GICs have evolved over the years in terms of scale and delivery capacity in addition to business acumen, leadership maturity, and credibility within their global enterprise. As a result, their performance and stakeholder satisfaction have both improved. They are now reaching a stage where they can more fully appreciate the numerous unique advantages of this in-house model.
Until recently, GICs were viewed as low-cost aggregators for IT services and backend operations. Today, GICs have evolved as innovation drivers and value contributors by making new things possible. Today, there are multiple business success stories where GICs have played an integral role in accelerating growth.
In a nutshell, GICs are moving from working at a lower cost to collaborating in solving some of your biggest problems. This is how the journey and evolution of GICs have been seen so far.
GICs growing in maturity and a shift from execution to leadership:
1.Cost & Productivity continues to be important.
Cost optimization & productivity continue to be a focus area, especially while kickstarting new GICs for global enterprises. Despite the growing focus on innovation, cost optimization is still a core expectation from stakeholders and GIC leaders have to continue to deliver it.
- Industry trends indicate that the GIC model continues to deliver 40-70% savings and these cost arbitrage benefits are not going away anytime soon. These are very likely to be sustained for at least another 15-20 years, perhaps even running up to 20-25 years.
- However, GICs cannot afford to be complacent. Some of the initial drivers of cost and operational optimization benefits might start diminishing. For instance, managing the talent pyramid and the per-unit infrastructural cost efficiently was made simple by the exponentially high growth that many GICs experienced in their formative years. It becomes harder to control such costs as headcount growth plateaus. As a result, GICs must work hard to optimize their talent models and operations excellence in order to maintain and possibly even increase the benefits to cost and productivity.
2.Innovation and Value Addition:
There are tremendous opportunities for GICs to add value beyond the traditional focus on cost & productivity in back-office processes. There is significant momentum already in building strong capabilities in new and emerging technologies. In addition, GICs drive product/service innovation in developing markets.
Also, many GICs are leveraging the cost and talent optimization advantage to extend services to new segments and markets that were earlier not viable to serve for the parent organization. This is a transformational opportunity not just for GICs but also for parent organizations.
3.The methods of governance are changing.
In the past, GIC’s operational models have been at either the extreme of the shared services or vertical integration spectrum. There are more sophisticated, hybrid operational models emerging as a result of the expanding scope of GICs. This makes governance and controlling the matrix in particular, more difficult. Also, the organization-wide distribution of GICs is changing. Business Heads are now frequently taking a direct interest in the GICs instead of reporting directly to the COO or the CFO. As a result, in the framework of their global organizations, GIC executives’ roles and responsibilities are also expanding.
How we can help?
The Managed GIC model, also known as the Virtual Captive model, delivers you all the strategic advantages of a Global In-House center while reducing your legal risks, securing your intellectual property, and resolving your ongoing management challenges. Additionally, having access to a talented staff pool allows your managed GIC to act as your company’s R&D and Innovation Center, which will benefit your bottom line.
We have years of experience delivering this model for clients, and on average, they save 30% or more in costs compared to standard offshore. Reach out to us for a free consultation and a price comparison matrix tailor-made to your skill needs.