Authors:
The global capability center (GCC) ecosystem is buzzing with potential. As India charges forward to become the world's third-largest economy, its GCCs are evolving from back-office hubs into innovation engines that drive global value. HFS Research, in partnership with Publicis Sapient, gathered the top GCC leaders in Bangalore to tackle a big question: Why is India primed to lead in the innovation arbitrage era, and how are GCCs leading the way?
This point of view summarizes the executive roundtable discussions from prominent GCCs in India, including Exxon Mobil, Franklin Templeton, Haleon, Lumen Technologies, Mastercard, Merck, Microsoft, Novartis, Philip Morris, Tesco, and Unilever.
The numbers don't lie—GCCs in India are multiplying, with HFS forecasts suggesting they'll exceed 2,500 by 2029, growing at a solid 10% annual clip. Headcount is set to surge by around 14% yearly, meaning an ever-greater demand for top-tier talent. But it's not just about growth—it's about transformation. The GCC journey is moving from pure cost-cutting to a place where skills, technology, and innovation dominate the game. Developing and grooming leaders capable of opening and running these new centers will be crucial.
Forget cost arbitrage; it's yesterday's news. The future is all about skills and innovation. Leaders at the roundtable made it clear—they're gunning to move beyond being just "cost-effective" to becoming critical innovation hubs. The playbook is evolving—GCCs must focus on innovation-led projects rather than just labor arbitrage. This shift means more work in advanced tech and less focus on routine tasks.
Only 15% of the participants positioned themselves in the Cost Arbitrage stage, which focuses on cost efficiency. Nearly 50% of leaders placed their GCC at the Skills Arbitrage stage, indicating a focus on developing technical expertise. Almost 35% mentioned they were already in the early phases of the Innovation Arbitrage stage, with organizations actively leveraging AI, cloud technologies, and other advanced solutions for strategic advantage.
Source: HFS Research estimates, 2024
The path to becoming a true innovation powerhouse is no walk in the park. We asked the roundtable participants what GCC challenge they would make disappear if they had a magic wand. Here are the top five challenges that GCCs must tackle:
The real challenge isn't just technical—it's mastering softer skills such as leadership, communication, and collaboration. These elements will drive GCCs from cost-focused operations to becoming true innovation leaders.
All GCC leaders indicated that AI would play a central role in their future aspirations, with specific focus areas being productivity improvement, automation, decision-making, and customer experience.
There is a strong focus on generative AI (GenAI), deep learning, and the development of AI feedback loops. However, participants also emphasized the need to integrate AI gradually, ensuring safety and alignment with ethical standards.
It’s clear that GCC leaders see massive potential in GenAI, but they’re stuck on one major hurdle—turning proof-of-concepts into real-world results. GenAI shouldn’t just be a productivity booster; it should drive bold new ideas. Without it, GenAI risks becoming another shiny tool instead of a genuine value driver. According to Sanjay Menon, Managing Director, Publicis Sapient India, “The GCCs have an excellent opportunity to be AI first in their thinking and show real examples of scaled implementation of productivity tools and a learning mindset of change. They can be a point of inspiration for the rest of the company to follow suit.”
Many enterprises grapple with whether to keep work in-house through their GCCs or outsource it to service providers. Spoiler: the answer isn’t either/or. The model of the future is about building fluid ecosystems with the GCC team at the core, which will enable leveraging a diversity of capabilities through service providers, startups, etc. that can drive innovation while having an increased impact on execution.
A survey of 510 GBS leaders revealed a preference for a hybrid model.
Survey of enterprise preference:
Source: HFS Research, 2024. Sample: 510 GBS Leaders
To succeed long-term, GCC leaders must adopt an infinite mindset. Unlike a finite mindset, which focuses on winning specific battles or achieving short-term goals, an infinite mindset embraces ongoing growth, adaptability, and resilience. For GCCs, this means looking beyond immediate cost savings or quarterly targets and focusing instead on continuous innovation, talent development, and long-term strategic partnerships.
By thinking beyond the limits of immediate success, GCC leaders can navigate market shifts, technological disruptions, and evolving customer needs, ensuring that their organizations remain relevant and competitive in the ever-changing global landscape. GCCs are becoming central to the broader business strategy. For GCCs, it’s about stepping up and becoming innovation leaders, not just support functions. The path forward? Lean into the change, build those partnerships, and prepare to disrupt.
Inspired by Finite and Infinite Games, a book by religious scholar James P. Carse
Biswadeep Ghosh Hazra is a senior research analyst for HFS. Earlier in his career, he was a lead analyst at Avasant, a functional consultant for Deloitte Digital, a quality assurance engineer at Tech Mahindra in Hyderabad, and a content writer and manager at ExamFocus. While in graduate school, he interned at Mindfire Solutions. Biswadeep earned an MBA in business management with marketing, operations, and systems majors and a decision sciences minor from Xavier Institute of Management in Bhubaneswar (XIMB). He also holds a bachelor of technology degree in electronics and communication engineering from the Haldia Institute of Technology.
Suhas is an associate practice leader for HFS Research and a key member of the IT services team. His coverage areas include cloud-native transformation, application modernization, and quality assurance. He also covers hyperscaler strategies and ecosystems across cloud, data, and AI. With more than eight years of experience as a research analyst focused on the tech, media, and telecoms (TMT) sector, Suhas is keenly interested in evolving concepts and emerging technologies.
Saurabh Gupta is president, Research and Advisory Services for HFS Research. He sets the strategic research focus and agenda for HFS Research, understanding and predicting the needs of the industry and ensuring that HFS maintains its position as the strongest impact thought leader for business operations and services research. Saurabh oversees HFS' global research function, managing the team of analysts and operations across the US, Europe, and Asia.
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