Partner with startups to drive disruption, experts urge GCCs

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Global Capability Centres (GCCs) need to partner with startups to drive disruption at a time when enterprises are wary of letting go the control of their products, experts said.

"The need to work with the startup ecosystem to infuse your organisation with another level of innovation and up the innovation quotient is actually quite critical," said Shalini Pillay, India leader at Global Capability Centres, KPMG.

Echoing these sentiments, Vic Bhagat, global advisor at Kyndryl, urged GCCs to leverage the innovative mindset to accelerate their ability to deliver and drive change. "(GCCs are) so focused on control that (they) don't want to let go,” he said at the India Global Innovation Connect in Bengaluru.

The comments come at a time when GCC-startup partnerships are on the rise in product development. Over 1,500 GCCs employ approximately 16 lakh people in India, and could generate revenues of up to $60-85 billion by 2026.

Also read: GCCs eyeing 5-15% equity in start-ups for product acceleration

GCCs, the offshore centres for in-sourcing IT and business functions, have been expanding rapidly in India as global corporations focus on developing their own software services and products.

According to Pillay, while collaboration with startups is not a new model, it is becoming increasingly essential. "But what we're also seeing is the need to do this cautiously, the need to do this with clear thoughts on what is the problem you're solving."

Pillay emphasised the importance of long-term clarity in innovation efforts, warning against a "jugaadu" approach. The colloquial Hindi term refers to short-term problem-solving. She noted that this can result in the need to undo efforts in the future if they do not align with a longer-term roadmap and return on investment (RoI).

The need for collaborating with the startup ecosystem is going to be imperative as startups are wired very differently. “They can infuse some really fantastic innovation into organisations," Pillay said.

Experts argued that GCCs should not lose sight on what is the global problem they are solving. Innovations by these captive centres should be driven towards unlocking value for which they can actually measure RoI, Pillay said.

Bhagat highlighted the challenge within enterprises where there is often resistance to external innovation. "The challenge in enterprises is if it is not built here, it's not good enough. And that's an old thinking. We have to start in the enterprise with faith on something that I've been working on for many, many years through my career, called ‘core’ versus ‘chore’," he said.

He explained that ‘core’ activities of a company drive better revenue, while ‘chore’ activities are operational tasks that others can manage more efficiently. He pointed to Siemens, which excels in products and software services but outsources server and network management to information technology (IT) companies such as Kyndryl, as an example.

He urged GCCs to leverage the innovative mindset to accelerate their ability to deliver and drive change. "But we have to be courageous, we have to have the ability to embrace that different thinking."

Also read: BFSI global capability centres bullish on Gen AI despite regulatory hurdles

Avinash Vashistha, chairman and CEO of Tholons, which builds GCCs, also agreed that integrating startups into enterprises has become crucial since innovation is now happening within startups. He noted that previously, large corporations would dismiss startups as too small to make any significant impact.

“The startups did not know how to work with large enterprises and the large enterprises did not know how to work with startups. So I think at the same time, it is very important to integrate the startups into the enterprises,” said Vashistha, who is also the former India chairman and CEO of IT services company Accenture.