Why GCCs Must Partner with Startups to Spark Innovation and Disruption

by | Jun 7, 2024 | 0 comments

More and more Global Capability Centres (GCCs) are being urged to work with young companies to make their organizations innovative and disruptive. It is stressed that these partnerships are key in bringing new ideas to life and keeping the businesses competitive in the rapidly changing business environment.

The Imperative Need for Startup Partnerships

Enhancing Innovation Quotient

Shalini Pillay, India Country Leader for Global Capability Centres, KPMG, emphasizes that GCCs have got to start collaborating with startups. She states

“The need to work with the startup ecosystem to infuse your organization with another level of innovation up the innovation quotient is actually quite critical”

and this is reiterated by several industry leaders who see how such collaborations can be transformational.

Accelerating Delivery and Change

Vic Bhagat, an advisory partner at Kyndryl, underlines the significance of tapping into the innovative thinking of startups. He points out that sometimes GCCs become too obsessed with control which may impede their capacity to drive effective changes. Bhagat challenges GCCs to adopt external innovation as a tool for improving their capabilities and speeding up delivery cycles.

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Current Landscape of GCC-Startup Partnerships

GCCs Growing Collaborations

The trend of GCC-startup partnerships is on the rise particularly in product development. The 1,500 plus Indian-based GCCs employ about 1.6 million individuals who will potentially generate revenues between $60 billion and $85 billion by 2026. The growth rate is fueled by global companies focusing on building their own software services and products through offshore centers.

Strategic Collaborations

Pillay observes that collaborating with startups has been an age-old practice but it is becoming increasingly important now. She says

“What we’re also seeing is the need to do this cautiously, the need to do this with clear thoughts on what is the problem you’re solving.”

This ensures that any efforts invested into driving innovation are consistent with long-term goals and have a measurable return on investment (RoI).

Pillay cautions against ‘jugaadu’ approach – local slang equivalent for short term problem solving – stating that any such effort made today might need to be reversed in the future if it does not fit into a broader roadmap. GCCs should concentrate on sustainable innovation that brings long term value.

Overcoming Resistance to External Innovation

Bhagat, however, points out that one of the challenges faced by enterprises is resisting external innovation. He believes that the notion “if it is not built here, it’s not good enough” is outdated. Instead, firms should distinguish between ‘core’ activities whose revenue generation would be enhanced and ‘chore’ activities that are more operational in nature best outsourced for efficiency.

Embracing Different Thinking

Bhagat calls for courage to start embracing different thinking and leveraging an innovative mindset to drive change. An example of this approach can be seen with Siemens which excels in its core products and software services yet they outsource operations like server and network management to other IT firms such as Kyndryl.

The Role of Startups in Driving Innovation

Integrating Startups into Enterprises

Vashistha, the leader of Tholons, who is the chairman and CEO, undresses the benefits that come with incorporating technologies as well as innovations started by start-ups in corporations. He argues that it is vital for large firms to understand how best they should partner with small business enterprises, which has allowed most innovation to take place today. In this regard, he notes that previously, large corporations have been ignoring startups considering them too small to make a real difference but things have changed.

Building Effective Partnerships

According to Vashistha, there is need for both startups and big companies to establish ways of working together. Small businesses are known for their quick response and ingenious methods of finding solutions while on the other hand; they are resourceful because of their huge size. This will result in disruptive innovation through effective partnering and value unlocking.

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Conclusion

GCCs must engage in strategic partnerships with start-ups: these collaborations are necessary for remaining innovative and being competitive. GCCs can boost their rate of innovation adoption and improve delivery time by carefully integrating startups into their operations. Making such partnerships successful lies in overcoming resistance towards external innovation as well as focusing on sustainable long-term solutions. Accordingly, GCCs cannot survive without such synergies given today’s business environment which keeps changing at an unprecedented pace.

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