For the longest time, leaders have perceived Global Capability Centers (GCCs)/Global Business Services (GBS) Centers through a narrow lens of being just an offshore utility designed for cost arbitrage. With time, experience, and expectations, this global scenario and perception is changing.  

GCCs/GBSs today are evolving into strategic powerhouses of growth and innovation. As per a recent ET Realty article, “Global Capability Centers are projected to lease 50-55 million sq. ft. of office space in India’s top 6 cities by FY26-FY27, contributing significantly to overall demand.” 

However, despite this positive and incremental trend, the myths about GCCs/GBS centers continue to exist.  

So, if you are considering setting up a Global Capability Center (GCC), a Global Business Services (GBS) center, or a Global Innovation Center (GIC), then it’s the perfect time to rethink your goals. Moving past a purely transactional mindset is the key to unlocking its full potential as a center for innovation and significant enterprise impact. 

Check out these top five common myths that global enterprise leaders still tend to hold about service centers. Here are some modern truths that are driving the next big wave of transformation for businesses worldwide.  

Myth 1: A GCC/GBS is a Cost-Saving Venture 

• The myth: Set up a GCC to capitalize purely on labor cost arbitrage. 

• The truth: It’s all about control, capability, and enterprise resilience. 

The traditional view of a GCC being perceived as a delivery hub focused on cost reduction is no longer the primary driver for modern centers.

During a recently conducted webinar on ‘Key Success Factors for Building & Scaling AI-First GCCS,’ Karan Kamal, Co-founder and Transformation Advisor at FutureFactor360, explained, "The truth is that the modern GCC has moved beyond many of these perceptions. The reality is that GCCs are not just about cost. It is about control. It's about capability. It's about speed, innovation, IP, and the resilience that a GCC can drive for the enterprise." 

Crucially, a GCC is a wholly-owned entity, making it fundamentally different from a vendor relationship. “A vendor works for you. A GCC is you. It is an enterprise within the enterprise,” stressed Karan. This ownership grants the headquarters complete control over its intellectual property (IP), data security, and strategic talent development, a level of control impossible with a third-party vendor. 

According to a 2024 McKinsey survey, 63% of global CXOs now state their GCCs are central to innovation, not just execution. Similarly, Bain & Company's 2024 GCC Outlook expects over 60% of GCCs to manage end-to-end digital product portfolios by 2027, confirming the shift from a cost focus to an innovation mandate. 

Myth 2: GCCs Add a Layer of Friction and Complexity 

• The myth: Adding an offshore team complicates our global operating model with new management layers and time zone challenges. 

• The truth: It simplifies the global operating model. 

This is a common fear, especially when a GCC/GBS is viewed as a separate, remote silo. In reality, a well-governed GCC acts as a strategic nerve center. Karan countered this myth by saying, "It's far from adding complexity. If anything, it simplifies the global operating model in terms of bringing better decision-making, better visibility, and agility to the whole operations." 

Instead of having work scattered everywhere and operating in silos, the capability center/captive center integrates it. This means processes become standard, and you get better economies of scale, making the entire enterprise run much more efficiently. 

Myth 3: GCCs Are ‘Only’ for Back-Office Functions 

• The myth: Move low-complexity, transactional support activities like IT helpdesk and payroll to the GCC. 

• The truth: GCCs are evolving to manage critical R&D, tech, and data functions. 

While the initial GCC model focused on transactional delivery, the modern mandate has expanded dramatically. 

Dr. Subhendu Pattnaik, Chief Marketing Officer, Enablr™, a Covasant company, and moderator of the webinar, noted, "Now GCCs are being established to manage not just your back-office function, but also critical functions like research and development, your finance, your tech, data, and so on." This shift positions the GCC as a ‘growth lever’ and an innovation engine. 

As per NASSCOM’s report, referring to the maturity of GCCs over the years, “Almost 90% of the GCCs operate as multi-functional centers, supporting technology, operations, and product engineering. Engineering, Research & Development (ER&D) GCCs have grown 1.3 times faster than the overall GCC growth rate, indicating a key shift towards higher-value and more complex work to India.”  

Modern GCCs are establishing dedicated innovation labs and R&D centers, often developing proprietary AI models for supply chain optimization, customer behavior analysis, and product engineering. This move to deep domain expertise positions them as strategic co-pilots in business strategy and product roadmap planning, not just execution arms. 

Myth 4: Setting Up a GCC is Purely a Logistics Exercise 

• The myth: Just incorporate the entity, sign a lease, hire a recruiter, and cut the ribbon. 

• The truth: Success comes from defining your charter, identity, and ambition. 

A common stumbling block for most enterprises is perceiving the setup as ‘something very easy’ and transactional.  

Karan used a sharp analogy to dismiss this myth, saying, "But that's almost like saying that, you know, you buy yourself an apron and you can call yourself a Michelin five-star chef.” He clarified that, "Setting up around real estate, the incorporation is what I would call as logistics." The real excellence, he said, lies in the strategy: “The real deal is around defining your charter and your identity."  

Leaders must answer these existential questions: 

• Why do we exist? 

• What unique problems and what unique value-add are we going to create for the enterprise? 

• What's our short term, mid-term, long-term ambition? 

Without upfront answers to these questions, the GCC risks just ending up being a facility, but not a force to reckon with. 

Myth 5: You Must Go "All In" With Functions from Day One 

• The myth: To maximize cost savings, we should transition all non-core functions immediately or immediately start with AI and data analytics. 

• The truth: Start with foundation enablers to earn credibility. 

Shameel Sharma, Managing Director and Site Lead at Marriott Tech Accelerator, and one of the speakers at the recently concluded webinar, emphasized the caution against trying to do too much too soon: “Well, all in definitely doesn't work because at the end of it, if you go all in, then everybody is pushed to all corners, and everybody's trying to make things successful and is never really going to be successful." 

Instead, he advised starting with "the foundation enablers” which means building a strong horizontal across data, engineering, governance, and cloud. 

Further, Karan built on this point, introducing the concept of the trust ladder.  

“You can't raise the flag and say, I'll do innovative work from day one. Earn the trust, build the credibility, and that's when you can raise your hands and say that I'm now entitled for something more strategic,” added Karan. 

What’s Next? Watch the On-demand Webinar for More Insights  

If you are a leader currently weighing your strategy to conceptualize a capability center, then watch the full webinar to get critical insights into: 

• The biggest early stumbling blocks and non-negotiable must-haves for GCC success. 

• The "trust ladder" and how to gain strategic influence at headquarters. 

• The crucial debate: Who is the right leader for your GCC? An engineering expert or an operational generalist? 

• Karan Kamal's CORE framework (Control, Outsource, Re-engineer, Eliminate) for transforming existing GCCs. 

Watch now!