ChatGCC: Why GCCs Struggle and How to Avoid Failure

Episode 2

Hosted by Patricia Connolly and Aditya Jayaraman 

Listen to the Full Episode Here

Read the Full Transcript Here

Key Takeaways

• GCCs rarely fail because of bad strategy — on paper they're usually well designed. They fail gradually, drifting from their original purpose until they become "an ODC in disguise."

• A Global Capability Center or "GCC" and an Offshore Delivery Center or "ODC" are fundamentally different: a GCC is employee-centric and built for business value, while an ODC is contractor-based and built for task execution. Confusing the two is where disappointment begins.

• Drift usually traces to three patterns: unclear definitions of success, weak leadership empowerment, and scaling without the right foundation.

• Culture, talent fit, and governance are the most underestimated determinants of success — and all three must be built in from day one.

• The hardest part of a Build-Operate-Transfer model is the transfer. Plan it from the start, or risk a transition that never fully happens.

  
  

Why Good GCCs Quietly Go Wrong

Global Capability Centers are booming — and many of them are quietly failing to deliver what was promised. The striking part, as Jayaraman observes, is that they don't fail for lack of strategy: "On paper, they're usually quite well designed. There's a clear mandate, a strong business case, leadership backing." The board signs off, the center launches, and then a few years in it feels underwhelming — never scaling the way it was meant to, or drifting away from its original purpose.

What was supposed to become a strategic capability turns into something else: a high-cost delivery engine, or a center perpetually trying to reinvent itself. As Connolly puts it, the failure doesn't happen where you'd expect.

"GCCs rarely fail at the boardroom level. They fail in the way reality sets in after lunch." — Patricia Connolly

This episode isn't about fixing the problem yet — it's about naming the real reasons GCCs drift, the ones that set in early but aren't recognized until much later. If you've ever sensed your GCC isn't quite becoming what it was meant to be, the most useful first step is recognizing when it has started to slide into an offshore delivery center in disguise.

GCC vs. ODC: Knowing the Difference

A lot of the confusion starts with the model itself. A GCC, in Connolly's definition, "has a defined strategic purpose — to create business value and innovation through an employee-centric workforce that operates as one team with headquarters." An ODC is a different animal entirely: typically contractor-based, disconnected from the broader vision by design, and focused on executing defined tasks, usually driven primarily by cost.

Those are two very different objectives, and when they get mixed up, the disappointment starts — you expect business outcomes but you're getting output. That's how many GCCs begin to fail, Connolly notes, "maybe not dramatically, but subtly. They still operate, they still deliver to a degree, but they never really become what they were meant to be."

Where the Drift Begins

The breakdown is rarely one big failure. It's gradual, and a few patterns show up consistently.

The first is a lack of clarity. Companies don't always define what success actually looks like — cost savings, capability building, innovation, or business growth. "When that's not clear from day one," Connolly says, "the GCC starts drifting, even if the teams seem busy." She points to a company that set up what looked like a GCC but whose real intent was a contractor move into a lower-cost center; by year one it was wrestling with slow hiring, poor retention, and leaders with no clear sense of purpose — confusion that showed up everywhere, in morale, delivery, and outcomes.

The second is leadership empowerment. If the GCC isn't truly empowered and most decisions still sit with HQ, local ownership never forms — and, as Jayaraman notes, the HQ leader ends up carrying the entire load on top of their existing job. Without clear ownership and an articulated mission, people improvise. That slows decisions, creates bottlenecks, and can drive strong leaders away.

The third is scaling without a foundation. Companies try to ramp quickly without the right leadership, structure, clarity, or empowerment in place. That's when you hear, in Aditya's words, "we thought we'd be at 100 people by now, but we're only at 20," or "we've just started hiring and we're already losing people." The issue isn't speed itself — it's scaling before the underlying support systems can keep up.

Culture: The Most Underestimated Factor

Culture is where many GCCs are won or lost, and it's the factor leaders most often skip. A GCC isn't just a delivery engine, Aditya argues — "it is a cultural extension of the parent organization, the mothership." The trouble is that culture doesn't wait to be designed.

"If culture isn't intentionally built, it builds itself." — Patricia Connolly

When that happens, employees fill the gap themselves, and you end up with a fragmented GCC: poor communication, different ways of working, mismatched expectations. The most successful centers invest in culture early — defining how decisions are made, how teams collaborate, how accountability works, and what everyone is working toward — while aligning the parent's principles with the local environment's strengths.

This is where SMC Squared's approach is deliberate from day one. During startup, its talent, marketing, and HR teams meet with client leaders to absorb the company's culture, history, and values, then build a value proposition that positions the company correctly in the talent market. Everything from there is infused with brand and culture, so a new hire identifies with the parent's purpose from their first day. The payoff, Connolly says, is that employees work "as a valued part of the team — not in a contractor model or distant from headquarters. That's culture when it's running best."

Hiring for Fit, Not Just Skills

Talent acquisition is where GCCs are fundamentally different from traditional outsourcing. "You're not pulling from a bench," as Jayaraman frames it. "You're building something from the ground up." Connolly emphasizes that SMC Squared has never kept a bench by design: "We never wanted to fit a candidate halfway. Everything matters when you're hiring, especially early on, when you're defining the DNA of the organization."

The focus is on fit — not just technical capability, but alignment with how the organization operates, plus the right industry and geography, language competency, growth potential, and long-term retention. The cautionary version is a center that hires purely for skills. If a parent company sets up a GCC to advance its data journey but the operator simply chases Databricks, Snowflake, and Redshift résumés, the center drifts from the original objective over time. The goal is people who don't just work for the company but think like it — especially since employees may eventually transition to work for the parent directly.

Governance From Day One

Governance is where GCCs either stabilize or struggle. It isn't just oversight, Connolly notes — "it has to be embedded into how the GCC operates day-to-day, and it starts right from the beginning." The most effective models don't bolt governance on as an afterthought; they weave it into a structured playbook adopted from day one, spanning hiring, delivery, outcomes, and performance management.

The absence of it is telling. When Connolly talks with leaders whose GCCs are underperforming, governance often "isn't even on the table" — the focus is on filling seats, with no clear answer to where the center is going, how progress is measured, how it's communicated, or how change is managed. Things turn reactive, and consistency and quality break down. Strong governance, by contrast, inherently mitigates risk — which is exactly why C-level leaders and boards respond to it when it's raised early.

Vendor Dependency and the Transition Trap

One of the core reasons companies build GCCs is to regain control — over talent, IP, delivery, and outcomes — and reduce their reliance on external vendors. But that only works if the GCC is truly integrated and capable. Otherwise you get a hybrid in which the GCC exists but the vendor dependency never actually goes away, and the original mission gets diluted.

The most overlooked piece is the transition itself. Many GCCs are built on a Build-Operate-Transfer (BOT) model, expecting eventual transfer to the company's own entity — but that end goal has to be mapped from the very beginning. Patricia is candid about how often it goes wrong: some vendors want clients to stay dependent and quietly create roadblocks; in other cases the transfer happens too early, before the GCC is stable. "We hear horror stories about GCCs that go through an ownership transition," she says, "and only 50% of the team actually moves to the parent company." Avoiding that fate takes structure — clear milestones, capability assessment at every stage, and leadership in place to move with the GCC when ownership shifts.

The Bottom Line

Step back, and the pattern is clear. GCCs don't struggle because the model is broken.

"They struggle because the keys to execution are maybe not understood, making it very hard to succeed." — Patricia Connolly

The difference between average and high-performing GCCs comes down to a handful of things done well: strategic clarity, culture, talent, governance, disciplined execution, and a planned transition. Get them right and the model works remarkably well. Get them wrong and you end up with something that looks like a GCC but doesn't deliver like one.

Listen to ChatGCC Episode 2 — for the full conversation, including real examples of GCCs that drifted and what it took to get them back on track.

New here? Start with Episode 1: Introducing ChatGCC.

Frequently Asked Questions

Why do Global Capability Centers fail? GCCs rarely fail because of bad strategy. They drift gradually due to unclear definitions of success, weak leadership empowerment, scaling without the right foundation, neglected culture, hiring for skills over fit, lack of governance, and poorly planned transitions — until they function more like an offshore delivery center than a strategic capability.

What is the difference between a GCC and an ODC?

A GCC has a defined strategic purpose — creating business value and innovation through an employee-centric workforce that operates as one team with headquarters. An ODC (offshore delivery center) is typically contractor-based, disconnected from the broader vision by design, and focused on executing defined tasks, usually driven by cost.

How important is culture to a GCC's success?

Culture is one of the most underestimated factors. A GCC is a cultural extension of the parent organization, and if culture isn't intentionally built from day one, it builds itself — leading to fragmentation, poor communication, and mismatched expectations.

What is the Build-Operate-Transfer (BOT) model, and where does it go wrong?

In a BOT model, a partner builds and operates the GCC before transferring it to the company's own entity. It fails when the transition isn't planned from the start — some vendors create roadblocks to keep clients dependent, and transfers attempted too early can leave only part of the team moving to the parent company.

ChatGCC is hosted by Patricia Connolly and Aditya Jayaraman, and backed by SMC Squared and Hexaware.

Episode Transcript

Introduction

Patricia Connolly 

Hello and welcome to ChatGCC, where global business leaders share how the world's most effective global capability centers are built and scaled. I'm Patricia Connolly. 

Aditya Jayaraman

And I'm Adi Jayaraman. 

Patricia Connolly 

In each episode, we explore the strategies, decisions, and real-world experiences shaping the future of GCCs. 

Aditya Jayaraman

This series is brought to you by Hexavare Technologies and SMC Square, proven strategic partners to organizations building high-impact GCCs. 

Patricia Connolly 

Let's get into it. 

Discussion

Aditya Jayaraman

Welcome back to the podcast. 

Patricia Connolly 

Hi, Adi. Great to be here with you again. So today we're going to talk about something that most people don't want to be talking about, basically the good and the bad. Global capability centers are booming right now, which is very exciting, but many of them are quietly failing to deliver what was originally promised. 

Aditya Jayaraman

Yes, that seems to be the general sentiment in the market, Pat. In my view, they don't fail because of bad strategy. I think on paper, they're usually actually quite well-designed. There's a clear mandate, there's a strong business case, leadership backing, et cetera. 

Patricia Connolly 

That's right. Companies need to get the board agreement there before they even begin. And yet, once they begin, and in a few years, many of them feel very underwhelming. They don't really scale the way they're meant to be, or they have drifted away from their original purpose. 

Aditya Jayaraman

Right. And then what was supposed to become, I suppose, I guess, a strategic capability, often turns into something else entirely. I would think a high-cost delivery engine or a center constantly trying to reinvent itself, yeah. 

Patricia Connolly 

We've seen this pattern repeat across companies and industries, and it's really worth addressing on a broad basis. 

Aditya Jayaraman

I totally agree, Pat. In fact, I should tell you, as recently as a couple of weeks ago, I was speaking to a leader here in India who's planning to quit and do something else. as the GCC is not shaping up for the original intent. 

Patricia Connolly 

Oh, that's interesting. Well, Adi, here's the deal. GCCs rarely fail at the boardroom level. They fail in the way reality sets in after lunch. 

Aditya Jayaraman

And so well said, Pat. And this episode, it isn't about fixing that yet. I feel this episode is about naming the real reasons GCCs fail. The ones that usually set in early, but aren't realized until much later. 

Patricia Connolly 

If you've ever sensed that your GCC is not quite becoming what it's meant to be, this episode will help put words to that feeling. You may also be able to clearly recognize when and how your GCC starts to fail and begin to look at an ODC or an offshore delivery center in disguise. 

Aditya Jayaraman

An ODC in disguise. I like that very much, Pat. 

Patricia Connolly 

Yeah, there's a lot of confusion about what a GCC is and what an ODC is. So hopefully we'll shed some light on these questions. 

Aditya Jayaraman

So then, Pat, why don't we start with some theory? Yeah. A GCC is supposed to be a strategic extension of your parents' business, driving innovation, owning capability, and building long-term value. 

Patricia Connolly 

That's right. It's positioned as more than just delivery. It's supposed to be integrated, aligned, and eventually a core part of how the company operates globally. 

Aditya Jayaraman

But in reality, what we often see, especially in the early stages, looks very different. 

Patricia Connolly 

Yep, that's true. It does take some time to settle in. Without proper planning and alignment, it ends up functioning more like a traditional offshore delivery center, very execution-heavy, limited or even unclear ownership, and sometimes quite disconnected from the core business purposes. 

Aditya Jayaraman

And Pat, you're the expert here, but I'm assuming this is where things start to quietly go off track. 

Patricia Connolly 

Yes, just to ground this for our listeners, it's worth a quick reminder of the differences between GCC and a traditional ODC. 

Aditya Jayaraman

Good call. 

Patricia Connolly 

So in my view, a GCC has a defined strategic purpose, and that is to create business value and innovation through an employee-centric workforce that operates as one team with headquarters. An ODC, on the other hand, is typically contractor-based. It's disconnected from the broader vision by design, focused on executing defined tasks and projects, often driven primarily by cost. 

Aditya Jayaraman

So to me, that was a lovely definition. And to me, there are two very different objectives and definitions. So when those two models get mixed up, I would suppose the disappointment starts. Because in one case, your expectation is business outcomes, but then the reality is you're getting, you're executing tasks and you're getting only output. Is that a fair thing to say? 

Patricia Connolly 

Yeah, I think that's fair. That's fair. And that's how many GCCs begin to fail, maybe not dramatically, but subtly. They still operate, they still deliver to a degree, but they never really become what they were meant to be, what the full purpose was. 

Aditya Jayaraman

Interesting, interesting. So now, Pat, given this, I think we should dive a bit deeper into the reasons for such a drift away from original intent. Yeah, so then let's get into it. So if the intent behind GCCs is usually sound, where do you think things actually start to break down? Because what we've both seen is that this isn't about one big failure. It's a lot more gradual than that. 

Patricia Connolly 

Yeah, exactly. There are a few patterns that show up consistently. The first one is a lack of clarity. Companies don't always define what success really looks like for the GCC, whether it's cost savings or capability building or innovation or business growth. When that's not clear from day one, the GCC starts drifting, even if the teams seem dizzy. 

Aditya Jayaraman

Right, And that drift shows up pretty quickly. You will see activity. hiring, delivery, but no clear sense of direction or progress. We've seen cases where the original intent wasn't clearly thought through, and the GCC ended up functioning very differently from what was envisioned. 

Patricia Connolly 

Right, We hear about these cases, and sometimes we actually step in to help. So one example that stands out is a company that initially set up what looked like a GCC, but the intent was really more of a contractor move, moving roles into a lower cost center. In year one, they were dealing with slow hiring, poor retention, and leaders who didn't have a clear sense of purpose. That confusion showed up really everywhere, in morale, in delivery, and in outcomes. 

Aditya Jayaraman

You know, Pat, that doesn't seem surprising to me at all. Even as a person, as an individual, I need that North Star of purpose and clarity. Absent that, life seems to go wayward, even though I'm very busy getting tasks done. Yeah, but it is not, I'm not headed to what my objective was or my strategic purpose was. Anyways, having said that, I feel another big factor is leadership alignment path. If the GCC isn't truly empowered, or if most decisions continue to sit with HQ, it becomes very difficult to build ownership locally. And I would think what happens then is that not only is something, are major decisions getting made locally, but equally the HQ leader ends up carrying the entire load on top of their existing responsibilities.

Patricia Connolly 

Do you agree with that? Yeah, that's really right. And I mean, think about it. These are just very human responses to problems. If there isn't clarity, if there isn't true lines of ownership, if you haven't articulated what the mission and vision is, clearly enough, people kind of make it up. And that's just not sustainable. It slows decision-making, creates bottlenecks, and in some cases, even drives strong leaders away. So while the model looks fine on paper, execution becomes increasingly strained. 

Aditya Jayaraman

Exactly, So there is one more aspect, or a third pattern that I wanted to bring up. And this, we see this pattern typically around scale, yeah? Companies try to ramp up quickly, but without the right foundation in place, Pat, whether that's, you know, leadership or structure, or clarity or the empowerment that you just spoke about now. That's when you start hearing things like, oh, we thought we'd be at 100 people by now, but we're only at 20. Or we've just started hiring and we're already losing people. 

Patricia Connolly 

You know, it's really kind of sad because we hear these kind of comments. quite frequently. And there's really kind of a disbelief as to why this is happening. There are a big misunderstanding and a gap. But to your point, it's really not about speed itself. The issue is scaling without the necessary support systems in place. So the organization needs to expand, but it's not getting there. The underlying structure just doesn't keep up. And that's where the cracks start to show. 

Aditya Jayaraman 

Exactly. Exactly. Very, very well said. 

Patricia Connolly 

So let's shift gears a little bit, but to an important point. Let's talk about culture, because this is one of the most underestimated factors when you're building a GCC. 

Aditya Jayaraman

Absolutely, Pat. I will say this. GCC isn't just a delivery engine. It is a cultural extension of the parent organization, the mothership. And I have grown to appreciate this so much. the more we've been working together and collaborating. And I think this is something which is very unique and very powerful. So please, I think you should educate us all about the culture aspect. 

Patricia Connolly 

Oh, thanks. We learned this the hard way. Very early in our history of working with companies, 20 years back is when this concept really came to light. If culture isn't intentionally built, it builds itself. It's a big gap, and companies just find that their employees fill it in. So what you get is a GCC that's fragmented due to poor communication. We find different ways of working, we find different expectations, and things tend to go awry over time. 

Aditya Jayaraman

And that's a huge problem. In contrast, Pat, the most successful GCCs we've seen Invest very early in culture. And culture loosely defined as how decisions are made, how teams collaborate, how accountability works, what are we working toward, and things like those. Would you agree? 

Patricia Connolly 

Yeah, absolutely. It's how we work, but it's really what's driving the team? What drives the company? What is the mission and the values that underlie even the business intent? It becomes a very important element to understand and convey to candidates as they are coming on board and working in the GCC. It's not just about company culture exactly. It's about aligning principles while adapting to local strengths. So both sides need to be considered, both the mothership, the headquarters, as well as the environment where the GCC is planted. 

Aditya Jayaraman

That's so well said. In fact, I must just say, I was reading something earlier today, and this was about a stand-up comedian, and he was saying his goal is to find purpose. Even in stand-up comedy, He wants to find purpose in what he does. And what you're saying aligns with that so very well. Maybe we should just talk about this in the context of an example and how SMC specifically injects culture into GCC operation path. 

Patricia Connolly 

Sure, yeah, let's do that. It's one of my favorite topics. So SMC, as I mentioned, has kind of a long history and experience with this. So we approach building culture and the importance of it into the GCC really from day one. So during the startup phase, SMC's talent marketing and HR teams meet with our client leaders to absorb the culture, the history, the values. They hear the story of the organization and where they're at today. We really lean into this, and I think this is a big differentiating factor. We talk to them about the value proposition that all of this brings to candidates because we want to position the company in the marketplace correctly and get them excited about where they're headed in this new GCC. Then everything that we do from here forward is infused with brand and culture. Whether the company is a big name in the market or a smaller, lesser-known firm, This whole concept is key to jumpstart and sustain a strong culture-driven organization. 

Aditya Jayaraman

So if I understand this correctly, were I that employee who's being employed by SMC for a particular client in that GCC, then from day one, Pat, I am 100% aligned with the culture and the values and the purpose. of that parent that I'm working for. And I directly identify with that. Is that a fair way of saying it? 

Patricia Connolly 

That is absolutely correct. Absolutely. 

Aditya Jayaraman

And that is where this bonding is born. And that's where that sense of purpose is born. And therefore, right from day one, how I know how what I contribute is what my output is contributing to the output of my parent company. And that's where that alignment happens, I suppose. 

Patricia Connolly 

Yes, yep. You're working as part of a team, as a valued part of the team. And that's where the magic happens. You're not working in a contractor model. or distant from headquarters and feeling that way. You're part of a bigger organization and a team that's working well together. And that's culture when it's running best. 

Aditya Jayaraman

And that's where the magic happens, Pat. Yeah. So well said. Anyway, so that's a natural segue onto the next dimension where problems typically start to creep up, yeah? And that is talent acquisition. So Specifically, how is that talent? We talked about how you get the talent culturally aligned with the parent company, but now I think back, we should focus on how is that talent brought in the 1st place. 

Patricia Connolly 

Yeah, this is where GCCs are fundamentally different from traditional outsourcing models. 

Aditya Jayaraman

Exactly. You're not pulling from a bench, right? You're not inheriting A-team, but you're building something from the grounds up. Would you agree? 

Patricia Connolly 

Yeah, We've never had a bench purposely. We never wanted to fit a candidate halfway. We're all in. Everything matters when you're hiring, especially early on. And you're defining the DNA of the organization? 

Aditya Jayaraman

I want to say one thing, and I want to double click on what you just said, Pat. So basically, the focus is on fit, not just technical capability. but alignment with how the organization operates. Having said that, could you shed some more light from your personal experience on what happens to this, what I just said now, the focus on fit, if you're just creating a bench and then you're recruiting off it. 

Patricia Connolly 

Yeah, it is an interesting concept. And honestly, this surprises a number of leaders that we talk to about this because they're quite used to the way outsourcing works. But we want to ultimately enable ownership. We want to bring candidates in that work with the headquarters team and leaders and build a GCC team that not just works for the company, but actually thinks like the company. It is part of the company. So there's a lot of short-sightedness sometimes in talent acquisition. But we take a different approach, not just a skills-only approach. Sure, technical, functional skills obviously matter. We pay a tremendous amount of attention to this, but we're also looking for people that fit on different levels. So are they from the right industry or the right geography? Do they have language competency? Is there growth potential? Again, we're looking at employee hiring. We're not looking at contractors. We're looking at a long-term fit. And of course, we're looking at that cultural element for fit. 

Aditya Jayaraman

That is very interesting. So let me try and say that again. So if the parent wants to set up a GCC for tapping into data skills and furthering its data journey path, and if the GCC operator takes an approach of just looking for people with, let's say, Databricks skills and Snowflake skills and Redshift skills, then over time, we are saying that we're going to see that drift from the original objective. Is that a fair way of putting it? 

Patricia Connolly 

Yeah, we want to think long-term. We want to think long-term in terms of retention. And I know we'll touch on this at some point, but we also are expecting employees to perhaps transition and fully work for the company in the end state. And we want to ensure success all the way through. So we're thinking about these elements. What's the end goal right from the beginning? 

Aditya Jayaraman

And that is the focus on fit. Yeah. Awesome. So we've just covered culture and then we've covered talent acquisition. But now once all this comes through, I feel the next very important component, which if not paid attention to, can cause that potential drift. is governance. This is where a lot of GCCs either stabilize or struggle, Pat. That is my thesis. 

Patricia Connolly 

It's a good thesis. Governance isn't just oversight. It has to be embedded into how the GCC operates on a day-to-day basis. And it starts right from the beginning. 

Aditya Jayaraman

Exactly. So I would posit that the most effective models, We don't have governance bolted on as an afterthought, but it's woven into a very structured playbook that is adopted from day one. So from hiring, to delivery, to outcomes, to performance management, and so on. Would you allue that? 

Patricia Connolly 

Yeah, that's something we've focused on heavily at SMC, largely because that's the DNA from the organizations that we came from. Strong governance, strong leadership, strong communication, all brought into an operating model right from the beginning. It's not an afterthought. C-level leaders and boards really appreciate that we're bringing this up right in the beginning, and they do see the value. So good governance, in a sense, really mitigates risk inherently. 

Aditya Jayaraman

So could you tell me, Pat, What does bad governance look like? Well, lack of governance. I'm not going to say that. The lack of governance. What does it look like? 

Patricia Connolly 

I was just going to say the same thing. More often than not, when I'm talking with company leaders that have a GCC that's underperforming, this concept of governance isn't even on the table. It's just the lack of governance. They're so focused on, many times from a vendor's perspective, that's supposed to be helping them, just filling seats. They completely lack this concept of where are we going and how are we getting there? How are we measuring? How are we communicating? And what is the change management that's involved to navigate that successfully? So the lack of good governance really becomes an issue and it just seeps into everything that's being done. 

Aditya Jayaraman

And then things become reactive, I suppose. And then consistency and quality start to break down. 

Patricia Connolly 

That's right. That's right. This is one of the biggest points that I find when I'm talking with C-level leaders and even at times invited to talk with boards about this question. They're really interested. They want to know more. They want to know how it's carried out. And it is something that seems to be a surprising factor. It's part of our way of working, to be honest. 

Aditya Jayaraman

Wonderful. 

Patricia Connolly 

So another key objective for many companies coming into a GCC equation is reducing their reliance on external vendors. 

Aditya Jayaraman

Right. So I guess one of the core reasons companies build GCCs is to regain control over talent, over their IP, over delivery, and over outcomes. Yeah. 

Patricia Connolly 

Yep, that's a very common theme. I hear that all the time. But it only works if the GCC is truly integrated and capable. 

Aditya Jayaraman

Otherwise, you end up with a hybrid model where the GCC exists, but then the dependency on those other vendors doesn't actually go away. 

Patricia Connolly 

Yep, that's when the value and the original mission gets diluted. 

Aditya Jayaraman

And the confusion sets in. There's one more point I think we should talk about here that can put in really cause this drift from original intent. And that's about the transition. Because this is often overlooked back. Many GCCs are built leveraging a build, operate, transfer or the bot model, yeah? Expecting a transition to the company's owned entity at some point in time. 

Patricia Connolly 

That's correct. And I think we touched on the idea of having the end goal in place all the way from the beginning and mapping that through all the steps in a build, operate, transfer type of model. So if it's vendor dependency that we're trying to address, we want to be able to weave that into the roadmap right from the beginning and make sure that we've got success even through the point of transition. The situation is true with BOTs, and it's also true with assisted build approaches to building a GCC. 

Aditya Jayaraman

I want to pick up on something that you just said. So if my original objective is to lower my dependency on external vendors, and that's why I'm looking at this GCC model, and I'm working with a provider to help set up a GCC, Then you're saying that the end goal, in order for that objective to be met, the end goal has to be the transitioning of that GCC from the vendor back to the parent. Is that a fair thing to say? 

Patricia Connolly 

Yeah, yep. I think you're touching on something that's quite critical. Some vendors want you to stay dependent and they create roadblocks to the success, especially the success of a transition. In other cases, the transition happens, but the GCC isn't stable. Sometimes companies are actually putting this in place themselves because they're looking for a transition to happen too early. So we hear... Honestly, horror stories about GCCs that go through an ownership transition, and only 50% of the team actually moves to the parent company. So there are a lot of pitfalls in this transfer equation, and we try to address those straight up. But the main point is, if a company is looking for a build, operate, transfer, and the transfer to actually happen, we have to plan that, plan that successfully. 

Aditya Jayaraman

And Pat, I want to go back to the drift that potentially happens there. So if my objective in doing this was to lower, reduce vendor dependency and have more control over IP and my talent and all that, and then this is what you just mentioned happens, which is that the transfer doesn't happen at all or it is not successful. Where does that leave me? vis-a-vis the original intent and the strategic objectives that I had for this plan. 

Patricia Connolly 

Well, if you're the leader in that company responsible for building and guiding the GCC, I'd say you're pretty frustrated. And that's not the place that you wanted to land. So I think it's good that we're talking about these things, Adi, so that we can shed some light on them and help companies understand that there are ways to perform better, to work through these questions and mitigate the risks. 

Aditya Jayaraman

Absolutely. So then what I take away is that insofar as this point, transition is concerned back, structure is very important. Clear milestones, assessment of capability at every point in time and mapping it to what is needed, and the leadership being in place to transition along with the GCC into the parent company when the ownership shifts. Is that a fair way of saying that? 

Patricia Connolly 

Yep, that's correct. So if we step back, the takeaway to this whole discussion is really GCCs don't struggle because the model is flawed. They struggle because the keys to execution are maybe not understood, making it very hard to succeed. 

Aditya Jayaraman

And then the difference between average and high-performing GCCs comes down to a few key things. Strategic clarity, culture, talent, governance, disciplined execution, and then, of course, the transition. 

Patricia Connolly 

That's correct. You plan for success. If you get these things right, the model works incredibly well, and we've seen this numerous times. 

Aditya Jayaraman 

And if you don't, you end up with something that looks like a GCC, but doesn't deliver like one. And I think we've seen that model quite a few times over as well. 

Patricia Connolly 

That's true. That's true. I think that's a great place to wrap up this episode, Adi. What do you think? 

Aditya Jayaraman

I think so. And the next episode, we'll start diving deeper into some of the solutions that can fix, can prevent problems like these from happening in the 1st place. 

Patricia Connolly 

Sounds good. Well, we'll see you all next time. Thank you for joining us. 

Aditya Jayaraman

Thanks for listening. 

Patricia Connolly 

So if we step back, the takeaway is this. GCCs don't struggle because the model is flawed. They struggle because the keys to execution aren't well understood, and that makes it hard to succeed. 

Aditya Jayaraman

And the difference between an average and a high-performing GCC comes down to a few key things. Strategic clarity, culture, talent, governance, and disciplined execution. 

Patricia Connolly 

Yes. And if you get those right, the model actually works incredibly well. 

Closing

Aditya Jayaraman

And if you don't, Pat, you end up with something that looks like a GCC, but doesn't deliver like one. But before we close, for the leaders listening, who just heard us walk through every way a GCC can quietly go off track. The natural next question is, where does my organization actually stand vis-a-vis all these factors? 

Patricia Connolly 

Exactly. And we've built a GCC readiness checklist that helps you answer that very question yourself. It's a practical self-assessment tool, walks you through the areas, that we just discussed and flags where you might be vulnerable. You can download it at smc2.com, as well as reference the perspective section of our website, where we regularly publish trends and execution challenges we're seeing across the marketplace. 

Aditya Jayaraman

And if today's conversation was useful, share it with a colleague who's navigating these same questions. 

Patricia Connolly 

In the next episode, we'll start diving into the solutions that can prevent these failures from setting in. We'll see you next time.