In today's fast-paced and interconnected world, businesses constantly seek innovative ways to enhance their global capabilities. Global Capability Centers (GCCs), shared service centers, better known as offshore centers, have long played a pivotal role in this quest for efficiency and effectiveness. As organizations increasingly embrace digital transformation, artificial intelligence (AI) emerges as a powerful technology to tap into levels of productivity, innovation, and collaboration unheard of before. We explore the transformative potential of AI in GCCs in driving AI-driven process digitization, intelligence, and transformation.
Why the focus on Global Capability Centers?
The worldwide Shared Services, Global Business Services (GBS), and the GCC market have matured with over 10,000 centers. Traditionally, GCCs were established to centralize and streamline business functions, such as finance, IT, and customer support, in geographically advantageous locations. However, the market flux today demands more than just cost-effective outsourcing. The role of GCCs’ role within their global parent firms is rising up the value chain and becoming integral to the growth strategy by turning into strategic hubs for innovation, process optimization, and digital excellence.
GCCs – The Sandbox for Digital Transformation
While cost arbitrage is no longer the primary motivation, a blend of talent, a thriving digital ecosystem and a digitally adept industry and customer base is attracting companies to the value of cost-effective captives over outsourcing. According to Zinnov, by 2030, there will be as many as 20,000 global leaders based out of India, spearheading innovation and strategy for global corporations. Presently, over 42% of global company headquarters manage end-to-end solutions through their India-based GCCs, showing a notable increase from just a decade ago.
As industries undergo transformation propelled by technologies like Artificial Intelligence, Machine Learning, and Intelligent Automation, global companies recognize the potential of GCCs and GBS to spearhead digital transformation initiatives. Parent companies strategically choose to outsource less critical tasks while retaining more transformational aspects in the in-house captive centers. This approach ensures enhanced quality control and safeguards intellectual property, optimizing the overall impact of digital transformation efforts.
Challenges Faced by Modern GCCs
Globalization has closely integrated GCCs as vital players into the foundation of the modern business environment and has evolved to become strategic partners in driving business transformation and innovation. However, maneuvering through this complex and ever-changing landscape poses its own set of challenges, including:
- Complex Delivery Models: Multi-shore delivery models that are a mix of onshore, nearshore, and offshore, are used by large-scale organizations seeking cost efficiencies but can lead to several complexities including team collaboration, cultural differences, data security & compliances, etc.
- Talent War: Most GCCs encounter challenges in both attracting and retaining qualified personnel, given the increasing demand for specialized talents. Additionally, they grapple with cost pressures, as the initial cost benefits they offer may be compromised by rising operating costs.
- Compliance & Regulatory hurdles: The regulatory environments in a few countries can be challenging due to the lack of a cohesive regulatory framework which can result in operational delays and increased compliance costs. Managing and mitigating risks associated with data protection, privacy, and compliance can be a challenge.
- Barriers to Innovation: Maintaining a pace of innovation by integrating cutting-edge technologies and fighting and managing the cybersecurity menace.
- Cultural Integration: Leading across different time zones, integrating cultures, and building a unique team.
- Benchmark Value: Align compensation & value by industry standards; and global trends and demonstrate outcomes to stay ahead of the curve.
Can there truly be transformation without AI?
It would be an understatement to say AI plays a crucial role in digital transformation, providing valuable benefits in today's highly competitive business environment. Its contribution to process optimization and insights extraction makes it hard to imagine embarking on a digital transformation journey without incorporating AI.
AstraZeneca's Innovation and Technology Centre in Chennai utilizes a virtual reality (VR) headset and XR (AR/VR) tech to offer an immersive, digital replica of their drug production facility in Sweden. Developed by their captive unit in India, this virtual training module significantly reduces waste and time, providing cost savings by enabling pharmaceutical operators to learn and practice without the need for physical drugs.
Rakuten Pay, Japan's counterpart to Google Pay, is the result of the Bengaluru Global Capability Centre (GCC) of the Rakuten Group. This center not only developed the platform but also oversaw its entire product, including UX, back-end operations, and strategic management.
GCCs have actively engaged with innovative next-gen technologies, consistently exploring and creatively applying these advancements to keep their global parent companies ahead in the competitive landscape, delivering enhanced value to customers. Positioned at the forefront of technological innovation, they continually push the limits of what can be achieved. Today, GCCs are actively harnessing emerging technologies such as AI, ML, and NLP technologies. These advancements, ranging from conversational chatbots in improving customer service to using predictive maintenance in enhancing manufacturing, are subtly transforming how GCCs contribute to their parent organizations' operations.
AI-driven platforms such as Epiplex facilitate structured knowledge transfer, mitigating the risk of information loss during transitions. It expedites onboarding for new employees, enabling quick adaptation to the system and seamless integration into full productivity. The digital interactive intelligence platform supports global collaboration, streamlining cross-departmental processes across diverse offices, and supplements knowledge-based support with e-learning materials for ongoing training and skill development, preventing common migration issues.
As the use of AI becomes mainstream and offers a competitive advantage to GCCs, platforms like Epiplex can help discover untapped possibilities of growth, sustainability, and quality.