation and engineering.

    2. The emergence of tech hubsIndia has seen tech hubs emerge in Bangalore, Hyderabad, Pune, and Chennai. With world-class infrastructure and supportive government policies favorable for ecosystem growth, they attract companies. 

    3. Growth of the startup ecosystem India has seen significant growth in the start-up ecosystem due to recognition for their innovative solutions. This has resulted in more companies setting up GCCs focused on innovation, R&D, and product development. 

    4. Growing demand for digital transformation India’s GCCs were able to accelerate digital transformation, and help companies 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. 

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

    6. Possibilities of strategic ecosystem partnerships GCCs partner with start-ups to develop new business models, foster innovation, and lend technical expertise to public organizations and academic studies. 

    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 adopt new technologies and leverage 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 using India’s young tech talent on a global scale. 

    Draup for Talent assists workforce planning in the GCC by analyzing millions of data points for candidate hiring. It provides actionable insights into candidates’ skills and experiences, facilitating data-driven recruitment decisions tailored to the region’s specific needs. 

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

    The report covers why India is a favorable destination for GCCs and talent strategies to expand GCCs. It provides talent intelligence on GCC hotspots, service providers, and their focus areas. 

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