Nitin Seth

NASSCOM GIC (Global In-house Center) forum in NCR launched a leadership series earlier this year to facilitate development of the next generation of GIC leaders. Through this note I am sharing the opening speech I made at the 1st GIC Leadership Series event in Gurgaon on January 18 on the evolution of GICs and the “new ask” of GIC leaders. I am also sharing the synopsis of panel discussion amongst a star cast of GIC CEOs on the “what and how” of Global mindsets, one of the 4 key competencies identified for GIC leaders.

This note is structured into the following 3 sections:

• GIC evolution and priorities
• Leadership ask in GICs
• Global mindsets – what and how

GICs are maturing and poised to move to a next level

We have over 750 GICs in India alone. Many of these GICs have now been in existence for over 10 years. GICs are in a very different space now from where they were 4-5 years back. Couple of years back there was a lot of talk about doom and gloom, whether the GIC model is sustainable, and whether all GICs will eventually be sold. We have moved far from that existential debate. Over time GICs have grown not just in delivery capability and scale but also in business expertise, leadership maturity and credibility within their global organizations. Consequently, both their performance and stakeholder satisfaction has been on an upswing. They are now getting to a point where they can more fully realise the many unique advantages of the in-house model. Consequently, many GICs can are now poised to move to a next level where their role grows from execution to leadership within their organizations. Perhaps one reflection of this change is that we have now moved away from using the term “Captive” to a more respectable GIC – Global In-house Centres.

There are at least 6 manifestations of the growing maturity and the movement from execution to leadership:

1. Value Addition is now a huge opportunity. There are tremendous opportunities for GICs to add value beyond the traditional focus on cost & productivity on back-office processes. There is significant momentum already on building hi-skill capabilities like research and analytics. In addition, there are many examples of GICs driving product/service innovation especially for developing markets. Finally, there are emerging examples of contributing to revenue generation. For example, many GICs are leveraging the cost + talent advantage to extend services to segments and markets that were earlier not viable to serve for the parent organization. This is a transformational opportunity not just for GICs but also for parent organizations. If the GICs are able to progress on this journey they can become a source of business advantage for their firms helping serve existing customers better, enter new markets and increase market share. It is now not far fetched to visualize that GICs can evolve from Cost Centers to Revenue Centers!!
2. Cost & Productivity continues to be important. While there is a lot of interest in Value Addition, Cost & Productivity continue to be a focus area. It is still a core expectation from onshore stakeholders and GIC leaders have to continue to focus on it
   • Good news is that the GIC model continues to deliver 40-70% savings and these cost arbitrage benefits are not going away in a hurry. These are likely to be sustained for at least 15-20 years perhaps even running up to 20-25 years
   • However, GICs cannot rest easy. Some of the initial drivers of cost & productivity benefits might be diminishing. For example, high growth that many GICs saw in their early years was helpful in efficiently managing the talent pyramid and the per unit infrastructure costs. With headcount growth plateauing, it becomes more challenging to manage those costs. Therefore, GICs have to push hard on Operations Excellence and Talent Model optimization to sustain and potentially improve benefits on Cost & Productivity
3. Development of global delivery networks. Many GICs have moved from single site in India to a global network of sites. While India might continue to be the largest site, organizations want to have multiple options. Location selection has become more than just a cost arbitrage decision. It is driven by mitigating concentration risk, access to new pools of talent and strategic business considerations Even within India, GICs often have multiple sites and are expanding their footprint to Tier 2 cities. In addition, GICs within the organization are beginning to be managed as an integrated global network rather than as independent sites.
4. Sourcing model for GICs is becoming more complex. “Make vs. Buy” has been a perennial debate. Many organizations have now moved beyond this debate and recognized that there is a role for both and these models can co-exist. Therefore, hybrid sourcing where both GICs and vendors co-exist is now increasingly becoming the norm. In addition, in a significant departure from past, GICs are often being asked to play a lead role in managing the partner relationships, where such relationships might have been managed directly by the head-office in the past
5. Governance approaches are evolving. Historically, GIC operating models have been at two end of the spectrum – either Shared Services or Vertical Integration. Given the evolving scope of GICs, more complex, hybrid operating models are emerging. This makes the governance, especially managing the matrix more challenging. Moreover, the placement of GICs within the organizations is also evolving. From reporting into the COO or the CFO, you now often have Business Heads taking direct interest in the GICs. Consequently, the role and expectations of GIC leaders is also getting enhanced in the context of their global organizations.
6. Workforce maturing and becoming more diverse. Given the increasing maturing of GICs, the workforce tenure is also increasing. This is a great opportunity but also a challenge. Many GIC staff have now acquired business expertise that can be leveraged to do higher value-added roles. That is a great opportunity. However, there is also a need to provide them more challenging career paths and professional development opportunities. If you don’t, then there is a risk of losing your best talent. In addition, the workforce is becoming more diverse with large numbers of the Next Gen joining especially at entry levels

GIC leaders need to step up

GICs are facing a lot of change and there are great opportunities in front of them to move to a next level of impact and relevance within their organizations. However, this journey is not easy. To realize the opportunities, GIC leaders need to step up their game significantly.

Sometimes GIC leaders are caught in a “Comfort Zone”. Expectations from the parent company are often low. They are able to deliver well on the expectations without too much stretch. Rewards are good and there is no apparent need to push beyond that. This can lead to a negative and limiting cycle. GIC leaders have to be conscious of this and confront the “Comfort Zone” issue with honesty and courage. They have to ensure that they are challenging status quo and pushing their organizations forward. There is a critical need to develop a new generation of leaders who will be the torch bearers for the exciting journey for GICs from execution to leadership.

Within the NCR GIC forum we have been discussing this need for quite some time. We set up the NCR GIC forum 2 years back and initially lot of our focus was on Value Addition and how the value proposition of GICs should evolve. We saw that there were great opportunities for GICs to move to a next level, but the critical success factor was GIC leaders having to step up. We also saw that it was a challenge that was not sporadic but something all of us as a GIC community were facing. Therefore, over the past 6-9 months we have gone through a number of deliberations to figure out what skills the GIC leader of the future should have and how we as a GIC community can collaborate to help foster those skills.

Based on surveys and forum discussions, we have identified 4 skill-sets that we see as critical:

1. Global Mindsets. The expectation is not just to be effective as a team player in a global environment but to influence and lead globally. This is becoming important because of three forces. First, change of expectations of GICs from process execution to thought leadership and development of global delivery networks with India often taking the lead. Second, organizations increasingly looking up to emerging economies as source of talent. Third, the fact that leadership talent in GICs in the emerging economies is relatively inexperienced.
2. Entrepreneurial Leadership. The next stage of growth for GICs will not be easy. Cost arbitrage driven growth will reach a plateau at some stage and new growth will be driven by adding value to the business. This requires leaders who are not just solid operations managers but those who are entrepreneurial and business oriented. The new generation of leaders needs to be creative and commercial, understand the business well, and engage well not just with the COO or CFO but with the CEO. They also need to have the courage to take risks and the resilience to navigate through the opposition and setbacks that are inevitable as you build something new.
3. Networking and Influencing Skills. Managing the matrix is a reality for every GIC. With evolving scope of GICs and governance models it is becoming even more complex. You often need to assert influence without having direct authority. You need to be a diplomat to navigate through and align multiple stakeholders with different agendas. And, you need to build a coalition of supporters who will sponsor and champion the development of the GIC to the next level.
4. Managing Gen “Y”. GIC workforce is becoming more diverse and certainly younger. Gen Y offers great promise. They are creative, confident and with lot more of ‘can do’ attitude. However, the traditional command-and-control management style might not work with them. It is necessary to understand them well and connect with them to fully harness their substantial energies.

We have resolved to work together as a GIC community to supplement efforts individual companies are making to build the above skill-sets. Towards this, we have developed a two-pronged approach: 4 half-day leadership sessions each focusing on one of the four priority skill-sets, and a cross-GIC mentoring process that we will hopefully launch in second half of the year.

Global Mindsets – What and How

The key characteristic of a successful global leader is influence. The global leader needs to go beyond boundaries and should be able to influence across geographies and culture. The other key characteristics of successful global leaders include vision, creativity, resource allocation and risk taking.

So how can GIC leaders build global mindsets and become successful global leaders?  There were 6 key lessons that GIC CEOs shared in the panel discussion:

1. Making an effort to understand. Put yourself in the other person’s shoes and try to understand their perspective instead of jumping to conclusions. Be intellectually curious and have the urge to learn about new cultures and people.
2. Exposure to novelty. Going outside one’s “comfort zone” and continuously having new and varied experiences. These grow you and make you more adaptable.
3. Spending more time with global peers and clients. Global leaders need to step out of their offices and spend more time globally. They need to go beyond operations and people management and focus on networking and relationship building.
4. Going beyond self interest and building trust. To build trust, suspend self interest and your “India agenda” and genuinely want to do the right thing for the other person. In addition, ensure open and honest communication. Do not hesitate to share bad news. Every crisis is an opportunity for building trust!
5. Managing the matrix. Organization politics is a reality, so do not be shy of facing conflicts in a matrix. Resolve potential conflicts by always bringing focus back to what is right for the customer.
6. Being natural and courageous. While it is very important that you seek to understand and then to adapt, it is equally important that you are natural and stay true to your convictions. You should trust your instincts, treasure your self-respect, and say what it is the way it is!

In summary, being an effective global leader is not about the cosmetics (e.g., language fluency) but simply about the fundamentals of being a good leader. Like most things in life, it is important for a global leader to find balance between seemingly contradicting expectations. In particular, a global leader should find balance between “cutting his/her chains” and “staying true to his/her roots”.

It will not be an exaggeration to say that the future of GICs depends to a large extent on how the GIC leaders step up and drive change. So, we hope the GIC leadership series provides all of you some good ideas and inspiration to realize this wonderful future for yourself and your organizations.

Thank you!!