How can GCCs circumvent the Kodak Moment: by developing a sustainable competitive advantage that is very difficult to duplicate, boosting value for the parent company and by creating different moats.
Global Capability Centres (GCCs) concept is not new to India. It had existed in the 1990s and in the early 2000s. There were companies like Amex, Cosl, AIGSS, GM, GE and many more that had set up captive units in India.
Scenario 1990-2010
But did the GCC model thrive and succeed?
Most of them merged or sold to IT major companies for reasons explained below. Most of the parent companies benefited from the monetization as it made business sense for them. It was also a win-win for IT Majors as it enabled them to scale and extend their reach.
Global Capability Centres (GCCs) merged into or were sold to IT service giants because they reached points of operational stagnation, regulatory exhaustion, or strategic misalignment. While GCCs excel at internal execution, they are fundamentally cost centres tied to a parent company’s core business, making long-term independent scale difficult when macroeconomic or technological conditions shift.
Global corporations monetize and offload their captive operations to pure-play IT firms for several critical strategic and structural reasons
- Capital Monetization and Core Competency Focus: A parent corporation can monetize its captive GCC by selling it to an IT major. This injects immediate, massive cash flow into the parent company’s core operations. Parent companies specialize in their industry (e.g., banking, automotive, aviation), not in managing massive technology workforces. Merging the GCC out allows corporate leaders to refocus entirely on their core business rather than operating as an IT employer.
- High Operational Overhead and Administrative Exhaustion: Operating a captive entity requires dedicated internal legal, compliance, HR, and payroll structures across multiple offshore geographies. For smaller or mid-sized “micro-GCCs”, the cost of maintaining dedicated physical real estate and infrastructure eventually outweighs the labour arbitrage savings, turning the facility into an expensive administrative burden.
- The Talent Demand and Lack of Career Mobility: At a large IT service company, an engineer can hop between 50 different global clients and industries over a decade. Inside a captive insurance GCC, that engineer only works on that single insurer’s legacy systems, leading to high employee turnover due to limited career mobility. Pockets of leading-edge projects in GCCs are used as a training ground by employees to learn and leave, resulting in high attrition. Captives struggle to compete long-term against specialized tech providers for niche, hyper-expensive skill sets like Agentic AI, AI security, AI governance, multi-cloud engineering, and cybersecurity.
- Rigid Operating Models vs. Elastic Demand: A captive GCC represents fixed overhead (salaries, office space, long-term asset leases). If the parent company faces a global economic downturn or budget freeze, it cannot easily downsize an internal offshore unit without incurring massive legal and severance costs. Traditional IT giants leverage “bench talent” to scale teams up or down in days. Captives lack this flexibility; every new initiative requires a months-long recruitment lifecycle.
- Technological Obsolescence and AI Isolation: No External Innovation Exchange: IT service giants learn from working across thousands of clients globally, continuously cross-pollinating technology and domain expertise. A self-contained captive GCC operates in a silo, often being a fast follower rather than a trendsetter.
Scenario 2026-2030
Will the GCC model thrive and succeed in today’s environment?
The above factors are still relevant. But if the parent companies are looking at Monetization of their captives or if the IT Services companies are looking to expand scale and growth through acquisition, then I feel they are on the wrong path.
Let me spell out the reasons why it will not work
Headcount, Talent, Legacy or Current Book of Business, and Infra will all become redundant in the AI Era. Monetization based on these assets will not yield the same value as it did in the pre-AI era. Talent absorption by IT service companies will be minimal, resulting in forced attrition from both sides. The talent skill gap between GCCs and IT service companies would be so huge that GCC talent would not be considered. Will there be an ROI for the captives when they decide to shut down due to macroeconomic or new business model changes? It is a big question mark.
How to create MOATs to circumvent the Kodak Moment :
In order for GCCs to thrive in the era of AI and to create value for the parent companies, they must create multiple MOATs.
- Network Effects: Every parent division must use the services of the GCCs. The capabilities of the GCC should be of such high quality that all R&D and any new development initiatives should be initiated from the GCC. The GCC should be the nerve centre for the parent. Adoption across the parent company should be at a very high level.
- Switching Costs: Create an AI First workforce which becomes incredibly difficult to replicate the structure in terms of capability, execution and trust.
- Cost Advantage: The GCC should operate on a scale which is better than the IT service players. The mindset should be of IT service players. More of agentic AI play should be encouraged with human oversight. This creates IP in the form of Agents and enhances value for the GCC during valuation.
- Intangible Assets: Should be the nerve centre with new Domain models, IP assets, Refined Domain Ontology and Knowledge base through learnings and execution, which will be GCC’s appreciating asset. Focus on appreciating assets and keep a light on depreciating assets like Infra, manpower, and legacy book of business.
- Efficient Scale: Serving the Parent organization divisions at a cost and scale that IT companies would love to acquire, enhances the valuation of the GCC
At Verseport Consulting, we help GCCs become AI-first, scale up their workforce to be AI-savvy, and transition them from their current roles to new AI roles. Enable reimagination of their business processes to be outcome-first rather than task and process-oriented. Assist and create an agentic AI play for the domain and industry.
About the author: Karthik S is Head of Strategy and Consulting at Verseport Consulting. A specialist in Workforce Transformation. Enabling the workforce in organisations to be future-ready, adaptable and ready to take up new challenges. Curating and handling workforce transformation programs for GenAI, Business Transformation, Design Thinking and Workforce Innovation. Talent Development Specialist with a focus on AI, delivery, simulations, gamification, immersive, and Experiential learning.