The Michelin Trap: Buying the Apron, Skipping the Craft

Karan Kamal, Co-founder and Transformation Advisor at FutureFactor360, perfectly sums up the initial, fatal flaw in thinking while setting up a GCC/GBS center. According to him, "Most enterprises perceive setting up a GCC as something very easy. For many of them, it is about incorporating a company, signing a lease. Hiring a recruiter. And then cutting the ribbon with a guest, and you have the digital hub."

He further mentions, “But that's almost like saying that, you know, you buy yourself an apron and you can call yourself a Michelin five star chef. Because the real deal and the real excellence don't come from the apron and the kitchen. It comes from the craft, the discipline, and the soul that you put into the GCC.”

The Non-Negotiable Core: Charter and Identity

The fundamental mind shift you need is separating logistics from identity. The facility is just logistics. The foundation of success for your GCC/GIC lies in its charter and identity.

According to Karan, the real work is defining your charter and  identity.

This means your leadership team must align on three critical, strategic questions before the GCC setup process even starts:

• 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?

If you fail to define this mission clearly, then your GCC will end up just being a mere facility, but not an innovation hub. And that is how a massive investment underperforms.

De-risking Your Investment: The Three Pillars of Execution

For companies entering a vibrant hub like India, highly favored for its deep talent pool and evolving innovation ecosystem, the early days are full of unknowns.

With key inputs from our panel of experts, here are three successful ways in which companies can de-risk their GCC/GBS investment from day one:

1. Clear decision frameworks: More than reporting, setting up a GCC/GBS requires establishing a very clear decision-making framework between your global headquarters and the India/local entity. This clarity ensures the GCC is fast, compliant, and perfectly aligned, and not stuck in the approval loop.

2. Compliance as a strategic pillar: It’s important to keep compliance amongst the key elements in your equation. Engage with experienced legal, tax, and regulatory advisors early on to embed compliance into your daily operations and avoid unforeseen circumstances.

3. The right talent strategy: Anchor your talent strategy on stability and culture building by focusing on building the right leadership layer and clear growth pathways.

The key tip here is, don't skip the feasibility study. According to industry experts, initial setup is a major challenge. You need to check viability factors like local talent availability, cost structures, and crucial regulatory risks before committing to a location or entity type.

Navigating the Setup Process

The establishment of captive Global Capability Centers (GCCs) in India has become significantly easier and faster over the last decade. This is attributed to supportive factors like regulatory evolution, proactive state government participation, and a robust partner ecosystem. Additionally, enterprises benefit from flexible set-up options, including self-funded models requiring upfront CapEx or partnership arrangements where the CapEx is handled externally.

So, you have flexibility on your model:

• Self-funded enterprise: You absorb all the CapEx (Capital Expenditure).

• Partnerships: Specialized firms can manage the CapEx and compliances for you, enabling you to pay a monthly or annual subscription.

With strong local leadership and seamless HQ integration, enterprises can move from entity incorporation to full scale operation in as little as six to twelve months. Speed is possible, but it requires the right upfront strategy.

Watch the Full Webinar for Deeper Insights

This is just scratching the surface of what it takes to build and scale next-generation GICs and GCCs. If you are a leader currently planning your strategy, then the full webinar provides critical, in-depth discussions on:

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

• How to build the "trust ladder" and transition from purely transactional tasks to strategic ownership.

• The concept of "earned relevance" versus the costly "entitlement trap."

Check out our latest blog highlighting the “5 Myths That Global Enterprise Leaders Must Bust to Derive Real Value from Their Global Business Services (GBS) Center.”