First in a three-part series. 

Introduction

What are Global Capability Centers?

Global Capability Centers (GCCs) are development, testing, and product management offices established in locations with a strong talent pool, time zone advantages, and access to global markets. These centers can be in countries like India, Vietnam, and Eastern European nations, often chosen based on cultural fit and existing employee connections at headquarters. 

For example, GCCs have evolved significantly in India since Texas Instruments pioneered one of the first centers in the early 1980s. Once perceived as cost-saving operational units, GCCs have transformed into strategic hubs for innovation and business growth. Today, they play an essential role in the global economy by integrating technology, talent, and strategy to drive success.

Why?

Simon Sinek’s Golden Circle framework emphasizes the importance of starting with Why—the fundamental purpose that drives an organization. A GCC ensures support availability, local language fluency, and seamless customer experience for global enterprises with customers across different time zones. Additionally, startups benefit from a 24×7 development cycle, where teams across various regions, such as the US and India, work on the same codebase, accelerating development, testing, and frequent product releases.

However, the success of a GCC depends on more than its existence—it requires the right leadership, clear communication of its purpose, and strategic alignment with the parent organization to maximize its value.

The Early Days of GCCs

Initially, GCCs were created to reduce operational costs by offshoring repetitive tasks. The primary focus was efficiency through cost savings. However, as global business needs shifted, so did the role of GCCs. Companies began recognizing their potential for handling strategic initiatives, fostering innovation, and contributing to broader organizational goals.

For example, many early GCCs were limited to handling back-office operations, such as payroll processing or essential IT support. As companies experienced success with these functions, they began experimenting with using GCCs for more advanced roles, such as product development, software engineering, and even customer relationship management. This shift marked the beginning of GCCs’ transformation into catalysts for business strategy.

Drivers of Transformation

Several factors have propelled GCCs into their modern role as innovation hubs:

 

• • Technological Advancements: AI, machine learning, and cloud computing have empowered GCCs to tackle complex challenges and drive digital transformation. For instance, AI-driven predictive analytics allow organizations to proactively identify market trends, optimize supply chains, and enhance customer experiences. Cloud computing enables GCCs to expand their operations seamlessly, providing global teams instant access to critical tools and data, improving collaboration and efficiency.

• • Access to Talent: Regions like India have become hotspots for highly skilled professionals, providing GCCs with a diverse, specialized workforce. Engineers, data scientists, and R&D experts bring cutting-edge expertise, driving innovation within global organizations. The availability of world-class talent at competitive costs has been pivotal in maximizing business value and operational efficiency.

• • Strategic Alignment: Companies now leverage GCCs for operational support and as key players in research and development R&D, customer engagement, and business expansion. By integrating into core business functions, GCCs contribute to high-impact strategic initiatives, directly influencing revenue growth, innovation pipelines, and global competitiveness.

• • Strong Leadership and Strategic Execution: A GCC’s success depends not just on technology and talent but also on leadership that aligns the center with the parent company’s goals. A capable leader fosters innovation, drives collaboration across global teams, and integrates the GCC into the organization’s broader vision. Without the right leadership, even the most well-resourced GCCs can struggle with misalignment, inefficiency, and talent retention issues.

Case Studies in Innovation

Organizations have successfully transitioned their GCCs into centers of innovation. Some have leveraged these hubs to drive advancements in clean energy, smart grid solutions, and AI-driven applications, integrating regional expertise with global business strategies. These examples underscore how GCCs are reshaping industries by delivering high-impact solutions.

One notable example is how certain GCCs have pioneered the development of AI-powered solutions to optimize energy consumption in commercial buildings. By combining local engineering talent with global R&D teams, these GCCs have enabled organizations to achieve significant cost savings while reducing their environmental footprint. Another case highlights how GCCs have been instrumental in creating scalable platforms for e-commerce, allowing businesses to expand their reach and improve customer satisfaction.

My own experience with GCCs

Throughout my career, I have leveraged various GCC models—ranging from outsourcing partnerships to fully established offshore development centers—for both my startups and the companies I have worked with. Below are a few key experiences with further details on the pros and cons of each approach to follow in upcoming articles

 

1. 1. WACS – my first startup in the data warehousing domain for Smart Grid. For this endeavor, we prepared an RFP, got bid responses from Indian companies focussed on outsourced software development, and selected one based on cost, past successful completion of software products, and checking their references. My co-founder and I traveled to India, were stationed at the development office of the vendor, and worked directly with the development and testing staff.

1. 1. Trilliant – Smart Grid company wanted to leverage cost-effective resources to develop a large MDM (meter data management) product. I was a US employee and was charged with creating an ODC (offshore development center) in India. The cost, hiring and retaining employees, and other setup hassles led me to drop the idea of opening a Trilliant captive ODC. Instead, I contracted with a Bangalore-based company that was focused on software product development for US Clients. They provided a team of their employees (I selected them based on my interviews) and had an office in their center. I used to go to work every day and work with this extended team and the consulting charges for the team were billed and paid by Trilliant US.

1. 1. Verdeeco – Verdeeco was my second startup, where our entire engineering team operated remotely across multiple countries. Managing daily standups across time zones was challenging, but we successfully delivered our cloud products on time with frequent customer-driven updates.

1. 1. Xylem – Xylem hired me as an Indian employee, and we were tasked with setting up Xylem’s offshore development center. This included getting an office space, incorporating the company, hiring local employees, and training them to be part of the global Xylem development team.

Each of these GCC models required a different leadership approach. In some cases, hands-on involvement was necessary, such as when I traveled to India to work directly with the development teams. In other cases, success depended on choosing the right local leadership, ensuring they had the autonomy and alignment to execute effectively. Whether setting up an ODC (Offshore Development Center) or integrating external vendor teams, leadership decisions shaped outcomes, influencing speed, cost, and overall success.

Conclusion

The journey of GCCs from cost centers to innovation hubs highlights their vital role in modern business strategies. As they continue to evolve, GCCs are not just supporting organizations but are integral to shaping their future. Setting one up is not a luxury but a necessity in the current world of rapid application development. 

Interested in learning more about the evolution of GCCs? Let’s connect and exchange ideas. Connect with me on LinkedIn, and visit my Professional Portfolio. It’s a work in progress. I’d love your feedback.

About the Author

Venki Ramachandran has been at the forefront of the Global Capability Center (GCC) transformation for nearly two decades. With a background in engineering leadership and strategic innovation, he has helped organizations evolve their GCCs from operational cost centers into hubs of technological excellence. His expertise in follow-the-sun operations, cross-functional team leadership, and cutting-edge technology integration has enabled businesses to drive innovation and efficiency on a global scale.Verdeeco was my second startup, where our entire engineering team operated remotely across multiple countries. Managing daily standups across time zones was challenging, but we successfully delivered our cloud products on time with frequent customer-driven updates.