By Kv Kurmanath

Copyright thehindubusinessline

India’s Global Capability Centers (GCCs) are undergoing a significant transformation, evolving from cost-saving ‘captives’ into strategic Global Value Centres that drive innovation and even generate revenue for their parent companies, according to Santhosh Rao, Partner and Executive Director at IBM Consulting.

Rao, who leads IBM’s GCC Business Unit for India and South Asia, outlined the rapid maturation of the sector. “It started predominantly as a cost and a labor arbitrage sort of a model initially,” he stated.

“Over time, with technology adoption and transformation being key, we are very clearly seeing more and more GCCs move into what we call Global Value Centres,” he said.

“This evolution is marked by a crucial shift in autonomy. The decision-making, the autonomy into GCCs, which was not there earlier, is shifting,” Rao explained.

He noted that GCC leaders are now empowered to make critical decisions on technology adoption, project financials, team composition, and timelines—responsibilities once held exclusively at global headquarters. While this shift is still happening in “pockets” and varies by business function, the trend is clear: mature GCCs are being trusted to drive value.

Rao credits this change to the realisation that these centres can contribute to the top line, not just the bottom line.

“Some of the clients are actually generating revenue for the corporation from here on the solutions developed here,” he said.

Major challenge

The fierce competition for talent is a major challenge, but one that is being addressed strategically.

Rao pointed to mindset shifts, where companies are moving away from rigid experience requirements. “We actually had to convince (a client) that a 2-year experienced person with the ability to work on these tools and technology, along with training, is what will solve the same problem,” he shared.

IBM focuses on a “step ladder” career path and a synergy of technology and industry domain training to build its talent pool. The most in-demand, or ‘fast-moving skills,’ are in data science, AI, and cybersecurity. The ability to “cleanse the data to be AI-ready” is a particularly critical skill.

Rao expressed strong optimism about India’s future as a GCC hub, citing supportive government policies and the rise of ‘emerging technology centres’ in cities like Kochi, Bhubaneswar, and Mysore. “I’m not seeing any major roadblocks or challenges,” he affirmed.

While most GCCs in India are from English-speaking countries, Rao revealed that IBM is making inroads into non-English speaking markets, such as Japan, leveraging conversational AI tools to overcome language barriers and a “two-in-a-box” model that combines Indian centres with nearshore hubs to build client confidence.

Published on October 2, 2025