Introduction

HSBC Holdings, one of the world’s largest banking and financial services organisations, revolutionised its operational model through a strategic global capability centres (GCCs) initiative that began in 2016. This comprehensive offshoring strategy transformed cost structures while enhancing service delivery across the bank’s global footprint.

Challenge

By 2016, HSBC was facing multiple operational challenges:

  • Unsustainable cost-income ratio of 67%, well above industry benchmarks
  • Fragmented operations across 65 countries with significant duplication
  • Rising regulatory compliance costs following the 2008 financial crisis
  • Legacy technology infrastructure requiring substantial modernisation
  • Intensifying competition from digital-native fintech companies
  • Skills shortages in key technology and analytics domains in Western markets

Strategy Adopted

HSBC implemented a multi-faceted GCC strategy:

  • Established four primary GCCs in India (Hyderabad, Bangalore), China (Guangzhou), and Poland (Krakow)
  • Smaller specialised centres in Malaysia (Kuala Lumpur) and the Philippines (Manila)
  • Moved beyond traditional back-office functions to include:
    • Software engineering and development
    • Data analytics and AI/ML operations
    • Cybersecurity operations centres
    • Customer experience design
    • Regulatory reporting and risk management
    • Digital banking product development
  • Implemented “follow-the-sun” model for 24/7 global operations
  • Created career progression pathways to reduce attrition
  • Established innovation labs within each GCC for emerging technology exploration

Implementation Process

  • Strategy development and location assessment: 6 months (2016)
  • India GCCs establishment (Phase 1): 12 months (2017)
  • Poland and China GCCs establishment (Phase 2): 15 months (2017-2018)
  • Function migration in three waves:
    • Wave 1 (Operations & IT Support): 12 months (2018)
    • Wave 2 (Finance, Risk & Compliance): 15 months (2019-2020)
    • Wave 3 (Advanced Technology & Analytics): 18 months (2020-2021)
  • Optimisation and expansion phase: Ongoing (2022-present)
  • Total transformation timeline: 6 years (2016-2022)

Results Achieved

  • GCC headcount growth from 7,000 to 35,000+ employees (2016-2023)
  • Cost savings of approximately $1.2 billion annually by 2023
  • Cost-income ratio improved from 67% to 59%
  • 40% of technology development is now delivered through GCCs
  • Reduced time-to-market for digital banking features by 55%
  • Improved customer satisfaction scores for digital channels by 24 points
  • Employee attrition in GCCs reduced to 12% (below the industry average of 23%)
  • 45% of GCC roles now in advanced technology and analytics (up from 15% in 2016)
  • 60% reduction in operational risk incidents through standardisation

Lessons Learnt

  1. Beyond labour arbitrage: Initially focused primarily on cost savings, HSBC had to pivot to emphasise capability building and innovation
  2. Location strategy matters: The Guangzhou centre faced challenges with English proficiency that required additional investment
  3. Culture cannot be offshored: Creating a cohesive company culture across global locations required more executive presence than initially planned
  4. Career progression is essential: Early attrition issues were addressed by creating clear advancement pathways
  5. Automation complementarity: GCCs became more valuable when paired with robust automation initiatives
  6. Regulatory complexities: Data sovereignty requirements necessitated careful workload allocation between centres