Reverse Innovation and Local Relevance: The New Mandate for Emerging Market GCCs

GCCs should achieve two outcomes which are interconnected to be successful:

• Local Market Relevance Strategies — Develop products and services that address a local issue (price sensitivity, infrastructure gaps, regulatory nuance).
• Integration of Global Business Strategy – Scaling those offers to mature markets, with IP, governance and commercialisation roadmaps.

An example of a case study is payments infrastructure:India UPI began as a domestic, no-friction solution and has, since, become a template for how local platforms can inform global expansion playbooks. 

Emerging-market GCCs are best suited to drive reverse innovation due to a number of reasons:

• Talent Density: They possess vast numbers of engineers and product managers capable of rapidly assembling teams and expanding global product development. 
• Market Proximity: The exposure to cost-sensitive consumers on a daily basis necessitates an emphasis on efficient and resilient design, leading to solutions that can be easily transported to other geographical areas.
• IP Momentum: An increase in the number of patents and research in these areas, especially in India, generates a solid channel of transforming the local innovations into intellectual property.
• Ecosystem Connections: By working closely with local startups, educational institutions, and regulators, it is possible to co-create more quickly and open compliance channels.

Fintech: The architecture and scale of UPI demonstrate how a local payment innovation can have an impact on international payment rails and cross-border services. 

Healthtech: Indian-developed frugal diagnostics and portable devices are now being used in low-resource environments around the world, speeding up the product development cycle and product optimisation. 

Enterprise Software: Product functionality highly refined to suit Southeast Asian retail chains has been repurposed to augment personalisation engines in Western e-commerce systems. 

Investment in reverse innovation within the GCCs is cost-effective in economic terms: Reduced cost of R&D per iteration (frugal prototyping), quicker time-to-market in related markets, and increased IP capture rates as the number of patent filings increases. GCCs are a source of considerable revenue (tens of billions of USD) and provide thousands of workers in both tier-1 and tier-2 cities in host countries to boost the development and sustainability of the region. 

The GCCs will increasingly own more of the enterprise product roadmaps and IP. Hubs of Tier 2 (Pune, Coimbatore, and Jaipur) will grow more quickly and take the load off of the classical megacities and make local innovation ecosystems. GCC-based solutions will become a major contributor to the global product launches of most multinationals by 2030.

It is simple to entrench local market relevance plans into the center charter, quantify and compensate reverse innovation performance, and connect local R&D with global commercialisation pipelines. Companies that reduce GCCs to execution points are likely to lose the competitive advantage that locally born, globally scaled solutions can provide. The global business-strategy future flows through GCC’s emerging markets – where the scale meets the relevance.

Does your GCC have the structure to go global with local innovations? Contact Inductus GCC to restructure governance, IP policy and commercialisation incentives in the present day to transform local relevance into sustainable competitive advantage.