In this edition of the Fireside Chat Series, we bring a conversation with Mr. Irendra Chhabra, Global Spend Management Practice and Back-Office Transformation Head for Startek. We talked about the emergence of GCCs as a vehicle for experimenting, embracing and enriching digital businesses, the post-pandemic war for talent and how reskilling is need of the hour.
Hi Irendra, it is great to have you as a part of our fireside chat series. Thanks for having this conversation with us regarding the tremendous growth journey that GCCs have had in India and how we can continue this partnership.
Thanks Swati for having me as a part of this conversation. It is a pleasure to be talking to you.
Let’s start by knowing more about how can Global Capability Centres (GCC) reshape today to re-invent tomorrow?
In my view, the core focus for GCCs for being relevant and leading productive partnerships with businesses hinges on the following parameters:
Prudently invest in people: While there is a need to upskill/reskill, the fast and hard decision will be to also invest in selecting the right capability talent pools and integrating effectively. More automation and intelligent processing will require lesser and lesser resource capacity, resulting in upscale people. While traditionally, most SSC organisations have looked at horizontal upscale – from transaction operation to analysis- the future shift requires vertical upscale from processor to controller to compliance to strategic roles.
Create an agile work culture: Decision velocity and visibility are core, and building the ability to harness the power of one is critical. Drive experimentation and cultivate an environment of accepting/embracing unknowns. Far too much effort has gone into building policies, processes, SOPs, and checklists, don’t make them static, and last but not least, teach the DNA of “sense and respond”.
Integrated value chain automation: Organisations seek to drive automation adoption, though from functional/activity silo-based automation efforts, the focus will shift to getting the overall value chain integrated via prudent and pragmatic automation. Don’t jump upon every new tech bandwagon; review the fit for business needs – stated/unstated. 360 degree of seamless view of the customer/transaction is a must. Organisations that are heavily leaning toward only automation and analytics should ensure that they have adequate focus on Connect and Operate organisations as the success of any automation/analytics or intelligence intervention is based on how the core functions improve.
Bring DNA of customer centricity: We are moving from a knowledge economy to an experience economy. The SSC needs to consistently ask themselves, ” What problem are they solving for customers, how are they going to enhance customer experience, and how would they sustain customer loyalty?” Customer centricity is not CXO’s KRA, but everyone is responsible from top to bottom of the pyramid. The question is how SSC first takes ownership of understanding the above and then percolates down the line. Culture certainly plays a significant role. Other than that, there is a structured way to address the customer journey: Here is one of the ways to track the customer life cycle. Connect with customers no sooner than they realise they have a problem. Once the customer has placed an order, it’s vital to have an excellent onboarding experience which will be the start of the loyalty journey. Remain connected with your customer, keep listening, and be empathetic to the customer’s issues. If SSC can be a part of the customer journey, it will lead to the customer returning again and again.
Is the emergence of GCC transforming the requirements of talent? Is there a larger need for talent?
GCC are the pillar of business operations – an outcome that has been served well over the last decade. We are now seeing the emergence of GCC as a vehicle for experimenting, embracing and enriching the new works of digital business and creating value for the customers. Two distinct talents complement the growth of the organisation. On the one hand, organisations need experienced subject matter experts and, on the other IT enablers to create the right technology platform for client serving. Digital is a prerequisite fundamental to businesses in the post-pandemic world. With companies relying heavily on technology, the usually young profile of GCC is getting more attention to drive the digital business model: This is driving the need for new capabilities/competencies and structures within GCC. Let me remind you, it is not more tech talent that is in demand; it is also talent that can bridge the business-digital divide; it can understand deeply the as is business operating models, stakeholder change mindsets and an ability to demystify tech and drive a business-centric implementation.
The way large firms are looking to bridge these talent gaps are:
- Build the base with fresh talent – Ones who are digital natives and, with the proper induction, curation and motivation, can work on critical areas
- Drive aggressively internal to business talent reviews and competency mapping, and create a fast track for talent which has long-haul relevance in the digital business
- Identify gaps in the mid-level talent pool and prepare a buy plan
- Leadership talent – Look at building their competence in emerging areas through an effective dual role portfolio – eg. Head of Sales Marketing entrusted the portfolio of customer analytics and insights portfolio; Head of Accounting Ops required to drive digital finance, etc.
- Finally, creating a culture where employees have fun, laughter and motivation to work towards the organisation’s goals is essential. A culture of inclusivity with significant factors are respect, trust, fair treatment and listening. Leaders need to focus on all softer aspects of the business for growth and preserving talent to move ahead of the competition
If yes, does it pose a challenge to you as a leader?
A short answer is yes, but this pressure is also making me look at more innovation and experimentation as a leader.
I would not have imagined four years back that I would assemble a set of leaders for Operations, Intelligence & Analytics and Transformation – all not company employees but experts in their field.
And my role moved from a boss to more of an inside coach and facilitator for internal dynamics, management, and driving collaboration which I find is more streamlined than dealing with internal line leaders.
With technology set to disrupt every area of business across industries, how do you see the role of GCC evolving over the next 2-3 years and what would be the key factors for growth?
GCCs will have to be at the forefront of leading the way in embracing the digital way of business for its larger business organisations. This is obvious; what is not so obvious is that the success for GCC will come from its ability to be at least a step or two ahead of its business counterpart, not in having the technology know-how but in how to make it relevant.
This is placing an enormous onus and challenge for GCC, which hitherto was a replica of its parent business in terms of structure, policies and roles. The legacy GCC operating model based on sequential assembly-based organisations has a top-org structure with a heavy layer of general management.
The move is to have flatter, agile, business outcome-driven and consumer-centric capability pools. Imagine that GCC is a digital twin of the parent business vertical with offices and plant distribution centres. GCC has to build, operate, optimise and transform the digital twin to add business value to the parent organisation.
Hence the critical factors of growth will be:
- Ability to create agile/nimble structures
- Create an integrated view of digital business
- Be ready to be measured, rewarded and compensated for achieving real business outcomes such as revenue growth, cost take-out that reflects on the company’s balance sheet – a true profit centre
- Be accountable to the end customer, partner, and vendor for delivering outcomes
- Create a network that enables it to integrate and provide oversight control of physical field elements
- The ability to retrain, retain, hire and develop talent faster and better than the competition and parent business
As the capacity centre technology prowess and staying ready for the future is a must, what are the upskilling priorities of existing GCC in India?
With Technology changing so fast and organisations having no choice but to adapt, the need for reskilling will be multi-fold. 2022 has led to the unexpected phenomenon of the ‘Great Resignation’. With this, the entire paradigm has changed, and the era of reskilling has begun.
As per WEF, companies estimate that to meet their expected needs by 2024, around 40% of workers will require up to six months of retraining, and almost all business leaders expect their employees to pick up new skills on the job. A separate line item in the budget for investing in reskilling would be a part of the long-term business strategy.
The era of AI, machine learning, and IoT is also an era of reverse mentoring. BOTS would perform the transactional jobs, and thus the existing staff would undergo reskilling, especially from GenZ, to train themselves on adopting new technologies.
However, I would not look at it from a GCC entity point of view but take an industry sector view, considering the entire GCC ecosystem as one vital segment of India’s services economy.
The quality of output from these talent manufacturing zones is less than adequate to fuel and power the ecosystem’s needs.
What I believe should happen, just like in manufacturing where firms have co-developed industry skill centres, for tech-centred operations, it is important that a more programmatic long drawn strategic partnerships be there between academia, polity, policy and industry. NASSCOM has been working on the same for some time and hopes it will bridge this gap.
For internal upskilling, GCC has to integrate skilling with business management; just like a medical professional gets awarded a speciality/super speciality degree/permit only after basic academics reinforced by on-the-job internships, and then continuous maintenance of the credentials through mandatory speaking/workshop. Demo engagements; mid to senior level management in GCC also should have a similar framework. One cannot be Head of Digital Finance unless you have undergone a spiral development model.
Will GCC maintain its upward growth trend? If we walk down the history of the last 20 years, the concept of outsourcing/capability centres was growing based on cost arbitrage for transactional work.
I agree that cost savings will never go out of fashion, but a significant shift happened in 2008 on the back of the subprime crisis, when the first wave of growth for multi-functional centres got established. Based on that, the growth continued with increasing initial digitalization and a shift to cloud-based architectures backed by the success of transactional improvement.
And the pandemic digital disruption has made GCC look beyond cost arbitrage, process reengineering, and digital transformation to creating value for the client organisation.
In my view, the growth is expected to continue over the next decade as the GCC ecosystem is going through a significant upward learning and reinforcing cycle, making GCCs more and more integral and integrated into businesses to create business value and move towards an experience economy.
Given the recent headwinds in GCC customer markets where there are demand drops and supply-side constraints, temporary global business confidence will be dipped, but that’s just a 3-5 year pitstop that has occurred in the life cycle of GCC.
However, as is true for any business, so is for GCC. The growth will be a function of GCCs ability to add value to customers continually. Be invested in people’s capabilities and technology changes and be vigilant about risks – now pandemics should not catch us by surprise in future or wars or supply chain disruptions.
How does the company decide between insourcing work to GCC or outsourcing to a service provider? What are key considerations?
Organisations should start cultivating the strategy to view the investment and sourcing decision as a spectrum instead of looking at outsourcing and insourcing as only two endpoints.
Usually, if it was core and strategic – it was deemed to have been insourced. Still, with the rapid leapfrog on technology and even more shortening product life cycles within the core, decisions are taken to outsource the services.
There is a possibility of outsourcing in strategic components or, as it exists, co-source. An example from the Indian auto industry, when the first wave of the open economy happened, traditional manufacturing and small footprint of platforms was a critical existential threat, and auto companies needed to create capability for design and product development. A major gap and scarce in-country talent come in co-source, where auto designers did design in Italy, but with the core market, customer and infra availability inputs from marketing. Production engineers from auto companies working together as a team side by side both in Italy and India.
Another alternative that we have seen is companies having outsourced earlier, now bringing back the work inside, given that economic changes have made that work core/strategic e.g. manufacturing of key product lines, as these provided an internal platform for rapid innovation. Market feedback and cost structure visibility.
Lest I can say, the decision on what to outsource/insource/co-source is integral to the success of GCC strategy but also involves continuous review, learning and reshaping the contours to be relevant and be ahead.
So to sum it up, it’s more of a strategic decision based on the organisation’s ability to attract talent and regularly invest in technology. In both cases, whether insource or outsource, both have to create value for clients, failing which decisions are taken from moving from outsourcing to insource and vice versa.
What are some of the immediate priorities to further augment the growth of the GCC in India?
The pandemic-driven talent captures anxiety and the scorching pace in compensation growth is not commensurate to the expected value add. This has to stabilise.
The no-shows, the external talent at 2-3x of in-house talent and money taking only priority rather than learning long term and being value adding to business has to get some collective GCC industry level alignment and action.
Second, recognize the fact that the pandemic has made and validated the WFH/hybrid model. Don’t force fit to the pre-pandemic WFO model.
And given the bursting at seams infra constraints in overflowing India mega cities, align the resource and GCC location strategy that enables a more seamless, more quality of life balanced transition – satellite offices in tier 2/3 cities, the concept of co-working in these locations.
And relook at the org structure staffing levels, and start proactively balancing demand to needs, to avoid layoffs/redundancies by the time we enter FY24.
How can India continue to attract more GCCs?
The scale and performance over the last 20 years have built an incredible success story. The agility with which GCC has aligned itself to the business needs is testimony to the fact that GCC is the extended arm of the parent organisation.
However we can not remain contented with the past glory, but we GCC need to consistently invest and build a capability of becoming true subject matter experts in many areas, and the measures of these on:
- What’s India’s share in patents and ranking in innovation – we climbed to 46 from 81, but need to aspire and move up, 2022 target is to be 25th place
- PhD of global reach, which requires more than a contest hackathon approach but building a network of public, and private institutions of new age science and technology
- The private academic institutions need to be rationalised and upgraded for soft infrastructure- capability needs applied academicians, not AC classrooms, buses, or hostels
And as employees, we need to realise that in whatever our task, we need to build deep insights and expertise – even if it is a simple task of manning a cab.
We cannot have this dichotomy of trying to deliver world-class while our ecosystem is not even at par to provide acceptable class.
These are anchor bolts for long-term foundation, if we don’t build this now, we have so many tailwinds. We will fritter this global advantage in the next 10-15 years.
What are some of the reasons for the failure of GCCs?
I am pretty clear some of the GCC fails primarily because of the following reasons:
- Unrealistic time and maturity development expectations and change management
- Wrong outcome measures on the business case – cost savings if the only reason for setting up GCC, the Global CFO will be after the GCC head from year 2, as the savings already get accrued in the first year on moment transition is over
- Not investing upfront time in understanding the incoming business – not only process steps technology but more critically organisational stakeholder system, adapting to changing business requirements
- Getting over-enthusiastic in creating technology exhibition in the organisational context
- Not focusing on creating a culture of innovation, inclusivity and teamwork
Thank you Swati for these fantastic questions.
Swati Yadav is the Manager for the GCC and Shared Service practice at Catenon India. She holds a BA (Hons) in English Literature from Lady Shri Ram College for Women (DU) and a MBA from ESCP Business School.
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