Forces that will shape GCoE ecosystem In 2021

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Even in the middle of a pandemic, companies including Amazon, Microsoft, and Google continue to thrive thanks to their control over the cloud infrastructure market.

As we step into 2021 with all the learnings from the last 12 months, ready to take on bigger, better, and greater things to achieve, these are the forces that will shape this exceptional ecosystem.

1. New GCoE Business Models: GCoEs are now considered a key enterprise asset. Mature GCoEs are looking to offer newer business models that allow them to provide flexibility similar to Service Providers such as Transaction-based pricing, Fixed pricing, and Risk/Reward-based models. This will be largely applicable for operations as well as legacy applications.

2. Virtual GCoEs: Work From Home has proven to be a successful model for pure-play software GCoEs. We expect to see some of the smaller GCoEs to move into a pure Virtual GCoE model with no office space. New GCoEs set up in India will also explore this model, especially smaller technology companies.

3. Work Portfolio Consolidation: GCoEs are expected to consolidate a larger share of the global work portfolios in their India centers. The agility, resilience, and antifragility shown by India GCoEs during the pandemic have boosted confidence in India as a globalization hub. Besides Tech and IT functions, Business Services function portfolios will witness a surge in 2021.

4. Portfolio Reallocation: GCoEs in highly regulated industries including BFSI, Pharma, etc., will experience a certain degree of portfolio reallocation. To circumvent compliance-related challenges, these organizations are set to attract higher amount of tech portfolios to India and trade them with portfolios that are low on work-from-home suitability.

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5. Dual Core Operations: COVID-19 has highlighted the importance of technology, innovation, and entrepreneurship in business continuity and future growth. Remote work has proven that customer proximity does not necessarily mean geographical proximity. GCoEs are looking to build a dual core of operations to balance dynamic ideation, experimentation, and skilling with scale. We expect GCoEs to build and expand integrated ecosystems of site-level initiatives to drive internal innovation, academic and start-up collaborations. This will be looked at as a differentiator and a core value offered by GCoEs to HQ.

6. Rapid Increase in GCoE Setups: The pandemic will amplify the pace of movement of global centers to India. Factors such as stiff competition for niche skilled talent in the US, scalability challenges for centers in Eastern Europe, as well as the negative sentiment around China as a destination, are expected to work in India’s favor. We expect 400 net-new global centers to be set up in India by 2025.

7. Expansion to Tier-2 cities: An increasing number of GCoEs are expected to set up centers in tier-2 cities to enable employees to work from locations closer to their hometowns. This will also enable organizations to leverage the earlier untapped local talent pool. Some organizations will also use these tier-2 locations as remote centers, where employees can ‘check-in’ for a few days a month as part of a long-term/permanent remote working contract.

8. Talent Wars will Heat Up: With the setting up of newer GCoEs, rapid expansion of existing ones, and the movement of existing installed talent closer to their hometowns, organizations will face a further crunch in talent availability in tier-1 cities, especially for niche skills such as AI/ML, IOT, Intelligent Automation, Data Science, Blockchain, etc.

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9. Return to Office: With the COVID-19 vaccine roll out just around the corner, organizations are expected to consider returning to office slightly earlier than previously expected. Our analysis reveals that 15% of GCoEs have already planned to come back to work with over 50% capacity in office by May 2021, however, in a phased manner.

10. Increase in Mega GCoEs: We will see an increase in GCoEs with a headcount of more than 10,000 in India. While several companies in Banking and Software verticals have Mega GCoEs, we will witness that trend in Insurance, Retail, Automotive, and other verticals, with high digital innovations.

For the new business models and the virtual GCoEs to work, the market side, the operations side, and the talent need to come together to transition the Global Centers of Excellence into the new era of growth. And with different value centers in play across GCoEs, the onus of bringing together all the elements to create exceptional value to HQ rests on the intrapreneurial center head.

Picture from freepik.com

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Forces that will shape GCoE ecosystem In 2021

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