Smaller GCCs losing plot through sponsorship change, AI strategy

As AI reshapes enterprises, many Indian GCCs risk being stuck as cost centres - forcing companies to rethink strategy, leadership and real decision power

Many smaller and mid-tier global capability centres (GCC) are struggling to deliver strategic value that their headquarters had expected after years of operation. This has left them being just cost and delivery centres at a time when artificial intelligence (AI) is upending business processes.

 

While still in the early stages, many such companies — which started GCCs with much fanfare amid announcements of headcount addition and establishing centres of excellence — are approaching consulting companies for help. It is to reset their operations after years of remaining stagnant or even mulling outright sale.

 

Sunil Padmanabh, an industry influencer and digital strategist, estimates that 18–20 per cent of GCCs will be AI-mature, with AI embedded into core workflows and real decision autonomy.

 

About 52 per cent will remain AI-active but constrained, with tools everywhere and limited structural impact. Around 30 per cent will stall or regress, remaining pilot-heavy, fragmented, and increasingly questioned.

 

“Momentum was mistaken for maturity. GCCs become strategic when ownership, authority and accountability actually move,” said Padmanabh.

 

In sectors such as manufacturing, a lot of the work is enterprise, resource and planning (ERP) support, engineering changes, and reporting. Teams are busy and reliable, but decisions still sit offshore. When automation or cost reviews hit, there’s little leverage beyond delivery.

 

India has about 1,800 GCCs across verticals such as banking, financial services and insurance (BFSI), retail, health care, aerospace and oil and gas, according to IT industry body Nasscom.

 

But according to experts, only one in five GCCs will be truly AI-mature this year with the momentum in favour of BFSI, retail and CPG ones. Pharma, manufacturing and automotive GCCs are likely to lag in maturity.

 

That is also impacting the creation of senior leadership roles in the country.

 

A survey by EY in November revealed that 80 per cent of them reported less than 10 per cent of leadership roles based locally. This underscores the need to accelerate leadership localisation for greater strategic influence.

 

Only 7 per cent reported senior leadership roles of 25-50 per cent being based out of India.

 

“It is just one or two roles and not large scale ones like 10-15 which is a relevant size and shows that the GCC is maturing. The people governing these centres are still at N-2 or N-3 level. We expect more N roles in three years,” Arindam Sen, partner and GCC sector leader — technology, media and entertainment and telecommunications at EY India, had told Business Standard.

 

The maturity curve has become a key talking point this year. Enterprises are looking at their GCCs to evolve from being delivery engines to becoming strategic value creators. This means co-owning global business outcomes, influencing enterprise strategy and enabling transformation, rather than just supporting it.

 

Aveek Mukherjee, managing director (MD) and cofounder of Gloplax Solutions, said that majority of the GCCs in India are still order takers from their parent. They are yet to act as true collaborators by delivering value, owning a product or platform or having innovations that impact company strategy.

 

“Can the GCC take responsibility at the local level and reduce cost by 5 per cent, improve productivity and reduce cycle time? Can it own a product or platform sitting in India and have an impact on the value chain? That is influenced as you get into more complex tasks. If you only hire from other GCCs, your costs will keep going up,” he added.

 

Such centres also often lose their way when the sponsorship changes.

 

If it is monitored by the technology or information officer, the focus is more on creating some breakthrough innovations.

 

However, if it is handled by the chief financial officer (CFO), the focus once again comes back to reducing cost. This impacts the vision and visibility.

 

Two recent examples are Credit Suisse India after the UBS merger and Ford’s India tech and services units during repeated global restructurings.

 

In both the cases, teams are strong, but there’s uncertainty around future charter and decision ownership.

 

Infosys bought Danske Bank's Indian IT centre in 2023.

 

“If a business is doing great and revenue is coming in, there is no challenge. It starts when the opposite happens and macro conditions worsen. For supermarkets, which have strong margin pressures the initial construct may have been to bring in value and innovation but when the weather is bleak, the focus goes back again to cost,” said the managing director of a Bengaluru-based retail GCC.