Global Capability Centers (GCCs) have traditionally been associated with labor arbitrage, reducing costs by leveraging talent in lower-cost locations. However, this is just the tip of the iceberg. The real value of GCCs is unlocked through optimization, centralization, and technology adoption, transforming them into strategic assets that drive business growth and innovation.

The new-age GCCs are the centers of innovation, fostering ‘lower-cost innovations’ by leveraging access to a highly skilled workforce, next-gen technology, and a supportive government ecosystem. With a mix of talent, digital capabilities, and policy-driven incentives, these centers are becoming key drivers of enterprise-wide transformation far beyond cost savings.

Despite the increasing number of GCCs, there is market apprehension that these centers are solely about insourcing. In reality, modern GCCs are about capability building—leveraging the best of both insourcing and outsourcing while fostering a broader ecosystem of technology, services, and expertise.

From Transaction Processing to Strategic Value Creation

Traditionally, GCCs were focused on transaction processing and non-core roles, but the game's rules have changed. Today, GCCs are deeply embedded in core business functions, such as supply chain, playing a pivotal role in organizational transformation. GCCs are shifting from being narrowly focused on transactional and project-based tasks, such as accounts payable, to offering more comprehensive, end-to-end services and solutions, with a more strategic approach.

Moreover, GCCs are not just execution hubs but are becoming innovation centers, driving digitalization and automation in business-critical areas. The shift is evident in the rise of technology-enabled roles within GCCs, leveraging AI/ML, data science, and analytics to optimize core processes.

As GCCs mature, they are continuing to transition to offering end-to-end services that prioritize not only cost, but increasingly service quality, user experience, and business outcomes. Throughout this change, outsourced service vendors will play an increasingly crucial role in the ecosystem, adding value not only by handling high-volume, low-value tasks but also by continuing to take ownership of processes and transforming them with the optimal application of next-gen technology. This continuing shift will empower GCCs to concentrate on higher-value initiatives that foster innovation, efficiency, and competitive advantage, while also enabling strategic talent access and driving technological progress.

The Evolution of GCCs: From Sourcing to Ecosystem Orchestration

For years, businesses have debated outsourcing and insourcing. The future, however, lies in ‘ecosystem orchestration’, an approach that enables organizations to evolve into orchestrators of dynamic ecosystems that integrate technology, partnerships, and strategic capabilities.

Rather than being confined to insourcing or outsourcing, GCCs are a value multiplier, leveraging a network of service providers, technology partners, and innovation hubs to drive enterprise-wide transformation.

As organizations mature their GCC models, the focus is shifting towards capability building, co-creation, and business impact. High-volume transactional tasks are progressively being automated or handled through consumption- and outcome-based models. Outsourcing vendors can enhance synergies in these areas by providing industry expertise and technological capabilities. By blending internal expertise with external collaborations, GCCs foster agility, innovation, and scalability, ensuring they serve as strategic enablers rather than just operational centers.

This shift from a linear sourcing model to a multidimensional ecosystem redefines the role of GCCs as innovation and digitalization engines. GCCs are not merely about retaining strategic control over core functions but about improving agility, scalability, customer experience (CX), and user experience (UX).

A prime example of this multidimensional ecosystem is Best Buy’s recent announcement to establish a global technology capability center in Bengaluru, India. This center aims to provide Best Buy with access to top-tier tech talent and drive digital transformation in areas like customer relationships, omnichannel solutions, e-commerce, and supply chain management, with a particular emphasis on mobile and AI platforms. The GCC will bring together a diverse team, including digital strategists, product managers, designers, engineers, infrastructure engineers, and operations teams.

In collaboration with its GCC team, Best Buy also intends to leverage the capabilities of its existing partners, including TCS, Microsoft, Accenture, Google, and Amazon, thus creating an ecosystem that extends beyond traditional insourcing and outsourcing.

GCCs: Guinea Pigs of Digital Transformation

The latest wave of GCC growth is driven by technology-led functions, making them integral to the digital transformation agenda. However, what truly sets them apart is their ability to embrace a culture of quick experimentation, rapid iteration, and learning from failures to accelerate innovation. Rather than fearing failure, GCCs are becoming test beds for new technologies and digital strategies, refining processes at an unprecedented pace.

By leveraging AI/ML and data science, GCCs enhance decision-making, automate processes, and use predictive analytics to drive better business outcomes. As enterprises transition to hybrid and multi-cloud environments, GCCs strengthen cloud capabilities and cybersecurity frameworks to ensure resilience and security. In areas like digital commerce and supply chain analytics, GCCs are pioneering e-commerce innovations and optimizing supply chain operations through real-time data insights and automation. This mindset of continuous learning and agility ensures that GCCs remain at the forefront of enterprise-wide digital transformation, setting new benchmarks for operational excellence and technological advancement.

The Future of GCCs: At the Forefront of Innovation

As GCCs evolve, they become pivotal drivers of global innovation, expanding far beyond their original cost-centric models. These centers now lead enterprise-wide digital transformation by embedding AI, cloud computing, and automation into core business functions. The focus is shifting from operational efficiency to high-value strategic roles in research & development, digital marketing, customer experience enhancement, supply chain visibility, and finance.

Many of these GCCs have also become a talent pipeline for global roles and leadership positions that are more receptive to working with GCCs and leveraging and honing their true scale and capability. By placing digital-first thinking at their core, GCCs are shaping the future of enterprise transformation, ensuring long-term strategic growth and global competitiveness.

Conclusion: GCCs as a Growth Engine for Enterprises

GCCs are no longer just about back-office operations or cost savings. They are evolving into centers of excellence, driving business agility, innovation, and long-term value. By embracing an ‘ecosystem orchestration’ approach, companies can strike the right balance across service providers, technology partners, and innovation hubs, ensuring their GCCs remain innovation hubs rather than just operational units.

Organizations must recognize GCCs as strategic enablers, not just cost arbitrage centers, and invest in their growth as digital-first, data-driven, and technology-enabled business units.