The landscape of Global Capability Centers (GCCs) has undergone a transformative journey, particularly in the banking sector, shaping their functions in the contemporary and forthcoming contexts. The ascent of GCCs from modest service centers has been a pivotal aspect of this evolution. The global response to pandemic-induced lockdowns propelled businesses into a rapid digitization race, making virtual work a necessity. GCCs played a crucial role at every stage of this transformation, rendering the traditional location-based model obsolete.

During the pandemic, GCCs emerged as essential contributors to the resilience agendas of their parent organizations, transcending business units and geographic locations. Their ability to maintain service levels in volatile markets has led to a substantial increase in their growth and significance. Over the years, driven by government incentives, countries such as India, the Philippines, South America, and parts of Europe have witnessed a proliferation of GCCs across various sectors, with India hosting more than 55 percent of the globally established GCCs.

GCCs have evolved into Centers of Excellence (CoEs), transitioning from cost-arbitrage centers overseeing support functions to becoming hubs for automation and innovation. Going beyond excellence, they are now positioned as pivotal components for the success of their parent organizations, emphasizing leadership, innovation, and knowledge-based capabilities.

Several common themes have emerged, necessitating a shift in perspective both at the head-office and GCC levels:

• Head-office Sponsorship: Solid visibility and strong sponsorship from the head office, coupled with a belief in the GCC and a strategic business outlook, are imperative for pushing boundaries and co-creating the enterprise’s future.
• Decision-Making Empowerment: Granting genuine decision-making rights to GCCs is crucial. Defining the scope of actions, especially whether the GCC should merely respond to instructions or aspire to enhance value and drive organizational transformation, requires careful consideration. Empowerment should be accompanied by accountability for the GCC leadership.
• Collaborative Approach with Technology and Operations: Achieving executive sponsorship and enabling GCCs to contribute to enterprise priorities requires a broader approach that spans business, technology, and operating models. Embracing new capabilities, utilizing artificial intelligence and machine learning, and introducing meaningful business initiatives are essential.

To further reposition GCCs, organizations, especially in the financial sector, are entering an era of borderless global teams. The blurred lines between GCCs and headquarters present opportunities for GCCs to help in discovering new possibilities, devising strategic plans to adapt to emerging business trends, and building new capabilities.

A cultural shift is necessary for GCC leadership, emphasizing an “enterprise-first, GCC-second” approach. Balancing flexibility for GCCs with adherence to the business agenda ensures alignment with business units’ expectations and demands.

Addressing capability, credibility, and consistency gaps is vital for the continued success of GCCs:

• Capability Gap: GCCs must keep pace with the evolving banking industry by developing necessary capabilities, taking full ownership and accountability for building end-to-end digital platforms, and implementing transformative initiatives.
• Credibility Gap: Acknowledging room for improvement in adding value and building capabilities is crucial. Poor risk-management outcomes, reactive people-management policies, or a lack of strategic direction can impact credibility.
• Consistency Gap: Recognizing the need for consistent performance quality is essential. Volatility in service standards often results from inconsistent practices and fragmented processes. Automation and innovation should be strategic, consistent, and industrial-strength.

Looking ahead, GCCs are poised to drive digital evolution. According to a report by Nasscom India, the market size of GCCs is expected to grow from $46 billion in 2023 to $60 billion by 2025. The forecast indicates a rise in the number of GCCs in India to 1,900 by 2025, with financial services accounting for 35 percent. The employment in GCCs is expected to reach over 4.5 million by 2030, indicating their pivotal role in shaping the future of work.