Once regarded as mere back-office operations or outsourcing centers, global capability centers (GCCs) are emerging as strategic enterprise nerve centers. They are known today to drive product innovation, enhance global go-to-market capabilities and facilitate breakthroughs in AI across various industries.
What Value Do Global Capability Centers Bring to Manufacturing?
Engineering, R&D and Product Development: Manufacturers establish GCCs in regions like India to tap large pools of skilled engineers at lower cost. As a hub for innovation, GCCs foster collaboration across geographies to generate new ideas. For example, Siemens’ recent establishment of a CAD$150 million global AI manufacturing R&D center (for battery production) exemplifies that it will leverage AI, digital twins and edge computing to drive innovation and efficiency in battery production, aiming to boost product quality and productivity. Similary, Bosch and Honeywell have made India home to multiple technology centers.
Manufacturing Operations and Industrial Engineering: GCCs often house industrial engineers and quality experts who drive continuous improvement across plants. By centralizing expertise in process engineering and Six Sigma, companies can reduce and cut production waste. These efforts yield direct cost efficiencies. For example, Honeywell’s Global Solutions Center in India uses AI/ML models to continuously monitor refinery operations, providing real-time alerts that optimize operational decisions and higher throughput. On the other hand, GCCs act as incubators for advanced manufacturing technologies – digital twins, IoT sensors networks, cloud-based controls, etc. GE’s Digital Hub in India is a prime example: it co-creates industrial software and analytics (built on GE’s Predix platform) to accelerate digital transformation, targeting $1 billion in productivity gains by embedding IIoT capabilities across machines.
Cost Efficiency: Consolidating digital functions in a GCC can cut costs. Hardware and licensing investments are shared, and lower-cost regions like India provide large talent pools for coding and IT support. This reduces total cost of ownership for technology platforms. Firms often develop and maintain their ERP, MES and analytics systems in GCCs to avoid duplicate deployemnt in every regions.
Supply Chain, Procurement and Logistics: By housing procurement teams in GCCs, manufacturers pool purchasing power across regions. A dedicated GCC procurement center can negotiate global supplier contracts and standardize terms, capturing savings that would be hard to achieve country-by-country buying. Additonally, consolidating logistics in a GCC creates standardized workflows. This improves operational performance. For example, a single GCC might handle order-to-delivery for all divisions, ensuring uniform data and metrics.
Strategic and Advanced Analytics: Many GCCs evolve into analytics hubs. They aggregare data from R&D, productions and finance and use advanced models to drive insights. Honeywell’s India-based GCC is built specifically to develop data science and analytical capabilities and serves as a frontline hub for global customer technical troubleshooting. GCCs that use machine learning can anticipate issues and optimize processes. GE’s Bengaluru Digital Hub (Predix) helps customers apply digital twin analytics and aims to deliver $1 billion in added productivity. Advanced analytics in GCCs can also support new product innovation.
Key Trends Shaping GCCs in the Manufacturing Industry
ISG Research shows a notable increase in the number of delivery centers. Figure 1 shows 13% of enterprises plan to build a new delivery center from scratch and 9% are thinking of expanding their existing staffing location into a dedicated delivery center. GCCs are diversifying their capabilities to meet evolving demands, placing emphasis on digital competencies such as artificial intelligence, machine learning and data analytics.
Figure 1: Initial GCC Set Up: Planned vs Actual
Source: ISG Market Lens Global Capability Center Study
ISG Research further reveals that approximately 23% of enterprises plan to expand their existing staffing location into a dedicated delivery center, while 21% intend to pursue outsourcing using a build-operate-transfer model.
Significant productivity gains are anticipated over the next two years, partly driven by AI. As shown in Figure 2, for existing GCCs, work throughput is projected to increase by 13%, despite an operational budget that remains flat. We will see if enterprises are able to deploy fractionally more staff with a more increased skill set and to increase spending on outsourced services over this timeframe.
Figure 2: How Enterprises Expect Their GCC Metrics to Change Over the Next Two Years
Source: ISG Global Capability Center Study
More expensive skills sets are expected to be added to centers to take advantage of AI and data analytics capabilities and reduce the need for more manual and process-oriented roles (see Figure 3). Even those centers with more moderate AI investments expect to bring on more AI skills over the coming two years to reduce headcount elsewhere.
Figure 3: How Demand for Talent Is Evolving
Source: ISG Global Capability Center Study
Offshore delivery centers are ramping up investments in generative AI to achieve their cost and productivity goals. As you can see in Figure 4, much of the current investment is directed toward AI pilot projects and the data preparation necessary for implementing AI solutions. Human factors, such as staff training and change management, have not been prioritized for investment thus far.
Figure 4: Where Enterprises Are Spending on Generative AI
Source: ISG Global Capability Center Study
Manufacturers are motivated to adopt AI to support the wider business (e.g., transition of further work to the delivery center). As Figure 5 shows, reducing operational costs, increasing staff productivity in the wider business and increasing staff productivity within the delivery center are the top three reasons enterprises are pursuing generative AI in their delivery center operations.
Figure 5: What Is Motivating Enterprises to Adopt Generative AI in Their Delivery Center Operations?
Source: ISG Global Capability Center Study
How Indian GCCs Are Empowering the Manufacturing Industry
Today, global manufacturers are investing in hyper-connectivity, autonomous systems and data-driven intelligence. Industry 4.0, often referred to as the Fourth Industrial Revolution, is the driving force behind this transformation. At its core is the idea of "smart factories," characterized by real-time optimization and the integration of capabilities like big data and AI in manufacturing and industrial processes. In India, GCCs have undergone a remarkable metamorphosis, evolving into centers of excellence that play a crucial role in enhancing responsive supply chains, promoting digital industrialization and fostering interconnected factories.
Here are seven benefits India-based GCCs are offering organizations:
Edge computing: Indian GCCs are at the forefront of Industry 4.0, leveraging edge computing-enabled sensors, machine learning algorithms, immersive AR/VR and predictive maintenance. A prime example is Bosch’s India-based GCC, which stands as a beacon of Industry 4.0 innovation, developing global smart factory solutions, including IoT-enabled systems and digital twin technologies, all prototyped and deployed from its Indian centers. Similarly, Samsung’s Bangalore R&D center, its largest outside of South Korea, has contributed more than 7,500 patents in AI, 6G and multi-camera technologies – all key enablers of Industry 4.0.
Agility: GCCs provide the agility and scalability needed to rapidly prototype, test and deploy new technologies across different geographies. They offer cross-domain and cross-functional expertise that enables integration of global solutions at a local level (e.g., adapting solutions for local languages, regulations, payment rails, UX preferences, and market practices). A prime example is L&T, a prominent player in engineering and manufacturing, which operates a high-impact GCC in India. This GCC has evolved from modest beginnings into a significant hub that supports global engineering services and product development, generating an estimated $20 billion annually.into a significant hub that supports global engineering services and product development, generating an estimated $20 billion annually.
Automation and robotics: Indian GCCs are co-creating and deploying autonomous systems including collaborative robots (cobots) and automated guided vehicles (AGVs) in numerous factories. They are also developing intelligent ecosystems in which edge devices collect and act on information seamlessly. For instance, Volvo’s Bengaluru center, in collaboration with HCLTech, is building electrification and autonomous systems for trucks, buses and passenger vehicles. Their efforts encompass advanced driver assistance systems (ADAS) development, EV platform engineering and solutions for battery and vehicle connectivity.
Cybersecurity: As manufacturing environments become increasingly digitized, the threat landscape expands. GCCs play a crucial role in embedding cybersecurity frameworks, real-time threat detection systems and compliance protocols into the core of manufacturing operations. For example, Tech Mahindra goes beyond managing traditional IT for GCCs; it has established a cyber-first architecture that incorporates security at every operational layer. This approach demonstrates how GCCs can transition from cost centers to innovation hubs and security leaders. Their blueprint, which includes Zero Trust principles, AI-driven security operation centers and DevSecOps, offers a replicable framework for any manufacturing GCC.
IIoT and real-time intelligence: GCCs are integrating industrial IoT (IIoT) into global production networks by specializing in data orchestration and connected systems architecture. They provide energy efficiency, real-time asset monitoring and equipment performance management. For example: Caterpillar’s GCC in Chennai, branded as Cat Digital, connects over 1.5 million assets (machinery and engines) worldwide via sensor networks and telematic systems. The center drives predictive maintenance through its “Cat Helios” cloud platform and tools like VisionLink, SIS2.0 Web, Cat Interact and the SIS2GO app. The result is real-time fleet visibility, actionable analytics and equipment health insights that dramatically reduce unplanned downtime. It's one of the clearest cases of IIoT orchestration from India powering global operations.
Supply chain management: GCCs have played a crucial role in streamlining supply chain management in the manufacturing industry. By leveraging advanced technologies such as AI, blockchain and IoT, these centers have enabled real-time monitoring and tracking of inventory, which reduces lead times and enhances delivery performance. As a result, the manufacturers’ experience improved customer satisfaction and increased competitiveness. For instance, Siemens Healthineers, a leading medical technology company, has established a GCC in India to support its global operations. This center has significantly enhanced supply chain management and production efficiency by implementing advanced technologies, including IoT and data analytics. Consequently, the company has achieved better customer satisfaction, increased competitiveness and notable cost savings. DigiKey, a U.S.-based global distributor of electronic components and automation products, transferred critical functions, including supply chain operations, to its Bangalore-based GCC. This initiative enabled smarter resource allocation and allowed the global headquarters to refocus on core competencies.
Enhanced production efficiency: GCCs have also been pivotal in enhancing production efficiency within the manufacturing industry by implementing lean manufacturing principles, automation and data analytics. By analyzing production data and identifying areas for improvement, GCCs enable manufacturers to optimize production processes, reduce waste and enhance product quality. For example, GE Appliances has established a GCC in India to support its global operations. This center plays a critical role in improving production efficiency, which results in cost savings, increased productivity and enhanced profitability.
Key Insights for Manufacturing Leaders
Manufacturing GCCs have evolved from cost-centric delivery centers to strategic innovation hubs. Talent is the core for GCCs – India offers a vast pool of IT/STEM skills for AI, software and engineering, while Eastern Europe offers skills in precision engineering and languages (Czech, Polish, etc.). Leaders should measure value beyond cost, such as product innovation, time to market and ROI. A suitable governance model (captive/hybrid) will ensure control and integration. Captive GCCs offer greater control over IP and governance, which is critical for complex manufacturing R&D and strategic functions. Bosch uses a captive model (in India, Vietnam, Poland and Mexico) to maintain cultural alignment and decentralized execution.
ISG sees that GCCs are moving beyond support mechanisms and are becoming critical to R&D. By co-locating design, prototyping and even assembly, manufacturers can shorten the innovation cycle and react to faster market shifts. Manufacturers should therefore plan GCC roadmaps that gradually build new capabilities – from advanced engineering and testing to pilot production and regulatory navigation.
ISG Solutions
ISG helps enterprises assess the need for and set up GCCs. These solutions are tailored to address the unique needs of companies based on their current GCC maturity level. Below is a brief overview of each layer.
Client Scenario | Client Objectives | ISG Solutions |
No existing GCC | Set up a GCC to assess talent, catalyze innovation and enable business value. | Service delivery model evaluation and GCC development * |
An existing GCC that needs to optimize | Enhance the effectiveness and efficiency of already-established GCCs |
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Advanced GCC in place | Drive innovation, sustain competitive advantage and learn how to co-exist with |
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Key Factors for Selecting a GCC Location
Whether you are building a GCC internally, through a provider partner or via a hybrid operation, selecting a geographic location for the GCC is critical. Organizations should consider a location’s economic stability, educational system support, quality of infrastructure (power, transportation, etc.) and political stability along with technical, business process and engineering acumen. Not all provider partners can help you equally in all regions, so understanding which providers have strengths in each will be important. Of course, labor, real estate and utility cost market dynamics will come into play.
Case Study: A Multinational Tire Manufacturer Makes the Most of Its GCC
A tire manufacturer wanted to standardize its product lines across multiple regions. It needed to rationalize platforms, expand globally, adopt agile for digital products and make strategic decisions about sourcing. It struggled to manage the complexity of capturing sensor data and achieving monetization and sustainability at the same time. It needed to develop SaaS products that could help it manage logistics, vendor networks, roadside assistance and subscriptions. A key component was integrating its recent acquisition in India as a development center and selecting the right service providers to scale up digital capacity.
ISG helped the manufacturer set up a GCC that could help it achieve the following six goals:
Modernize its products: the GCC helped build software for vendor management, fleet management, roadside assistance, data science and sensor services.
Increase efficiency: the GCC streamlined processes and standardization across Europe and the US.
Be more agile: the GCC used SAFe Agile methodologies to improve project flexibility and responsiveness.
Save costs: the GCC allowed the company to shift from time and materials to more agile sourcing.
Integrate: the manufacturer integrated its GCC in Bangalore with its previous acquisition to enhance capability in four areas:
Align SaaS capability with a new operating model, creating:
Agile sourcing for key products and platform teams.
A system for healthy communication and sharing best practices.
Adoption of the SAFe framework, strategic sourcing decisions and industry standards to facilitate global integration and greater operational synergy.
ISG Service Delivery Model Evaluation and GCC Development
ISG leverages our extensive market intelligence in IT and business services and our understanding of the GCC landscape to help enterprises develop and refine their service delivery strategies. We conduct a comprehensive evaluation of the GCC's role in the service delivery model.
Our GCC strategy and planning roadmap focuses on critical elements such as site selection, capacity management, process optimization, the establishment of an agentic center of excellence, strategic partnerships and the implementation of automation technologies. We help our clients achieve their objectives, optimize costs and minimize risks. Contact us to find out how we can help your enterprise think through its GCC plans.
About the authors
John Lytle
John has 40+ years of providing global enterprises with practical, yet strategic vision to drive meaningful change through complex programs, which extend business value through the effective use of today’s exploding Digital capabilities. John is a senior leader for many multinational enterprises in Capital Goods manufacturing. John leads the North American Industrial Manufacturing segment for ISG and is regarded as a global thought leader, regularly advising on emerging technologies and operating model changes to drive innovation.
Anamika Sarkar
Anamika Sarkar works as a Manager in ISG. She has close to 11 years of experience in research across various industries and geographies. At ISG, Anamika helps Manufacturing enterprises understand the latest technology trends, strategy, and innovation.
