The world is currently going through VUCA conditions – volatility, uncertainty, complexity and ambiguity. Multiple headwinds buffet the world and create unprecedented and unforeseen turbulence. Slowing economic growth, heightened geopolitical instabilities, supply chain disruptions, trade wars, Sanctions, Protectionism and more combine to not only unsettle conditions but also create a sense of fear. The looming risk of things getting out of hand seems real.

Of late, US President’s tariffs have added another layer of uncertainty to the already fragile world order. It is in this volatile, unpredictable situation that Governments and administrations are groping for rational responses.

A direct fallout is that business have turned defensive. They are in a wait-and-watch mode. Investment decisions are put on hold. Companies are examining their sources of supply for raw material and destination markets for exports in order to ensure no over-dependence on a single source of supply or market.

This investment hesitancy is sure to exert medium-to-long term effect in terms of growth, capacity creation and employment generation.

Countries and businesses are now looking closely at building resilience against uncertainty. Only the agile, nimble and resilient would survive.

Enter: Global Capability Centres. In the context of Trump’s tariffs and consequent risk of loss of export to the US, Global Capability Centres (GCCs) can play a significant role in helping businesses build resilience against the impact of tariffs and other global disruptions.

While tariffs may not directly target the services provided by GCCs, these centers can be leveraged as strategic hubs to mitigate the resulting economic uncertainty and operational challenges.

Here's how GCCs can help build resilience against tariffs:

Supply Chain Optimization and Visibility: GCCs can act as "control towers" for the entire supply chain. By consolidating logistics, trade compliance, demand planning, and supply chain intelligence into a single command center, they provide real-time visibility into the movement of goods, inventory levels, and demand signals across different markets. This allows companies to quickly assess the financial impact of new tariffs, identify alternative sourcing options from low-tariff regions, and pivot their strategies to avoid disruptions.

Data Analytics and Predictive Modeling: Modern GCCs are no longer just for back-office support; they are centers of advanced analytics and AI. They can leverage machine learning and AI to create adaptive demand models that automatically adjust to market fluctuations and external signals like tariff changes. This enables more accurate forecasting and proactive risk mitigation.

Centralized Compliance and Legal Expertise: Tariffs create a complex web of legal and regulatory considerations. GCCs can centralize legal, risk and compliance functions, ensuring that the organization stays on top of evolving regulations, data protection rules, and tax incentives in different jurisdictions. This centralized oversight helps in navigating the complexities of international trade and ensuring compliance.

Driving Innovation and Technology: By serving as innovation hubs, GCCs can help companies develop technology-led efficiencies. This includes leveraging automation and AI to accelerate service delivery, reduce operational costs and improve overall agility. This focus on technology can help offset the increased costs that tariffs may impose.

Risk Diversification: Establishing GCCs in different geographic locations helps businesses diversify their operational risk. By distributing core capabilities across multiple countries, companies can reduce their dependence on a single location, making them less vulnerable to disruptions from geopolitical events or tariffs targeting a specific region.

Strategic Sourcing and Procurement: GCCs can play a vital role in procurement by identifying and managing relationships with suppliers in different countries. They can help companies explore trade agreements, utilize foreign trade zones, and implement "tariff engineering" strategies, which involve redesigning products or their components to fall under a lower tariff classification.