Why Global Capability Centers Fail (And How to Save Yours)

Global Capability Centers rarely fail dramatically; they just stop creating value.

The degradation happens gradually. Efficiency metrics look good while effectiveness declines. Cost savings continue while innovation stalls. The center operates but doesn’t excel. At Stanton Chase, we’re often called when boards realize their three-year-old GCC has become exactly what it was meant to replace: a processing center rather than a capability platform. 

The Talent Squeeze

Competition for skilled professionals intensifies as more companies establish GCCs. India’s technology talent gap runs at 21%, the lowest globally, yet every company competes for the same pool. According to ACCA’s survey, 55% of Indian respondents want to move jobs in the next year due to cost of living concerns, compared to a global average of 39%. Improved remuneration is the key reason they cite for wanting to leave. 

EY’s research also found that three-fourths of GCC respondents express concerns that talent-driven risks continue to pose high to medium threats to their business. Companies struggle to find professionals who combine technical skills with the business acumen and cultural fluency GCCs require. Universities produce engineers, but GCCs need engineers who can present to boards, manage global teams, and think strategically about business problems. 

Zinnov notes that performance differentiation is becoming stricter, with companies creating clearer distinctions between high and low performers. This creates a vicious cycle: top performers get poached with massive raises, average performers feel undervalued and leave, and companies scramble to fill both gaps. We counsel boards that the talent challenge isn’t about supply; it’s about developing and retaining the right mix of capabilities. 

Knowledge and Innovation Gaps

GCCs accumulate expertise for years, then lose it overnight when key employees leave. Not the documented processes or technical specifications, but the unwritten knowledge: why certain clients prefer specific approaches, which stakeholder actually makes decisions despite the org chart, how to expedite approvals through unofficial channels. ACCA’s report notes this challenge, stating that GCCs need to retain institutional knowledge but struggle when “recent graduates need training and retraining” to replace departed experts. 

Even when knowledge stays, cultural distance prevents its application. A solution that works perfectly in Mumbai might fail in Munich, not for technical reasons but because of different customer expectations, regulatory interpretations, or business practices. GCC teams often know these nuances but struggle to convince headquarters. The expertise exists but goes unused because decision-makers don’t trust judgment from thousands of miles away. 

This lack of trust translates into lack of autonomy, which kills innovation. BCG found that only 8-11% of GCCs fully own product development, meaning most can suggest but not decide. While over 80% of top performers file significant patents, average performers contribute less than 10%. The pattern is clear: over 40% of top performers control innovation budgets while others wait for headquarters to fund every experiment. By the time approval comes, the opportunity has passed. 

Regulatory and Infrastructure Pressures

External constraints often determine GCC success more than internal capabilities. The EY GCC Pulse Survey found that when asked about their expectations for supporting growth, 75% of GCCs highlighted the need for simplified compliance processes, 65% sought tax benefits and incentives, and 60% emphasized the importance of enhanced infrastructure. These requests reflect daily operational challenges that prevent GCCs from reaching their potential. 

Compliance complexity consumes resources that should drive innovation too. ACCA’s report quotes an interviewee stating “different teams or different people within the same department have different ways to look at tax related issues” and that “explaining these complications to the parent company is a hard, time-consuming task”. What works in one jurisdiction might not work in another. Companies need separate expertise for each location, multiplying costs and slowing decisions. 

Stakeholder expectations also shape GCC scope. Shareholders want cost savings. Employees worry about job security. Customers prefer local service. Boards balance these competing demands by limiting what GCCs can do, often restricting them to non-customer-facing roles even when the capability exists for more. At Stanton Chase, we see companies build sophisticated GCCs but limit their potential because of stakeholder concerns about offshore operations. 

Building Resilience

The risks facing GCCs compound over time. What starts as minor attrition becomes knowledge loss. Knowledge loss becomes innovation stagnation. Innovation stagnation becomes irrelevance. Companies that recognize this pattern act before problems cascade. 

They start by promoting from within rather than always hiring externally. 20,000 global leadership positions will be based in India by 2030, up from 5,000 today. When employees see colleagues promoted to global roles, they stay. When every senior position goes to an external hire, they update their resumes. The math is simple: internal promotion cuts attrition and preserves knowledge. 

Once people stay longer, documentation actually happens. Not compliance paperwork, but the kind of notes that help someone new understand why certain decisions were made and what failed before. BCG’s research shows top performers plan for continuity by documenting processes, identifying successors, and capturing knowledge before people leave. When someone quits, their replacement finds answers, not confusion. 

The biggest change comes when companies stop micromanaging their GCCs. All top-performing GCCs track business outcomes like revenue and patents filed, while underperformers count activities like tickets closed. When GCC leaders control budgets and make decisions without waiting for headquarters approval, they start thinking like owners rather than employees. The center stops just processing work and starts creating value. 

At Stanton Chase, we help boards make these changes before crisis hits. We find leaders who know both local regulations and global business. We set up succession plans while your best people are still there, not after they leave. We help design governance that lets GCCs grow rather than keeping them small. The GCCs that succeed have the right leaders with the right authority from the beginning. 

About the Authors

Sundar Rajan Ramalingam is a Partner at Stanton Chase with nearly three decades of global leadership experience spanning manufacturing and technology sectors. His career uniquely positions him to guide GCC strategy—he’s led the scaling of a multi-billion-dollar global engineering capabilities division and supported the creation and building of several Global Capability Centers firsthand. Having transitioned from strategic HR leadership to general management with P&L ownership, Sundar brings both the people and business perspectives critical to GCC success. He holds an MBA from XLRI Jamshedpur and completed executive education at Wharton’s Chief Human Resource Officer Program. Based in North America, Sundar serves clients across the US and India, specializing in building high-performing executive teams for technology, professional services, and industrial sectors. 

Chandan Radhakrishna is a Partner at Stanton Chase serving clients in Bangalore, Hyderabad, and Singapore. With 17 years of experience in the GCC and Global Business Services ecosystem, Chandan has advised global enterprises on outsourcing, shared services, and GCC strategy during his tenure at Everest Group and NASSCOM. His expertise in analyzing market trends and delivering actionable insights has helped both enterprises and GCCs navigate complex transformations and refine their business strategies. As a trusted advisor to C-suite executives, Chandan specializes in securing top leadership talent that drives growth and innovation in technology, financial services, and consumer sectors. He holds a degree in mechanical engineering from the University of Sheffield.