GCC Setup Risks & Mistakes to Avoid in 2025 (And How to Fix Them)

In our previous blog, we learned how a GCC setup can slash costs. In this blog, let’s uncover the hidden side of the GCC setup story.

Setting up a Global Capability Center (GCC) has become one of the most popular strategies for scaling companies. From Fortune 500 giants to funded startups, GCCs promise a blend of cost efficiency, talent access, and operational resilience. Research shows that companies running GCCs save 35–50% on operational costs compared to fully onshore setups.

But in reality, over 40% of GCCs don’t deliver their expected ROI in the first 2–3 years. That’s because too many organizations treat GCC setup as a plug-and-play cost-saving hack rather than a strategic growth engine.

This blog takes a no-fluff look at the common mistakes companies make when setting up GCCs and how to fix them.

Reference Guide: GCC Setup Playbook: How Global Capability Centers Are Saving 35–50% on Ops in 2025

Mistake 1: Choosing a Location Based on Cost Alone

Many companies fall into the trap of chasing “the cheapest city.” While Tier-2 hubs in India, the Philippines, or Eastern Europe can reduce salaries by 25–40%, location choice cannot be cost-only.

• The Risk:
  • If not chosen wisely, in Tier-1 hubs, attrition can exceed 22% annually, driving rehiring and training costs up.
  • In Tier-2 cities, talent depth is often limited beyond the first 100–200 hires, causing scaling bottlenecks.
• Example: A US SaaS firm saved $8K per hire by choosing a Tier-2 city, but after 18 months, turnover costs wiped out the savings.
• The Fix: Develop a location strategy framework that weighs:
  • Talent pipeline maturity
  • Attrition and retention rates
  • State/national incentives
  • Language and cultural alignment
  • Time-zone overlap

Smart GCCs don’t chase the cheapest hub; they optimize for sustainable value + growth.

Mistake 2: Treating GCCs as Outsourcing 2.0

A GCC is not an outsourcing vendor. It is a captive center, owned and controlled by the parent company. Yet many companies copy-paste their outsourcing playbooks.

• The Risk:
  • Weak IP control, low innovation output, and a lack of accountability.
  • Employees see themselves as “back-office support” rather than strategic contributors.
• The Fix:
  • Integrate the GCC as a valid HQ extension.
  • Give GCC leaders a seat at the table with decision-making authority.
  • Establish cross-border knowledge transfer, shared KPIs, and governance councils.

When treated like outsourcing, GCCs stagnate. When treated like value-creation hubs, they scale innovation and talent.

Mistake 3: Underestimating Compliance & Regulatory Complexity

Cross-border compliance is one of the most underestimated challenges in the GCC setup.

• Global Risks in 2025:
  • Data Privacy: The EU’s GDPR fines topped €1.6B in 2023; India’s new DPDP Act adds stricter controls.
  • Labor Law: Countries like the Philippines have tightened wage, benefit, and employment rules for BPO/GCC employees.
  • Taxation: OECD’s global minimum tax rules complicate profit shifting.
• The Fix:
  • Bake compliance into GCC design, not as an afterthought.
  • Use BOT (Build-Operate-Transfer) models with local compliance experts.
  • Establish quarterly compliance audits, not just annual reviews.

Mistake 4: Ignoring Tier-2 and Emerging City Potential

Over 70% of GCCs are clustered in Tier-1 hubs. The result? Saturation, wage inflation, and fierce talent wars.

• The Risk:
  • Salaries in Bangalore for mid-level engineers rose 15–20% YoY in 2023–24.
  • Startups and SMEs are being priced out of Tier-1 talent markets.
• The Fix:
  • Blend Tier-1 + Tier-2 hubs. Cities like Jaipur, Pune, and Krakow offer retention rates 30–40% higher than Tier-1 hubs.
  • Use a hub-and-spoke model: Tier-1 for leadership, Tier-2 for scale functions.

Mistake 5: Weak Leadership & Culture Integration

Leadership gaps are the silent killers of GCCs. Many firms set up centers but staff them only with middle managers.

• The Risk:
  • Employees feel disconnected from HQ strategy.
  • Attrition spikes, innovation stalls.
• The Fix:
  • Install local leadership with dual reporting lines to HQ.
  • Embed HQ culture through exchange programs, shared training, and cross-border leadership summits.
  • Establish Centers of Excellence (CoEs) within GCCs to promote innovation, not just execution.

Mistake 6: Overlooking Tech Integration & Automation

GCCs that rely on spreadsheets and manual reporting fail to deliver ROI.

• The Risk:
  • 50–60% of efficiency gains are lost if automation isn’t embedded.
  • Teams become execution-heavy, not strategy-focused.
• The Fix:
  • Deploy AI-powered workflows for AP/AR, HR, compliance, and investor reporting.
  • Use real-time dashboards for finance, ops, and talent metrics.
  • Invest early in cybersecurity and cloud-native infrastructure.

A global e-commerce company reduced reconciliation time by 70% after integrating AI-based invoice bots in its GCC.

Mistake 7: No Exit or Scalability Plan

Too many companies jump into GCC setup without a clear roadmap for scale or exit.

• The Risk:
  • Locked capital and stranded assets if scaling stalls.
  • Difficulty pivoting back to outsourcing if the GCC model fails.
• The Fix:
  • Use phased scaling models (start with 50 FTE, scale to 500 with proven ROI).
  • Design exit scenarios upfront (BOT transfer, hybrid models, or strategic divestments).

The Cost Breakdown of GCC Setup

To make better decisions, companies must see the actual cost structure:

The Right Way Forward: Building Resilient GCCs in 2025

A successful GCC isn’t just about savings, it’s about strategic resilience.

Winning GCCs deliver:

• 35–50% operational savings

• Global talent pipelines for AI, cybersecurity, and finance

• Quarterly compliance readiness

• Centers of Excellence that drive innovation

Future of GCCs: From Cost Centers to AI-Driven Value Creators

By 2030, GCCs will evolve from back-office hubs into AI-powered global command centers.

• AI copilots will manage compliance filings and finance reconciliations.
• Predictive HR analytics will reduce attrition by forecasting flight risks.
• ESG dashboards will track carbon impact in real time.
• GCCs will serve as R&D hubs, not just execution engines.

Forward-thinking companies are already embedding AI and automation to future-proof their GCCs. Those who don’t risk being left behind.

GCC Setup: Risk-Free With DNA Growth

At DNA Growth, our GCC consulting approach focuses on de-risking every step:

• Location benchmarking beyond cost
• Compliance-first setup with local expertise
• Hybrid BOT + CoE models for flexibility
• Leadership and cultural integration from day one

Because a GCC isn’t just about saving money. It’s about building a scalable, future-ready enterprise backbone.

FAQs on GCC Setup Risks

Q1: What’s the #1 reason GCCs fail?
Poor governance and weak leadership alignment.

Q2: How long does GCC setup take?
Typically 6–12 months, depending on scale and model.

Q3: Are GCCs only for Fortune 500s?
No. Mid-sized firms and funded startups are increasingly adopting GCCs.

Q4: GCC vs outsourcing: Which is safer?
Outsourcing = vendor dependency; GCC = setup risk. The choice depends on your need for control vs flexibility.

GCC Setup Success Is in the Details

The promise of GCC setup in 2025 isn’t just cost savings. It’s the chance to transform operations into scalable, AI-enabled innovation hubs.

Avoid the mistakes outlined above, plan for compliance and culture, and build with automation from the start. That’s how your GCC becomes more than an offshore unit – it becomes a growth engine for the next decade.