Reimagine GCCs as innovation powerhouses—not cost sinks

In today’s high-stakes environment, enterprises are caught between two powerful forces: macroeconomic uncertainty that tightens IT and ops budgets, and an urgent imperative to modernize, digitize, and innovate. While enterprise budgets face a macroeconomic squeeze, the demand for digital transformation is accelerating. Global Capability Centers (GCCs) sit squarely in the eye of this paradox, promising innovation at scale amid tightening costs (see Exhibit 1).

Exhibit 1: The GCC value proposition – balancing the macroeconomic ‘slowdown’ with the ‘big hurry’ to innovate

Source: HFS Research, 2025

For too long, GCCs have been seen as cost-saving back offices—reliable but under-leveraged. That era is over. In today’s hyper-dynamic, AI-driven world, GCCs have evolved into strategic engines of innovation, growth, and competitive edge. The enterprises investing in GCCs aren’t just reorganizing—they’re reimagining. Whether it’s building next-gen AI platforms, launching digital products, or scaling intelligent automation, the new GCC is a high-impact node in your enterprise operating model.

India’s GCCs outpacing traditional HQs in innovation delivery

India’s GCCs have matured from low-cost execution engines to high-impact innovation hubs. India now hosts over 1,848+ GCCs, with projections to cross 2,600 by 2030, including the most mature centers globally, with structured governance and CoE-led delivery, reinforcing India as a complete GCC destination, not just a location (see Exhibit 2).

Exhibit 2: India’s outlook as a global services destination

Source: HFS Research, 2025

Today’s GCCs drive product development, digital transformation, and AI adoption for their global parent firms—often faster and more effectively than traditional HQ-led efforts​ (see Exhibit 3).

Exhibit 3: India’s GCC boom – from back office to brain trust

Source: HFS Research, 2025

And while India remains dominant, emerging delivery hot spots such as Latin America are quickly gaining traction—offering multilingual talent, time zone proximity, and diversified risk (see Exhibit 4).

Exhibit 4: LATAM is no longer optional—it’s a risk hedge and innovation driver

Source: HFS Research, 2025

Innovation arbitrage is the new currency of GCCs—trade in it or be left behind

The Indian GCC story has moved from cost arbitrage (1990s–2010s) to skills arbitrage (2020s) and is now entering the era of innovation arbitrage. It’s no longer about headcount and cost arbitrage—it’s about innovation arbitrage. However, an estimated 40-50% of the GCCs are currently operating as a back-end center to drive cost reductions vs. only a few (10-20%) who are leveraging India’s deep tech ecosystem—AI, cloud, and innovation—to gain a digital edge and drive innovation (see Exhibit 5).

Exhibit 5: The evolution of India’s value proposition for global enterprises

Source: HFS Research, 2025

To fully leverage India’s tech ecosystem and move from a back-end engine to a front-end innovator, GCCs must focus on several strategic shifts. Below, we have listed the five action pillars that will help GCCs transition into innovation hubs.

• Leadership: Bring innovation-driven leadership into the GCC; mandate innovation goals; establish innovation charters
• Talent: Reskill existing workforce and hire for next-gen skills (AI/ML, product design, platform engineering)
• Ecosystem: Partner aggressively with startups, VCs, universities, and tech forums
• Culture: Build entrepreneurial, fail-fast, agile-driven internal culture. Recognize innovation champions
• Technology: Invest in innovation labs, cloud-native platforms, GenAI platforms, IP creation engines

No more ‘us vs. them’: Co-innovation between GCCs and service providers is the new mandate for enterprise value

Enterprises must continue building a portfolio of internal and external capabilities to balance cost, innovation, and control mandates. For enterprises, the GCC strategy must align with its broader enterprise ambition—but getting it right requires the right partner—one that doesn’t just execute but ideates, builds, and scales with you. GCCs will need to actively collaborate and co-innovate with service providers and technology vendors to achieve the mutual objective of delivering business value for the enterprise (see Exhibit 6). It’s time to drop the ‘us’ vs. ’them’ mindset.

Exhibit 6: GCCs and service providers will both play a crucial role in the enterprise universe

Sample: 198 survey participants
Source: HFS Research, 2025

To effectively support enterprises in setting up and scaling Global Capability Centers (GCCs), service providers must possess a comprehensive suite of capabilities across the ‘why–what–how’ spectrum defined within the HFS GCC playbook. This includes articulating a compelling value proposition and highlighting differentiators and USPs tailored to client personas. They must offer a well-defined portfolio of offerings, innovative engagement models, and IP-driven blueprints to accelerate GCC setup and maturation.

On the execution front, providers need strong go-to-market (GTM) strategies, robust sales and marketing foundations, and curated engagement assets such as benchmarks and templates. Furthermore, an established ecosystem of partners—spanning legal, real estate, technology, and RPO—is critical to delivering an end-to-end, turnkey GCC enablement journey.

A service provider’s GCC GTM strategy should be underpinned by the client’s ambition and strengths. The GCC playbook for service providers must address the why, what, and how in their GCC GTM for enterprises (see Exhibit 7).

Exhibit 7: HFS GCC playbook

Source: HFS Research, 2025

The Bottom Line: For enterprises, it’s time to run a maturity gap analysis of their GCCs and benchmark against innovation leaders—not just cost efficiencies.

For enterprises, GCCs should be more than an operational hub. It should be a strategic lever for growth, innovation, and competitive advantage. But realizing that potential means partnering with providers who don’t just ‘do’—they think, build, and evolve with you. To transition into innovation hubs, GCCs must embed visionary leadership, reskill talent for next-gen technologies, and build strong partnerships across the tech ecosystem. Fostering a startup-like culture and investing in cutting-edge platforms will unlock true innovation arbitrage. The future belongs to enterprises bold enough to unleash the full power of their GCCs. Be one of them, or risk becoming irrelevant!