McKinsey: Global Capability Centers in The Next Normal

Companies with large global operations had to respond quickly to COVID-19. Now their short-term fixes are turning out to offer longer-term opportunities.

For certain parts of the global economy, the impact of the COVID-19 pandemic has been both immediate and sweeping. Executives have had no choice but to let go of long-held beliefs and quickly conceive a new way forward. The upside: measures that initially felt like a short-term fix to steady the ship now offer lessons for how to succeed in the next normal.

Global capability centers (GCCs) are a case in point. These large facilities concentrate workers and infrastructure that handle operations (back-office functions, corporate business-support functions, and contact centers) and IT support (app development and maintenance, remote IT infrastructure, and help desks) to sustain productivity growth. Some large companies use GCCs as a center of excellence for automation, innovation, and analytics, among other tasks.The pre-crisis location-based model for GCCs had been honed over decades, but within the span of a few weeks, the pandemic rendered it obsolete. GCC physical facilities were shuttered, and organizations quickly shifted to remote working. Surprisingly, many GCCs have been able to maintain service levels even while adapting.

The disruption caused by the pandemic has irrevocably changed how GCC executives approach their operations. Some executives say that their organizations have navigated five or even ten years’ worth of change in the span of a few months. Best-in-class GCCs have pivoted swiftly and have performed well on measures such as resilience, continuity, and efficiency (see sidebar, “About the research”). But not all GCCs have been equally successful. Some have struggled with declining service levels and flagging employee satisfaction. Executives now have an unexpected opportunity to reimagine their GCC.

How GCCs have performed during the crisis

Our survey analysis of 46 GCCs identified three key performance markers during the lockdown: resilience (defined as capacity and workforce availability), continuity (including client and customer experience), and efficiency (measured by productivity). While GCCs, on average, performed well, the best-in-class businesses achieved at least 100 percent of their pre-crisis baseline across all three metrics, setting the gold standard for operations and service delivery (Exhibit 1) … Download and read the full article here.

The pandemic left companies little choice but to adapt as quickly as possible, and many rose to the challenge. With the focus shifting to recovery, executives should take concerted action to build on the lessons they have learned and reinvent their GCC. The benefits are clear: better performance, greater resilience, and increased agility.

About the author(s): Indraneel Banerjee is a partner in McKinsey’s Bengaluru office, where Avinash Chandra Das is a senior expert; Abhinav Chanakya is an associate partner in the Chennai office; and Akash Lal is a senior partner in the Mumbai office.

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