Note: We have used the term “GICs – Global In-house Centers” through out this note instead of the more traditional term “Captives”
Part 1 – GICs reaching a Tipping Point
Part 2 – GICs can become Revenue Centers
Part 3 – Value Addition is an imperative for GICs
Part 4 – Realizing full potential of GICs requires many changes in Organization Approaches
Industry Collaboration can be an important facilitator
While the focus is on the specific opportunities for an organization and the changes they need to make, efforts will also be needed at an industry level. Industry collaboration can be an important facilitator in helping GICs progress on their value addition journey. Sharing best practices and success stories can help GICs learn from each other and get both ideas and motivation to move to the next level. Joint problem solving on common topics can yield insights that companies might struggle to reach individually. This industry discourse and collaboration can help raise the bar for the entire industry. GIC forums have already been set up in many cities in India (especially Hyderabad and NCR). These initiatives need to be sustained and similar momentum built in other hubs with significant GIC concentration.
In addition to the broader effort around GIC forums, having a structured, industry-wide GIC value addition framework can be an important facilitator. It can serve the dual objectives of helping the GICs define and drive their value addition journey in a more structured way, and shaping the discussion with stakeholders on strategic intent from GICs by not only making the business case tangible but also by demonstrating the maturity of the ecosystem.
GIC value addition framework should have the following components:
- Consolidate value addition success stories across GICs that can provide ideas to others
- Make tangible benefits beyond cost arbitrage that GICs are delivering for the parent company
- Identify specific value addition opportunities given the industry and stage of offshoring maturity of the organization
- Provide change management guidance both for the parent organization and the GIC.
Clearly, industry wide discourse and collaboration can lift the bar for the entire industry and improve the chances for GICs to achieve their full potential.
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GICs are at a very interesting juncture in their evolution. Their growing maturity and domain expertise provides the basis to realize the full potential of the cost + talent offshoring proposition and additional advantages of the in-house model. Tremendous opportunities exist for GICs to add more value and move beyond their traditional scope as cost centers to become revenue centers and a force for transforming the core business. GICs can become a strategic asset by helping the parent company develop new products and services, enter new markets and gain market share. Equally, organizations whose GICs don’t progress on a value addition journey might find their GICs becoming less relevant.
Realizing the full potential of GICs will require a very different approach, beginning with the organizations setting higher expectations for their GICs and recognizing that many changes might be needed in the traditional governance and people model. GICs value addition journey will require foresight and patience. Organizations that are able to move successfully ahead on this path can gain sustainable competitive advantages. GICs are at the cusp of a strategic opportunity, which should make for interesting times ahead!!
