Are you realizing the t p rue otential of your Global Capability Center (GCC)? Strategies and actions that are enabling high-performance GCCs to drive business value and growth Knowledge Partner
High-performance GCCs are strategic hubs that are integrated with their parent organizations. Their teams are empowered and enabled to deliver significantly to their overall strategy.
Introduction Global Capability Center (GCC) has been a strategic model adopted by companies to leverage India for more than two decades. In spite of that, only a few companies are able to truly realize the true potential of their GCCs. 03 With technology at the heart of transformation, companies are building technology foundation by increasingly adopting the GCC model to tap into the global talent. One question we frequently encounter, during our engagements with clients, is: ‘how do we realize the true potential of our GCC?’. There is no one silver bullet. Clarity of strategy, leadership sponsorship, operating model, organization culture, empowered and integrated teams and many other factors form critical elements to getting this right. In this report, we provide insights into how valuecentric companies are realizing the true potential of their GCCs.
Three categories of GCCs Based on the outcomes delivered, GCCs can be categorized into 3 distinct categories. 04 These GCCs deliver significant cost optimization by supporting various activities of their parent’s IT or engineering organizations. Optimizers These GCCs deliver value by taking considerable ownership and accountability for both back-end and business critical systems, as well as platforms/products. Creators These GCCs deliver value by generating new ideas/business models/o erings to transform their business and sometimes disrupting their industry. Innovators
05 How are the three GCC categories di erent from each other? • Junior to senior-level engineers and non-engineers with domain expertise • Graduates hired from tier-1 and tier-2 schools Deliver value creation Reasonable to significant ownership and accountability with GCC leaders • Junior to senior-level engineers and non-engineers with domain expertise • Talent with start-up experience • Graduates hired from tier-1 and tier-2 schools • PhDs with certain specializations Drive innovation High level of ownership and accountability with GCC leaders Low 11 - 13% High (including RSUs/stock options) • Junior to mid-level engineers • Engineering graduates hired from tier-2 and tier-3 schools Cost savings through access to lower cost resources High over 20% - Low to High Key areas of di erence Optimizers Creators Innovators Ownership and Accountability Primary Driver Talent Hired Attrition Levels Compensation Ownership and decision making rests with the parent organization Low 12 – 17% High (including RSUs/stock options)
What nature of work is delivered from di erent categories of GCCs? 06 Optimizers Creators • Software development • Applications/Product support • Data engineering/ analytics • Product maintenance and bug fixing • DevOps/Operations • UX/UI • Business processes • New product/platform/ applications ideas, POCs and design Innovators • Applications/Platform/ Product ownership • Applications transformation /major product/platform feature releases • Applications/Product/ Platform roadmap ownership • Applications/Platform/ Product ownership architecture • Product management • Complex AI/ML based solutions * Creators and Innovators deliver work in addition to those o ered by Optimizers
07 GCCs operating as Optimizers find it di cult to move up the value chain without going through an enormous transformation that encompasses on a robust strategy, organizational mindset, leadership, operating model, culture and other factors. Having a clearly articulated vision and purpose pre-empts confusion and lack of alignment across organization. For example, senior management’s intent for delivering high value from GCC may be interpreted by rest of the organization as strategy for delivery of lower cost from GCC. Changing strategy mid-way is tough: Alignment across the organization: Why clarity of vision and purpose that drives longterm GCC strategy is essential?
08 The following are common characteristics of these GCCs An organization structure that enables strategic alignment Role of the GCC head as enabler of continuous evolution and transformation GCC teams empowered with high level of ownership and accountability A culture of customer centricity Ability to attract, nurture, and retain high-performing talent 1 2345 High-performance GCCs clearly articulate their vision and there is organizational alignment with the vision
‘ 09 DIETER GERDEMANN Partner & Managing Director Kearney “Defining the core purpose and strategy for global innovation/ capability centers is essential as they guide the operating model and the choice of leadership, while shaping the organization culture. Organizations will find it di cult to drive innovation if they build their centers with cost optimization objective.” ‘
10 After a successful trial phase, many business units at parent organization start transferring greater chunks of work to GCC. With GCC delivery increasing, business units prefer to have vertically integrated dedicated teams led by dedicated leaders. Trial Phase Growth Phase During this phase the vertical integration of individual business unit teams is further strengthened and each business unit at GCC more or less works autonomously. Mature Phase During this phase, companies test waters and learn to work in a di erent mode with teams at GCCs. The teams at the parent organization have complete ownership of work while the GCC teams learn by shadowing them. Activities like quality assurance or support are chosen for the trial phase. The GCC acts as a common pool of talent, delivering work for di erent business units at the parent organization while providing enhanced productivity due to 24/7 support and time zone gains. There are three distinct phases of GCC evolution on their maturity journey An organization structure that enables strategic alignment 1
11 In the trial phase GCC is considered as one business unit reporting into the GCC head, who interfaces with various business stakeholders at the parent organization. Horizontal Structure: In the growth phase the horizontal organization starts splitting into vertical organizations as some business units prefer to have dedicated teams and leaders. Hybrid Structure: In the mature phase each team at GCC is integrated with their respective teams at parent organization. Vertical Structure: The organization structure evolution of high-performance GCCs An organization structure that enables strategic alignment 1
12 The organization structure evolution of high-performance GCCs An organization structure that enables strategic alignment Benefits Challenges Phase I: Trial Phase II: Growth Phase III: Mature Horizontal Organization Structure Hybrid Organization Structure Vertical Organization Structure • One trusted leader as single point of contact for business stakeholders at parent organization • Ability to test the model • Easy to launch • Key business units have dedicated vertically integrated teams at GCC and are able to operate independently • Highly productive vertically integrated teams able to operate independently and pursue objectives relevant for their groups • Issues related to span of control • Lower productivity as guidance and decision support from leader is required by teams • Risk of silo mentality needs to be managed and addressed • Business unit focused silo mentality • Decision making bottlenecks persist 1
‘ 13 ASHISH SINHA MD APAC & MEA - Epsilon “GCC leaders must navigate multiple complexities that are unique to this model. To ensure strategic growth, they need to enable continuous innovation while building trust with global leaders. Unlocking value by tapping into a global talent pool is core to the GCC leaders’ role, and ensuring accountability and ownership are developed into the cultural fabric.” ‘
14 The role of the GCC head (or country/ regional head) is ever-evolving and critical to accelerate the GCC’s transformation. Rather than operationally manage delivery, GCC head needs to play the role of facilitator and enabler for individual business unit heads who are responsible for delivery. The GCC head brings together teams by translating overall business objectives and goals into a common purpose for teams. The GCC head also plays an important role as the face of the company and in promoting the brand while engaging with the broader ecosystem. Role of the GCC head as enabler of continuous transformation 2
15 The responsibility of delivery management is transferred from the GCC head to business unit leads, however, there is still considerable level of involvement in decision making. There is greater focus on facilitating growth and supporting various business units, aligning GCC with business goals, creating a brand and hiring talent. The role of the country head is to facilitate setting-up GCC infrastructure, interface with stakeholders at parent organization, hire talent, oversee delivery and manage operations. The GCC head’s role evolves into aligning the GCC with overall business objectives, nurturing GCC culture, positioning GCC and creating a brand in the market. Phase I: Trial Phase II: Growth Phase III: Mature At high-performance GCC the role of the GCC head continuously evolves Role of the GCC head as enabler of continuous transformation 2
‘ 16 SEBASTIAN WERNER CEO BinaryCore “Value-centric companies enable their teams at global centers by providing business, customer and product/ applications context. Furthermore, teams are empowered to operate autonomously and make decisions to solve customer problems. Cloud technologies, microservices architecture, DevOps, etc. are the building blocks that enable and empower teams.” ‘
17 • Deep understanding of the domain • Understanding of customer needs and expectations • Ability to compare and contrast the with competing products • Product/solution future vision and roadmap • Architecture evolution What does ownership entail • Responsibility for delivering agreed results and performance • Addressing any customer or team escalations • Shared business targets/joint leadership for P&L • Acquisition of skills/capabilities • Product/solution performance/quality What does accountability entail GCC teams empowered with high level of ownership and accountability High-performance GCCs empower teams with accountability which in turn enables the teams to take more ownership 3
18 Ownership of customer solutions/products Ownership of specific microservices Ownership of competency Ownership of product line Examples of approaches adopted by various companies to vest ownership in India. Example - ways of dividing up work between the parent organization and GCC
There is parity of responsibility and roles between parent organization and GCC 19 Some critical roles established at GCC, with some degree of ownership and decision making. Teams globally report to the product/ solution owner. The GCC is self-su cient and contributes to specific customer solution while taking ownership and accountability. Trial Phase Growth Phase Mature Phase Product Conceptualization Product Management Architecture Design and Development Testing Support Development Testing Support India Parent / US Roles and responsibility split leans towards parent organization Development Testing Support Development Testing Support Product/solution Conceptualization Product Management Architecture Design and Product/solution Conceptualization Product Management Architecture Design and Development Testing Support Product/solution Conceptualization Product Management Architecture Design and Development Testing Support GCC teams empowered with high level of ownership and accountability 3
20 The accountability spans across a variety of products/applications. Products/applications that are planned for retirement Sunset Products/applications are mature and stable with limited new features being added Mature Products/applications with high potential and strong market demand High Potential/Innovation What kind of products/ applications are GCCs accountable for?
‘ ‘ 21 “A strategic capability center plays a vital role in enabling global enterprises to operate seamlessly, especially during challenging times. Providence India not only o ered its parent organization the 24/7 operations support it needed during the pandemic, but also built core capabilities to accelerate key digital transformation programs, helping Providence enhance productivity and bring care closer to patients. Today, as a healthcare global innovation center, we are building new products and platforms, and providing enterprise services that help US health systems like ours increase operational e ciency, enable more personalized care, and improve patient experience.” GR REDDY Vice President - Enterprise Services Providence India
22 High-performance GCCs believe that customer context is essential for teams to design and deliver solutions that are aligned with solving customer problems Teams are enabled with customer context Teams are enabled to openly deliberate over critical topics and contribute to solutions, processes, operating model and other topics Sta -centric benefits and policies are o ered Platforms to share new ideas opinions and Focus on team well-being/flexible work environment By democratizing decision-making, high-performance GCCs tap into organization-wide creativity and stimulate productivity GCC teams are empowered with decision-making within their specific charters A culture of customer-centricity Teams at high-performance GCCs are enabled and empowered 4
23 Product and customer context provided to teams Platforms to share new ideas and opinions Decision making/autonomy within their specific charters Integrated teams and roles Focus on team well being/flexible work environment COMMUNICATION Best Practices A culture of customer-centricity 4
24 • A product management team based at GCC • Open channel of interaction between product managers and engineers • Internal platforms and portals for sharing product/applications vision, knowledge and roadmap • Easy to launch Well-defined formal channels and platforms exist that enable teams at GCCs to share their ideas and opinions Well maintained documentation exists for both functional and technical aspects In addition to standard ones, KPIs that link engineers’ contribution to customer value delivered are measured such as • How many new features were added • How many features were adopted by customers In some cases, customer sponsorship/ accountability is given to leaders at GCC. Knowledge Sharing New Ideas & Opinion Documentation KPIs Customer Sponsorship High-performance GCCs are enabled with customer context and centricity A culture of customer-centricity 4
25 Team Member • New features information • Roadmap information • Customer context and impact Product Knowledge/ Customer Insights Portal • Knowledge • Updates • Questions • Ideas • Opinion Engineering Team Product Manager Sales Access to business and product/service knowledge enables team empowerment Example
Product managers/owners Sales Delivery Product Management • All teams from US and India come together for 2 days on a quarterly basis (typical size of participants is between 170-200) • Planning meet held one day in the US time zone and another in India time zone • Provides extensive insights into broader aspects of product and specific aspect that help in forecasting and sprint planning. • Understanding of business and product vision and goals by all teams • Interactions and communication between various teams • Ascertain commitments, dependencies, risks and opportunities Achievements India Teams US Teams Development Team Support User Stories Customer Insights Q&A Features Roadmap 26 Big Room Planning is another channel to enable teams with business and product/service knowledge Example
27 • For the solutions that GCC is accountable for, GCC leads are empowered to make decisions about product/solution/application roadmap, enhancements, new features etc. • On engineering front there are self-managing scrum teams who are empowered to decide how to achieve objectives High-performance GCCs are empowered to make decisions A culture of customer-centricity 4
Though many companies' vision is to enable this model, only a few have been able to operate in this model. Many companies have product management team, that supports parent organization, based at GCCs. Customers Salespeople Lead PM Model 1 Supported by PM team in India Engineering teams Salespeople Model 2 Engineering teams Global PM teams Management Customers Lead Product Manager in India 28 Product managers based in India: 2 models adopted by GCCs Example
29 A story point completion ratio metric is extensively used to track e ectiveness in estimation, planning, and identify external issues impacting the ratio e ciency. Changes in the squad is assessed for impact on velocity and committed stories • Autonomous and self managed teams • Line management is eliminated Squad lead focuses: • Domain • Innovation beyond backlog • Decides and prioritizes WHAT needs to be done Scrum lead focuses: • How can the stories be delivered e ciently Dedicated agile coach for squad Squad Squad Squad Squad P P P P Chapter Chapter Tribe Lead Agile Coach Tribe Spotify organization model adopted P Product Owner Chapter Lead Pursuing appropriate KPIs and processes ensures customer centricity Example
‘ ‘ 30 RAMKUMAR NARAYANAN VP, Technology and Managing Director VMware “Globally, the common theme across enterprises is cost reduction and increasing productivity. This will come on the back of AI and cloud adoption. India is well poised to take advantage of fuelling this growth as a result of availability of highly skilled talent. As India becomes the hub for product development, talent reskilling and upskilling becomes increasingly important. While we see an exponential increase in innovation and product-based companies, there is an urgent need to bridge the skill gap to scale up the product ecosystem. It would be prudent for educational institutions as well as organizations to develop programs that o er experiential learning in line with market demands, and ensuring that the learning finds applications in the real world. Organizations that foster an environment of constant learning and hands on experience are not only likely to retain talent but also emerge as market leaders than those that don’t.”
High-performance GCCs o er compelling value proposition, that embodies the core ethos of the company that drives talent engagement, attraction and retention. Employee Value Proposition that clearly articulates the promise that GCC makes to current and future employees Compensation that drives performance • Base salary • RSUs/ ESPOs • Bonus • Benefits A culture of global inclusiveness 31 • Scope for creating an impact for customers and business • Responsibility accountability and • Sense of achievement Work itself Ability to attract, nurture, and retain high-performing talent 5
High-performance companies understand aspirations of talent and o er suitable work, environment and benefits Creators Innovators Talent with product/platform/ domain background and typically with computer science degree Talent with product/platform/ domain/start-up background and with computer science degree/PhDs Tier 1 and tier 2 Tier 1 and tier 2 Talent with product/ platform/ domain background and typically with computer science degree Talent with product/platform/ domain/start-up background and with computer science degree/PhDs Accountability and value creation Innovation Background of talent hired Schools hired from Talent motivated by GCC leadership focus Optimizers Talent with experience in IT services industry and predominantly with a non-computer science engineering degree Tier 3 and tier 2 Talent with experience in IT services industry and predominantly with a non-computer science engineering degree People management and driving e ciency 32 Ability to attract, nurture, and retain high-performing talent 5
Overview of key elements of selection criteria Main initiatives for hiring Hiring through referral program Hiring talent from specific type of companies Hiring talent with di erent backgrounds A very well focused graduate hiring program and creating a brand at select schools across India Candidate Vision Clarity of thought and ability to articulate future vision for self Drive and curiosity To learn about new products/platforms, domain, technologies, business strategy, performance etc. Values and Culture Fit Alignment with core organization values and culture Empathy Thinking from customer and end-user perspective Capabilities Capabilities, experience and aptitude for the role 33 High-performance GCCs look beyond tech skills when hiring talent Ability to attract, nurture, and retain high-performing talent 5
Incentivizing developers and leads for performance, innovation and ideas through awards such as Star of the Sprint, etc. Engineering Performance Rewards The best performers are recognized and featured on global platforms and websites and get an opportunity to interact with leaders Encourage teams to publish and organize/participate in relevant tech and domain related events Global Recognition Publications/Events High-performance GCCs o er a variety of rewards and recognition programs 34 Ability to attract, nurture, and retain high-performing talent 5
Opportunities to work at global locations and also medium-term rotation to global locations for business and solution/product knowledge acquisition Global Opportunities A well-defined individual contributor track to attract and retain senior talent who are individual contributors Openness and encouragement to change roles within the organization Individual Contributor Track Role Change Options High-performance GCCs o er opportunities for career progression 35 Ability to attract, nurture, and retain high-performing talent 5
Use for tools such as GitBucket to enable collaboration between engineers Collaboration Tools Demos by various teams on their tasks and how they fit into user stories on a regular basis and brainstorming on various topics The role of scrum masters are rotated amongst teams without a dedicated scrum master Brainstorming Demos and Rotating Role of Scrum Masters High-performance GCCs promote a culture of collaboration and learning Various opportunities are provided to learn new skills and personal development. Learning new skills Ability to attract, nurture, and retain high-performing talent 5 36
Teams have access to various technology infrastructure whether sipping up virtual machines or access to development/testing environments. Time is allocated to each team member for new ideas and innovation For example - at a GCC after every 5 sprints, 2 weeks are typically provided for developers to work on innovative and new ideas. Proactive investments are made to promote and nurture ideas that have potential for creating customer impact. Developers are encouraged to work on various solutions/ platforms to acquire cross-functional knowledge which forms the basis for the role of an architect. Experience in support enables developers to be closer to the enduser of the product/ solution/application. Sprint Management and Time to Experimentation Encouraging Developers to Work on Support Infrastructure for Experimentation Investment in New Ideas Developers Role as Architects 37 High-performance GCCs encourage experimentation and to work on di erent stacks Ability to attract, nurture, and retain high-performing talent 5
‘ 38 SRIKANTH IYENGAR CEO Workforce Development - upGrad “India's role within the global talent supply chain is critical. Recent industry findings have highlighted that the Indian GCCs have added over 150,000 employees in the last 12 months to reach an estimated headcount of 1.6 million by the end of FY23. This talent can play a critical role in enabling companies to become agile and to adapt to market changes, and drive innovation. Hence, upskilling and reskilling is crucial for GCCs.” ‘
39 Amarjit Singh Deepika Singh Sathish Nanu Sridhar Vedala Amarjit has a broad range of experience spanning CIO advisory, software engineering and delivery, and technology management. He has supported and advised various GCCs on their strategic initiatives, especially in the areas of organization structure and operating models. Amarjit is based in Pune. Deepika has 15 years of experience in IT delivery and marketing SaaS platform. Deepika supports GCCs by overseeing implementation of complex transformation programs, including GCC go to market initiatives. Deepika is based in Shimla. Sathish played an integral role in the inception and expansion of development center focused on applications and support at Motorola India. Over the course of ten years, he oversaw the transition process and led the knowledge transfer from the organization's headquarters. This encompassed the creation of teams and successful project delivery. More recently, Sathish has been involved in managing and overseeing implementation of large IT programs. Sathish is based in Bangalore. Sridhar’s journey with global delivery/ capability centers began in 1996 with Motorola in Bangalore. Subsequently as product engineering lead at Oracle in the Bay Area, Sridhar was involved in knowledge transition to Oracle India Development Center. For the past 15 years, Sridhar has supported various enterprises with strategy, transformation and improvement of their global delivery/ capability centers. Sridhar is based in London and Hyderabad. Authors
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