Why do some Global Capability Centers (GCCs) evolve into innovation hubs while others remain tagged as cost-cutting back offices? The answer often lies in how leaders interpret what is cost centre. Misunderstood and misused, this simple term can shape how organizations perceive the purpose and value of their GCCs.
In today's global enterprise landscape, what is cost centre is often oversimplified or confused with unrelated financial ideas. Within Global Capability Centers (GCCs), this misunderstanding blurs the line between value creation and expense control — limiting the true potential of these operations.
In this article, we'll demystify what is cost centre and uncover six common misconceptions that prevent organizations from maximizing their GCC models. We'll also explore how modern enterprises are turning cost centres into engines of capability, innovation, and long-term growth.
Before diving into misconceptions, let's first clarify what is cost centre in simple terms. A cost centre is a business unit or department that does not directly generate revenue but incurs costs to support the organization's operations. These typically include departments like HR, IT, Finance, Legal, or shared service units that enable the revenue-generating functions to perform efficiently.
In enterprise GCC models, what is cost centre often becomes a core discussion because GCCs are usually established to optimize costs, centralize operations, and deliver high-quality support services. However, as the role of GCCs matures, many global corporations are realizing that cost centres can evolve beyond administrative functions — into Centres of Excellence (CoEs) that drive innovation, digital transformation, and strategic capabilities.
Perhaps the most common misunderstanding about what is cost centre is that it exists purely to reduce operational expenses. While cost efficiency is one outcome, it's not the sole purpose. In a modern GCC hub, the goal is to achieve both cost arbitrage and capability enhancement.
Forward-thinking global enterprises now view cost centres as strategic enablers that create value by consolidating specialized skills, standardizing processes, and accelerating transformation. For example, an enterprise finance GCC in India might start as a back-office function, but over time, evolve into a Centre of Excellence for analytics or regulatory reporting.
Thus, the true measure of a cost centre isn't just lower expense — it's how efficiently it delivers measurable outcomes like improved turnaround time, process accuracy, and decision support.
A second misconception about what is cost centre is that it has no impact on revenue creation. In reality, the relationship between cost centres and profitability is indirect but significant. When a Global business services unit optimizes internal workflows, reduces errors, or speeds up service delivery, it creates tangible value that translates into better customer satisfaction, improved retention, and stronger revenue streams for the enterprise.
For example, a GCC providing product design or R&D support might not invoice external clients, yet its innovations may lead to new product launches or market expansion. Similarly, an HR or IT cost centre can enhance employee productivity, which indirectly strengthens financial outcomes.
Therefore, enterprises must recognize that even though cost centres don't directly sell or bill customers, they play a critical role in enabling revenue generation and long-term scalability.
Another prevalent myth about what is cost centre is assuming that all GCC solutions are purely cost-driven. In truth, GCCs today operate across a spectrum — from traditional cost centres to profit-oriented entities or hybrid models.
The maturity journey of a GCC often begins as a cost-centric structure focused on process efficiency. But as it gains domain depth, technology expertise, and data capabilities, it can evolve into a value centre, and later, into a Centre of Excellence that generates intellectual property or drives innovation across the enterprise.
Some global corporations even transition their GCCs into independent P&L units that offer services back to multiple business lines within the group. The shift from cost to value requires mindset change, talent upskilling, and leadership alignment — but it's increasingly common in high-performing GCC ecosystems.
This is a fundamental misunderstanding of what is cost centre within an enterprise structure. Many executives mistakenly believe that cost centres are operational backbones with little strategic value. The truth is, cost centres often house mission-critical capabilities such as cybersecurity, risk management, finance control, and compliance — all of which safeguard enterprise continuity.
In the context of Global Capability Centers, these cost centres can become the strategic nerve centres of innovation. For instance, a cybersecurity CoE based in a gcc location like Bengaluru or Kraków not only protects global infrastructure but also leads global governance initiatives.
When cost centres operate in synchronization with business goals, they amplify strategic agility. Instead of being passive support systems, they evolve into proactive contributors to enterprise resilience and innovation.
Another myth surrounding what is cost centre is that it's impossible to measure return on investment (ROI) from non-revenue departments. This misconception arises because traditional accounting systems don't always link cost-centre outcomes with financial impact.
However, forward-looking organizations quantify ROI through operational metrics such as:
By linking these outcomes to business objectives, enterprises can calculate the real ROI of a cost centre. In the case of a gcc hub supporting analytics and AI automation, ROI may come from faster decision-making, reduced downtime, or better forecasting — all of which carry measurable value.
The key lies in aligning metrics with enterprise goals rather than evaluating cost centres in isolation.
Finally, one of the most outdated notions about what is cost centre is that it's a static structure that doesn't evolve. On the contrary, cost centres within enterprise GCC models are dynamic entities that continuously adapt to business needs, technologies, and market shifts.
A GCC that began as a shared service for finance or HR can transform into a multi-disciplinary Centre of Excellence driving AI, automation, or digital transformation initiatives. Similarly, as enterprises expand into new geographies, their cost centres evolve to incorporate local expertise, regulatory alignment, and innovation in service delivery.
The ability to transition from cost to capability is what distinguishes world-class GCCs from traditional back-offices. These centres act as the strategic engines of modernization — not cost drains.
To fully grasp what is cost centre, it's essential to view it as part of a larger enterprise value chain. When a GCC or shared service centre is empowered with digital tools, agile teams, and a performance-driven culture, it transcends its cost-label and becomes a catalyst for innovation.
Leading global enterprises are already redefining their cost centres using automation, AI, and predictive analytics. They are replacing transactional work with insights-driven activities — turning each centre into a powerhouse of process intelligence.
For instance, a finance cost centre that once focused on data entry can evolve into an analytics command centre that drives working capital optimization. Similarly, an HR cost centre can leverage AI to predict attrition, enhance employee engagement, and support leadership decisions.
The more a cost centre integrates with business strategy, the faster it moves up the maturity curve — from cost efficiency to strategic differentiation.
Modern GCCs have redefined what is cost centre in global business strategy. Far from being seen as low-cost delivery arms, they now represent a fusion of cost efficiency and capability building. Many multinational organizations have adopted the GCC model precisely because it allows them to balance operational optimization with innovation.
According to a recent KPMG‐NASSCOM analysis, India is projected to host nearly 1,900 Global Capability Centers by 2025, contributing over USD 60 billion in market value. This explosive growth underscores how cost centres have evolved into strategic enablers driving enterprise transformation.
By leveraging GCC solutions, enterprises can consolidate critical functions under one roof, build domain-specific expertise, and create scalable operating models. The result is a powerful synergy — where the GCC becomes both a cost-efficient support system and a centre of innovation for the global corporation.
In other words, the GCC journey often begins as a cost centre but eventually matures into a Centre of Excellence that delivers competitive advantage across global markets.
Choosing the right gcc location plays a pivotal role in determining whether a cost centre remains transactional or transforms into a strategic value centre. For example, according to KPMG India, around 50% of new Global Capability Centres are now being set up in India, thanks to its large talent pool, digital infrastructure, and cost competitiveness.
Countries like India, Poland, and the Philippines have emerged as prime destinations due to their vast talent pools, digital infrastructure, and cost competitiveness.
However, success doesn't depend solely on location; it also depends on leadership intent. Enterprises that treat their GCCs as extensions of the corporate strategy — rather than just offshore delivery hubs — achieve higher talent retention, innovation throughput, and stakeholder alignment.
Hence, when evaluating what is cost centre, organizations must ask: Are we using our GCC purely for efficiency, or are we nurturing it to become a driver of transformation?
The future of what is cost centre in enterprise GCC models is not about accounting definitions — it's about strategic mindset. Cost centres that remain siloed, transactional, and underfunded will inevitably stagnate. Those that embrace digital transformation, cross-functional collaboration, and innovation will redefine enterprise competitiveness.
The transition from cost to value requires investment in technology, leadership empowerment, and measurable KPIs. Whether it's process automation, advanced analytics, or cross-functional skill building, every initiative must tie back to enterprise outcomes.
As global business landscapes evolve, GCCs that reimagine their cost centres as incubators of excellence will emerge as the strongest differentiators in the era of digital globalization.
The traditional understanding of what is cost centre — as merely a non-revenue, expense-tracking unit — no longer holds true. In today's enterprise GCC models, cost centres form the backbone of transformation, driving standardization, scalability, and innovation.
By shedding old myths and adopting a capability-driven view, organizations can turn every cost centre into a sustainable value engine. This shift from cost to capability is already unfolding across leading global enterprises.
At Anlage Infotech, we help global corporations unlock this potential through end-to-end GCC solutions — from setup and scaling to transformation and value realization.
Ready to reimagine your GCC as a value creation engine? Contact us to explore how Anlage can help you build, scale, and transform your Global Capability Center.
A cost centre in a GCC is a business unit that supports operations but doesn't directly generate revenue. It focuses on efficiency, compliance, and scalability — enabling the enterprise to function effectively while maintaining control over costs.
Knowing what is cost centre helps leaders manage budgets strategically, measure performance accurately, and identify areas for automation and improvement — turning traditional support functions into value creators.
Yes. As organizations mature, a cost centre can evolve into a value or profit centre by driving innovation, offering specialized services, and contributing measurable outcomes that enhance business performance.
What is cost centre is central to transformation — it acts as a foundation for standardization, digital adoption, and efficiency. Modern GCCs leverage cost centres as engines for innovation and strategic growth.
At Anlage Infotech, we help enterprises reimagine what is cost centre by providing end-to-end GCC solutions — from setup and scaling to transformation — enabling organizations to convert cost hubs into Centres of Excellence.
Gaurav Chawla, COO of Anlage Infotech, emphasized the transformative role of AI-powered analytics in HR at the 5th Edition of the GCC Summit 2024. Highlighting predictive analysis and smart tool utilization, he shared how these technologies can cut hiring cycle times by up to 60%, driving greater efficiency. The event took place at GMR Aerocity Hyderabad.
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