Post the early months of the pandemic, globalisation firmly re-emerged as a key business strategy for enabling business continuity, ensuring business resilience, and distributing the financial and business risks. Japan, for instance, approved a USD 2 billion additional budget to help companies move their high-value production back to Japan and USD 217 million to move them to other ASEAN countries.
But these are not the only reasons why companies are increasingly turning towards globalisation. The other big reason is access to talent, especially tech talent in areas of AI, ML, Robotics, IoT, among others. Access to relevant talent and domain experts helps to drive innovation and stay ahead in the game. In fact, industry studies point out that one of the big reasons companies fail to innovate rapidly or maximise their growth potential is the lack of access to tech expertise. But, changing business environments and priorities add to the complexity of accessing talent, which ‘The Great Resignation’ brought to the fore last year. And, the technology space, in particular, bore the brunt of the impact.
A deeper look at why India is a GCoE capital
As organisations reorient themselves to a heightened demand for globalisation, business transformation and growth, setting up of Global Centers of Excellence (GCoEs) has emerged as the answer. And India in particular has risen to become a hotspot for setting up world class GCoEs. As of 2021, India was home to more than 1,400 GCoEs, cumulatively employing a talent pool of 1 million, reflecting the confidence of global companies in the Indian talent market.
There are many reasons why global companies have India on top of the list when it comes to setting up their GCoEs. “One, it has a very mature tech talent. And, with India’s emergence as the third-largest startup ecosystem, the country’s innovation ecosystem has only grown stronger. The increasing research investment and thereby researcher density, stronger partnership between top academic institutions and industry, have also helped to accelerate the innovation ecosystem and tech expertise,” explains Nilesh Thakker, Managing Partner, Zinnov, a US-headquartered global management consulting and strategy advisory firm, with core expertise in globalization, product engineering advisory & digital transformation.
The favourable geopolitical support and regulatory environment in India, have been strong tailwinds too. In fact, according to the World Bank’s Doing Business Report (DBR) of 190 Countries, India moved up from 142nd position in 2014 to the 63rd position as of 2020. All this further translated into GCoEs which have already been established in the country to achieve enhanced efficiency in their service offerings, build strong proofs of concept, and create a comprehensive go-to-market (GTM) strategy to support their business growth.
When a US-based SaaS company that provides cloud-based online scheduling and other business management software for the wellness services industry decided to strategically leverage globalisation to gain access to talent, innovation, and diverse markets, it looked to India to set up its GCoE. The several factors that stood in favour of the decision were access to the skilled digital talent pool, opportunities to partner up with large technology vendors, cost optimisation, access to the whole ecosystem including startups, and better market opportunities. According to the company, its India GCoE was designed to undertake end-to-end responsibility of some of its critical product lines and bring next-generation products to fulfil local consumer needs. The India centre was at the heart of its global product development efforts.
What are some challenges organizations need to tackle while setting up a GCoE?
Setting up a GCoE requires extensive planning with respect to business outcomes, scale, infrastructure, and costs. It also requires a business to have ‘trusted’ feet on the ground. Simply put, businesses must have local subject matter and ecosystem experts who can efficiently manage the process without the excess overhead of time and/or capital. In addition, it needs to have a strong leader to ramp up and lead the teams to success from the time of inception of the centre. The involvement of many variables and lack of expertise means businesses face the dilemma of how to approach globalisation effectively.
More often than not, businesses leverage the expertise of their current leadership team to plan and set up a GCoE. But, in the process, the leaders end up managing local vendors, instead of being able to focus on driving technology and innovation from these centres. In many cases, there is a long waiting time before the centre is fully operational, resulting in delays in technology development. To top it all, the cost and the time factor involved are extremely high.
A one-stop solution to build and scale global delivery presence
The Global Center of Excellence Accelerator is a CaaS (Center as a Service) offering, pioneered by Zinnov, that enables a frictionless journey, beginning with building a strategic playbook for a GCoE and then going all the way to on-ground implementation and operations in a rapid and cost-effective manner. With this kind of optimised project management framework and end-to-end process mapping of setup activities, the time to set up the centre is highly accelerated. With the GCoE Accelerator, the centre can be up and running in a few weeks with minimal support from the company’s current cross-functional teams – HR, Recruiting, Finance, Legal, and Facilities.
“The average time that we have been able to get the GCoE up and running is about a few weeks. There is almost 2x reduction in time to set up a new centre and kick-start operations, compared to a wholly company managed center which usually takes three to five months,” says Amita Goyal, Partner & Head of GCoE Practice, Zinnov.
The other two big tangible advantages that Zinnov’s GCoE Accelerator brings to the table are cost savings and enhanced agility. In the Accelerator model, businesses pay for what they consume. The infrastructure and support costs are payable as a managed service on a per-employee basis with a commitment of only six months. Plus, the variable expense is much lower because of the larger economies of scale. This means, companies no longer have to invest heavily on the capital expense related to long-term leases, leasehold improvements, and hiring of functional teams. The cost savings are as much as 20 percent when compared to a traditional Global Center of Excellence setup model, and this further brings down costs significantly in successive years as teams scale up.
One of the other areas that decelerate the scaling out of center set ups, is the fact that a new GCoE cannot hire employees until it has a legal entity registered. A workaround that Zinnov has defined to help customers circumvent this roadblock, is an EoR (Employer on Record). The mechanism has Zinnov acting as an employer in trust, on behalf of the GCoE, to fulfill its immediate staffing needs.
With the GCoE Accelerator, companies can quickly hire the right people and deploy global resources on developing products that differentiate their business and transform customer experiences rather than managing infrastructure. This translates into companies being able to focus on the core functions to be delivered from the new centre. “Through the Accelerator model, companies can onboard the first centre employees in as little as three months,” remarks Nilesh.
The GCoE Accelerator advantage
“The Accelerator model is a good way to test, experiment, and explore the talent bed of a new geographical location at speed, without being compelled to incur upfront huge CapEx costs on real estate, etc. In addition, the plug-and-play office space brings in the elasticity to incur costs based on the team size,” says Amita.
And, one of the reasons why the companies can focus on building capability for end-to-end ownership of product development, building brand equity, strong customer and partner relationships is also because of the heavy-lifting done by a partner like Zinnov. Under the Accelerator model, Zinnov undertakes the responsibilities of establishing and managing the Accelerator end-to-end, from entity incorporation to facility setup, talent acquisition and knowledge transitioning, and full operations management (IT, HR, Finance and Accounting, Legal, etc).
But, even before it can do that, Zinnov’s engagement as a partner starts with clearly defining the company’s problems and the purpose of setting up the GCoE, holding workshops with key stakeholders, conducting a thorough location/skills/site analysis for the centre, and devising a suitable organisation structure, portfolio transition plan, along with a three-year plan for centre growth with comprehensive financial models. All this ensures that the Accelerator makes globalisation a cakewalk while also ensuring that it generates the highest value from the global talent.
The Global Center of Excellence Accelerator model doesn’t just accelerate the centre setup process but also the maturity of the centre. As a partner, Zinnov helps organisations identify the right projects and products to transition, and manage knowledge transfer, L&D programmes, leadership coaching, etc. The GCoE Accelerator model ensures that there’s the ease of implementation of strategies, and the leadership spends their time focusing on technology deliverables and innovation.
Zinnov has been a part of the ecosystem that helps set up centres for more than 20 years for global companies, including the Fortune 500 enterprises within and outside India. Since the inception of the GCoE Accelerator model in 2018, Zinnov has set up and managed 15+ GcoEs for companies of varied verticals, sizes, and requirements, and helped these GCoEs hire more than 1,000 people for diverse skillset requirements. With the GCoE Accelerator model, Zinnov has been able to establish expertise, drive innovation, access global talent and markets, and extend the advantages of globalisation beyond the traditional centre setup models.
In a world where time is of the essence and there is a need to fail fast and scale fast, the GCoE Accelerator model could be just the strategic initiative that companies need to differentiate themselves from the competition.
