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How GCCs are rewriting the playbook for driving strategic innovation

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6 minute read 07 Apr 2025

Leadership and strategic planning elevate global capability centers (GCCs) from cost centers to innovation powerhouses.

In brief
  • Global capability centers (GCCs) can enhance efficiency and innovation by centralizing processes and leveraging global talent pools.
  • Effective leadership and strategic enablement are crucial for successful GCC implementation and growth.
  • External advisors can mitigate risks and optimize GCC strategies for long-term success and innovation.

GCCs have the power to recalibrate an organization’s future.

Their strategic journey from back-office support facilities to dynamic innovation hubs aligns with rapid technological advancements and the increasing demand for digital-native talent. They have become versatile assets that can sharpen a company's competitive edge and light new pathways to success.

The GCC market is expected to grow to US$413 billion by 2030. Fully integrated with parent organizations, GCCs foster collaboration and contribute to various functions such as IT, R&D, digital, finance and logistics, among others. They also take on complex roles in data analytics and cyber risk management, while becoming the hub and catalyst for artificial intelligence (AI) activity across the enterprise. Modern GCCs are being built with AI at the center of everything GCC does.

Source: Global Capability Centres (GCCs): Three Lessons on Challenges and Five Strategies That Will Matter2


How EY can help

The transition to GCCs is significant for several reasons. First, GCCs optimize resources and drive efficiency, saving costs without impacting delivery. Second, as companies acquire new entities, each with its own processes, GCCs help standardize these processes, promoting consistency and streamlined operations. Third, GCCs play a crucial role in retaining talent, acting as catalysts for business transformation, and providing greater control over overall decision-making.

 

However, realizing these benefits requires significant change management. Leadership roles must adapt from local to remote, and the shift from vendor-managed to client-employee managed services demands a new mindset.

 

Additionally, employees may fear that their jobs will be eliminated under a GCC structure. To counter these concerns, it is essential to communicate transparently about the intent of GCCs, which is to establish, activate and accelerate a culture of innovation and change. Providing reassurances about job security and highlighting opportunities for growth within this new model are crucial for maintaining morale and engagement. By standardizing processes, addressing job security concerns, and adopting agile ways of working, organizations can foster an environment where innovation thrives and employees are empowered to contribute to the transformation.

 

To fully leverage the potential of GCCs, strong leadership and strategic planning are paramount. Building engagement and earning buy-in from everyone involved can be the cornerstone of a successful GCC strategy, enabling these centers to evolve into drivers of innovation.

Strong leadership: the cornerstone of a successful GCC strategy

The role of leadership is paramount in executing an effective GCC strategy. As GCCs transition from back-office functions to innovation hubs, leadership dynamics must evolve accordingly. Historically, leadership roles were centralized in the US or Europe, with GCCs functioning as support units. Today, leadership roles in critical functions such as R&D and IT are increasingly being driven through GCCs, underscoring the importance of CEO, CFO and CIO alignment in advancing a GCC strategy.


Consider the case of a global pharmaceutical company facing challenges in scaling its R&D capabilities due to a shortage of specialized talent in its home country. The CEO and senior leadership team fully committed to this strategy, appointing a highly experienced R&D leader to head the GCC.

This leader is not only responsible for managing the local team, but also plays a crucial role in the company’s global R&D strategy. As a result, the company has accelerated its drug development process, reduced time to market for new treatments and significantly increased its innovation pipeline.

Leadership buy-in and enablement are instrumental in this type of transformation. The CEO and senior leaders of the pharmaceutical company regularly visited the GCC, held strategic meetings, and saw that the GCC was fully integrated into the company’s global operations. This approach demonstrates the critical role of leadership in driving the success of GCCs and transforming them into hubs for thought leadership and strategic direction.

Transitioning to a GCC model involves significant change management. Leaders play a crucial role in guiding their teams through this transition, addressing concerns, and reinforcing the strategic importance of the GCC. Effective change management can mitigate resistance and foster a positive attitude towards the new operating model.

Source: EY Insights/Analysis


How GCCs are breaking down barriers to innovation

GCCs are designed around the pillars of innovation and creativity. This strategic focus on finding new ways to do things and exploring imaginative business models creates a culture where employees are not just given the space to think outside the box, they are encouraged to do it in pursuit of novel solutions.

Here are some ways the GCC model is driving innovation and enterprise agility:

How EY can help

How can advisors facilitate defining and executing a winning GCC strategy

While the benefits of GCCs are clear, attempting to develop a GCC strategy without the right insights and experience can be fraught with risk. The launch of an innovation hub in a new location requires a nuanced understanding of the GCC landscape, which many organizations may lack. This is particularly true for smaller organizations that may not have the internal expertise to navigate this complex transformation.

 

Consider the case of a mid-sized technology company that decides to establish a GCC to drive its global IT and R&D initiatives. The company’s leadership, confident in their internal capabilities, chooses to establish it internally. They quickly encounter numerous challenges, from navigating complex regulatory environments, setting up robust IT infrastructure, ensuring data security compliance and most importantly attracting the right talent to build the GCC team.

 

Recognizing the mounting issues, the company’s leadership decided to engage external advisors. These experts were able to provide invaluable insights into local regulations, industry benchmarks and best practices. They help the company streamline its operations, set realistic goals and implement a robust IT infrastructure that met all compliance requirements.

 

Organizations typically underestimate the resources as well as experience required to establish and maintain a GCC. Advisors can help in accurately assessing the necessary investments in technology, talent and infrastructure, making sure that the GCC is adequately resourced to meet its objectives.

 

Seeking external guidance is not just about the initial setup, but also about long-term strategic benefits. External collaborators can help organizations continuously enhance their GCC operations, stay ahead of technological advancements and adapt to changing market conditions.

The views reflected in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.


Summary 

The evolution of GCCs from cost-saving hubs to strategic innovation centers underscores their growing importance in modern business. By fostering a culture of collaboration and continuous improvement, investing in advanced technologies and leveraging local market insights, GCCs can significantly enhance an organization’s global footprint and competitive edge.

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