Nitin Seth

Excerpts from my opening speech at the NASSCOM Annual Conclave in 2012

I would like to share with you five key themes that I believe are most important for GIC (Global In-house Center) leaders to consider and act upon. Just as context, over the past 1.5-2 years a very special movement has been happening in the GIC community. GIC leaders across all major cities in India have come together to form industry forums to share best practices and discuss common strategic topics. It is based on this collective effort and wisdom that I have distilled these 5 themes

1. GICs are maturing and poised to move to a next levelWe have over 760 GICs in India alone. Many of these GICs have now been in existence for over 10 years. Over time, they 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 an inflection point where they can more fully realise the unique advantages of the in-house model. There are many powerful advantages of this model – GICs are integrated into a global organization not outside it, they have access to their firm’s Intellectual Property and expertise which has often been developed over decades, and they have shared motivation for making their firm’s business successful. The growing maturity of the GICs now makes it possible for them realize the full potential of the in-house model. If GICs can do that, they can truly move to a next level where their role grows from execution to leadership within their organizations.
2. Value Addition is a huge opportunityThere 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 emerging examples of product/service innovation, impacting customer experience and even contributing to additional revenues. 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!!  However, much work needs to be done to realize this opportunity. Existing examples are sporadic and not at scale. Organizations models, mindsets/culture and leadership that have been the norm so far might need to be challenged to realize this new set of opportunities.
3. Cost & Productivity continues to be importantWhile 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 also the key enabler that makes possible many of the value addition opportunities
   • 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 12-15 years perhaps even running up to 17-20 years (especially for large locations likeIndia and the Philippines compared to the US)
   • 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 need to push hard on Operations Excellence and Talent Model optimization to sustain and potentially improve benefits on Cost & Productivity
   • Focus on Value Addition and Cost & Productivity are not mutually exclusive. Our research shows that GICs with the most powerful examples of Value Addition are often also highly efficient with a strong culture of continuous improvement
4. Operating model for GICs is becoming more complexThe environment in which GICs are operating is becoming more complex. In addition, the organization expectations of them are continuing to evolve. Therefore, the operating model for GICs whether it is Location Strategy, Sourcing Strategy or Governance is also evolving and becoming more complex.
   • Many GICs have moved from single site inIndia to a global network of sites. Even within India, GICs are expanding their footprint to Tier 2 cities. Location selection has become more than just a cost arbitrage decision. It is driven by mitigating concentration risk, accessing new pools of talent and trying to get business advantages
   • “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  is now increasingly becoming the norm with GICs often playing a key role in managing the partner relationships
   • Governance approaches are also evolving given all the changes. From the simple models of either Shared Services or Vertical Integration, more complex models are emerging. In addition, GICs within the organization are beginning to be managed as an integrated global network rather than as independent sites. The role of GIC leaders is also getting enhanced within their global organizations.
5. GIC leaders need to step upGICs are facing a lot of change and there are great opportunities in front of them. However, GIC leaders need to step up to help realize these opportunities. Sometimes GICs are caught in a “Comfort Zone” – they are able to deliver well on parent company’s expectations and there is no apparent need to push beyond that. This can lead to a negative, limiting cycle. Therefore, GIC leaders have to ensure that they are challenging status quo and pushing their organizations forward. In addition, there is a need to develop a new generation of leaders. The emerging role of GICs requires leaders who are not just solid operations managers but those who are entrepreneurial and business oriented. 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 my message to all the GIC leaders is “Carpe Diem” – seize the day!!

To conclude, GICs are at a very exciting juncture. There is strong momentum and a real opportunity for them to move to a next level – from execution to leadership within their organizations. I hope this note provides GIC leaders with some good ideas and inspiration to realize this wonderful future for their organizations.