The Evolution of GCCs in the Manufacturing Sector
Once regarded as mere back-office operations or outsourcing centers, global capability centers (GCCs) are emerging as strategic enterprise nerve centers.
Advisory
Global Capability Center Advisory
Establishing, modernizing & reinventing your GCC
Global Capability Centers Are on the Rise
75%
of large enterprises with existing GCCs have expanded or expect to expand (ISG Market Lens, GCC Study).
11% vs 8%
Over the past 8 years, the GCC has experienced an 11% compound annual growth rate (CAGR) in India alone, compared to the IT sector's 8% CAGR (According to ISG Research and the data from NASSCOM)
Global capability centers (GCCs) have evolved from supporting standardization and efficient delivery of corporate operations to becoming centers of excellence that provide significantly enhanced value to enterprises. They provide access to top talent, build differentiating business capabilities, and drive transformation, innovation, scalability and business growth. Modern GCCs must consider:
- How can organizations effectively access, develop and leverage the necessary talent at scale?
- What is the optimal sourcing model by creating an ideal ecosystem by blending in-house capabilities with outsourced resources?
- How can we harness the power of AI to drive transformative impact?
- How to continuously enhance cost optimization, excellence, and value creation for significant top-line impact?
By leveraging our extensive market data on IT and business services, along with our substantial experience in transformation, sourcing, and GCC establishment, ISG helps organizations improve service delivery strategies and reinvent their GCCs, regardless of maturity level.
Our Global Capability Center Solutions
End to end advisory support
- Assess your business needs
- Evaluate your current service delivery model
- Design your future state of global service delivery model
- Candidate location analysis
- Cost, capability & capacity assessment
- Partnering options
- Establishing business case
- Roadmap & planning
- AI strategy for GCC
- Site evaluation & selection support
- Functional requirements & capacity planning
- Organization & operational process design
- Strategic partnerships
- Agentic Center of Excellence (CoE) design
- Enabling strategic partnerships
- Functional training development
- Organizational change management
- Agentic CoE
- Program management
- Value realization
- Performance management
- Cost management
- Commercial & vendor management
- Procurement support
- Ongoing automation CoE operations
Comparing Common GCC Set-up Models
| Models | Description | Pros | Cons |
|---|---|---|---|
| Captive Centers | A facility that is fully owned and managed by the parent company. | Offers complete control over all processes, operations, and quality standards. Ensures strict alignment with the company's objectives and internal protocols. | High operational costs and significant investment required. Can lack flexibility and may take longer to adapt to market changes or scale quickly. |
| Hybrid | A blend of captive center operations with outsourcing to third-party vendors. | Combines flexibility with cost efficiency, allowing businesses to scale as needed. Provides external expertise while keeping key functions under the company's control. | Managing third-party vendors alongside in-house operations can lead to complexity. Possible issues with quality control and accountability. |
| Joint Ventures | A collaboration between the parent company and local entities or international partners. | Allows for shared investment and risk, while providing access to local expertise and market resources. Fosters innovation and growth through collective knowledge. | Potential for conflict or misalignment between partners. Divided control and profits. Slower decision-making processes due to the need for consensus. |
| Build-Operate-Transfer (BOT) | A third-party establishes and runs the operation, later transferring ownership to the parent firm. | Reduces initial investment and operational risk. Enables a smooth transition to full ownership. Speeds up operational setup while requiring a lower upfront financial commitment. | Transitioning ownership may result in integration challenges. Less control during the initial phase, and performance may depend on the third party's management. |
Why Are Enterprises Choosing GCCs Over Managed Services?
Find out more from the ISG Market Lens™ study on global capability centers by clicking below.
The market has moved from ambition to accountability.
AI investment is accelerating, but results remain uneven. Only one in four initiatives is meeting revenue impact expectations, at an average spend of $1.3M per use case. Enterprises are no longer asking whether AI works. They are being asked to prove that it pays.
What We Deliver
AI strategy, governance and intelligence, built for execution.
Autonomous Enterprise
Operations built for autonomous execution, not retrofitted for it.
We help you identify where AI agents deliver the most value, restructure workflows around them and build the accountability models that keep autonomous execution auditable. The enterprises that win won't be the ones that reacted. They'll be the ones that designed for it first.
Autonomy-Level Pricing
Pricing that reflects how AI-enabled services are actually delivered.
We give enterprises transparent, benchmarkable pricing models that tag each resource unit with the autonomy level used to deliver it. As AI capability advances, your pricing keeps pace. Both buyers and providers can quantify what that progress is worth.
AI & Software Intelligence
Build-versus-buy decisions grounded in what AI is actually delivering.
We bring analysis of more than $2.6 billion in tracked AI spend to every sourcing decision. Procurement, technology and finance leaders get the independent intelligence to rationalize vendor portfolios and hold providers accountable to measurable outcomes.
AI Governance
Governance that accelerates AI adoption rather than constraining it.
We embed controls at the point of data creation, define accountability for autonomous actions and build adaptive frameworks that keep pace with AI without impeding it. Enterprises that get this right don't just manage risk. They build the trust that lets them scale faster.
AI Strategy
AI investment aligned to where impact is most achievable.
We ground strategy in research across 2,400 enterprise use cases, aligning investment to where impact is proven and designing the data, talent and governance foundations that move AI from pilots into the workflows that drive commercial results.
AI Maturity Index
A clear view of where you stand and a roadmap to where AI starts delivering.
We benchmark your AI readiness against peers across 75 countries, identify the dimensions holding you back and give you a personalized roadmap to close the gap.
The market today
Enterprise AI has moved out of IT and into the revenue line.
AI investment is shifting decisively toward revenue-generating functions. CRM automation, sales enablement and forecasting have replaced chatbots and IT productivity tools as the leading use case priorities, reflecting enterprise recognition that productivity gains alone do not satisfy board-level scrutiny. At the same time, use cases in production have doubled since 2024, and the portfolio is diversifying rapidly, with over 300 distinct function and industry-specific use cases now in active deployment.
ISG research across 2,400 enterprise use cases shows that the strongest AI returns are currently concentrated in compliance, risk management and quality control, not in the growth and cost outcomes most enterprises originally set out to achieve
The gap between where enterprises are investing and where AI is actually delivering is the defining commercial tension of 2025. Organizations that close it by targeting functions with structured, revenue-attributable data and clear ROI measures will establish performance benchmarks that compress the window for competitors still cycling through pilots. The standard is being set now.
Where enterprises are feeling the pressure
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Business outcomes are lagging AI ambitionEnterprises are scaling Al faster than they are realizing value from it. The number of use cases in production doubled between 2024 and 2025, yet only one in four initiatives is meeting revenue impact expectations, and broad cost savings remain elusive. At an average spend of $1.3M per use case, the ROI gap is sharpening board-level scrutiny and forcing a harder question: are we building Al for impact, or for activity?
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Data infrastructure exposing deferred investmentAl does fail in isolation. It fails on the foundations beneath it. Most enterprises are running modern Al on architectures built for reporting and compliance. Generative and agentic Al demand real-time contextually rich, governed data at the point of use. Without it, pilots stall and value dissipate before it reaches the business.
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The barrier to scale is organizational, not technicalOrganizational readiness as the bigger constraint on Al adoption, not talent or tooling. Workflows haven't been redesigned. Decision rights haven't shifted. Enterprises that treat Al as a pure technology deployment, without investing in the human side of adoption, consistently report underwhelming ROI.
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Agentic AI is outpacing governanceAs Al moves from generating outputs to executing tasks autonomously, the governance gap widens. Agentic Systems introduce a new class of risk that static compliance frameworks were never designed to catch. Governing what Al does, not just what it produces, is now a business-critical requirement.
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Frequently Asked Questions
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Q1. What is a GCC?
A global capability center (GCC) is a captive hub owned or controlled by an enterprise—onshore, nearshore or offshore. It is designed to deliver strategic functions and digital innovation by tapping global talent and technology. GCCs are also known as global innovation centers (GICs).
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Q2. How are GCCs set up?
Enterprises can establish GCCs as wholly owned, co-located or virtual hubs. Set-up typically requires business advisory and legal support, plus local partners for compliance, hiring and brand presence. Clear objectives and realistic timelines help the center start strong and scale responsibly.
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Q3. What are the main challenges when establishing a GCC?
The biggest hurdles are talent attrition and skills gaps, rising operating costs and organizational complexity. GCCs struggle without a strategy tied to the corporate value chain, leadership backing and strong local partnerships. Success improves when technology can help scale and retain savings.
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Q4. What’s the difference between a GCC and GBS?
A GCC is a strategic hub that builds and runs high-value capabilities. Global business services (GBS) is an operating model for end-to-end service delivery and cost optimization. A GBS model may include one or more GCC hubs alongside other delivery mechanisms.
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Q5. How do we assess the maturity of our GCC?
Evaluate seven areas: goals (cost, specialization, talent, market access), scale, scope of services, tenure, geographic footprint, operating model and talent attraction/retention. A simple scorecard across these dimensions reveals strengths, gaps and a roadmap for the next stage of growth.
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