With the arrival of the digital economy, the uniqueness of the global in-house center or what is coe is changing rapidly. While corporations previously turned to offshore companies for cost arbitrage, today we are witnessing a revitalized influx of firms from a wide range of industries producing global in-house center with a different focus. The role for these newly established GIC setups is to engage in innovation-centered efforts and to fast-track the company's discovery of new digital tech such as machine learning, advanced analytics, RPA, artificial intelligence and blockchain.
Firms with proven captive centers are reassessing their service centers with a critical eye. Several people are not pleased with how the global captive center cost equation has progressed. Forced to become more advanced, nimble, and digitally focused, they want their global captive centers to serve as a resource for modernization and their digital company goals. As a result, many are reexamining their investment.
Evolution of Global Captive Centers in India
Global captive centers have been instrumental in their ability to transform and adjust their functionality while discovering new and pioneering ways to efficiently support their parent firms.
Because of this, the global captive center landscape has grown exponentially worldwide. In India, global captive centers have indeed transformed in the last two decades. India is presently home to over 1,200 global captive centers employing about 1 million people. According to Nasscom, these global captive centers produced revenues of about $28.3 billion in the one financial year alone. With the augmented role that technology now plays and growing digitization, global captive centers are expected to make an even bigger impact in the future.
Challenges that Must be Overcome
To help global captive centers evolve into something that’s pertinent today, firms must focus on three key areas where many centers encounter challenges:
Sluggish digital adoption
Many centers have not been up-to-speed with changing business priorities and digital marketplace dynamics. With sluggish adoption of big data, cloud, RPA, artificial intelligence, and advanced analytics centers are battling hard to add definite, sustainable value to the firm. Companies must speed up the GIC evolution toward digital, including relationships, ventures, and operating models. This would help GICs transition to an innovation and revenue center and build a significant value proposition.
Operational cost and productivity pressures
Many GICs find it difficult to enhance their productivity and operational models, resulting in higher costs. This is frequently the result of a lack of automation, dependence on legacy IT infrastructures, poor governance and a business model that is hard to scale. Firms must evolve platforms, infrastructure, and GIC applications to control costs, simplify operations and allow for growth aligned with business goals.
Trouble finding and retaining digital talent
Global captive centers also find it difficult to nurture and retain employees with adequate digital skills, leadership qualities, and domain expertise. In GICs with inadequate career advancement prospects, attrition will be high, and attracting top talent becomes difficult with dynamic skills to fastrack the digital program. Firms must develop a viable approach to shift the GIC talent pool from operationally focused to innovation-oriented, from functional experts to business experts and from legacy to digital.
Published by Zinnov