Global Capability Centres — Routes And Models

GCCs can operate through a variety of models, designed to align with the specific needs of the Group. Each model has its relative advantages and challenges, allowing organisations to select, basis their strategic goals, cost factors, regulatory requirements and the desired level of control and customisation.

Under the do-it-yourself model, the Group may choose to build and run their GCCs entirely on their own. This approach grants full ownership and management, with external help focused on specialised local needs like legal and tax matters. This arrangement enables greater protection to intellectual property and sensitive data but would require internal expertise in Indian regulations and be more time-consuming.

Under the build-operate-transfer model, the Group could partner with a specialised vendor to handle the initial setup and operation, who would gradually transfer ownership and control to the Group. Owing to the vendor's local knowledge and established infrastructure and talent network, the time required in such an arrangement is lesser.

Under this arrangement, the Group would have lesser direct control during the initial phase and hence, requires careful vendor selection and contract negotiation. Further, it is key to ensure a smooth transition, particularly in respect of the employees, during the handover of the GCC to the Group, including by way of appropriate contractual arrangements in this regard.

The Group could also consider a joint venture, where the vendor continues to hold a minority investment in the GCC after the transfer. Here, the Group would gradually buy-out the stake of the vendor upon the occurrence of certain trigger events like capitalisation, revenue and market share. While such a JV provides invaluable access to established networks, market knowledge and regulatory understanding, the structure would require careful negotiation to address issues, such as ownership, profit sharing and dispute resolution.

A 'virtual captive' model would provide a bridge period wherein the vendor manages the GCC as a virtual presence to provide support services to the Group until the transfer. Subsequent to the transfer, the GCC eventually transitions to a captive entity and expands its services. The virtual captive model can be easily scaled up or down to meet changing business needs.