Is a Bigger Shared Services Center (or GIC) Always Better Performing? Maybe Not | Sherpas in Blue Shirts

Posted On September 17, 2018

We recently conducted a deep analysis of the digital maturity of almost 60 shared services centers, (also referred to as GICs) across diverse industries and geographies, and disseminated summary findings through a series of round tables across different Indian cities, including Delhi NCR, Bangalore, Mumbai, and Pune. You can read the detailed results in our recently released Digital Maturity in GICs | Pinnacle Model™ Analysis.

Here, I want to focus on a question that recurs in most of our conversations: Does the size of a GIC have any implication on its Pinnacle performance on digital maturity? Note that we define Pinnacle GICs™ as those that achieve superior performance because of their advanced capabilities.

The answer to this question is not as objective as it seems.

Related: Commercial Options for India GIC Setups

Our study revealed that scaled GICs (those with 3,000+ FTEs) have consistently delivered better impact across cost savings, operational KPIs, and even strategic metrics such as contribution to revenue growth. It also showed that small (those with less than 1,000 FTEs) and mid-sized GICs (those with 1,000 – 3,000 FTEs) have demonstrated lower improvement across all business outcomes.

Is a Bigger Shared Services Center or GIC Always Better Performing Maybe Not blog image

Does this Mean that all Scaled GICs are Pinnacle GICs? Not Really

Based on our analysis, less than one-third of scaled GICs have been able to demonstrate Pinnacle performance, while multiple small and mid-sized Pinnacle GICs (~30 percent of the Pinnacle performers) have achieved superior outcomes because of their advanced capabilities.

  • For instance, a multinational conglomerate’s GIC (mid-sized with 1,000-1,500 FTEs) delivered 20-30 percent improvement on operational KPIs such as process agility and SLA compliance. This GIC operates as the global competency center for IT solutions development with end-to-end ownership across the application development lifecycle, thereby allowing it to drive process transformation changes and yield impressive improvements
  • A U.S. food & beverages major’s GIC (also mid-sized, with 1,500-2,000 FTEs) is leveraging pricing analytics to drive competitive advantage for its parent. The GIC developed a competitive intelligence and analytics platform, which allowed the firm to view what its competitors are selling and make recommendations on the necessary price changes to its merchants. This platform is tied to a machine learning engine that dynamically prices their products.

Related: Learn more about Everest Group’s Shared Services Center capabilities

Common Threads across all Pinnacle GICs’ Journeys

We believe it is the triumvirate of the approach to demand creation, strategic focus of the digital strategy, and orientation towards cross-functional collaboration.

Demand Creation

A pull-based approach to demand creation – i.e., a proactive approach to creating Proof of Concepts (POCs) and showcasing capabilities – has not only helped shared services centers secure CXO-level sponsorship, but also increase the existing breadth and depth of services to enable end-to-end process orchestration. For instance, a European BFSI major’s GIC currently operates as the RPA CoE, and champions the end-to-end global RPA program for the enterprise. However, this was not the initial mandate for this shared services center. It proactively started developing POCs, capitalized on visits by onshore C-level executives to showcase their capabilities, and subsequently received buy-in from the parent company. The CoE now operates in a hub and spoke model, wherein the India GIC (hub) provides global governance and drives RPA for Europe through the CEE shared services center (spoke).

Strategic Focus of Digital Strategy

While other GICs solely focus on technology adoption, most Pinnacle GICs focus on using technology to enable operational improvement, which consequentially results in employee and/or customer experience enhancement. With achievement of these objectives, financial benefits – both top-line and bottom-line growth – follow suit automatically. Technology adoption per se needs to be viewed as a means to the end, not the end itself. Pinnacle GICs’ more holistic approach allows them to see both higher chances of success and ROI.

Cross-functional Collaboration

The third – and most underrated – differentiator is the focus on cross-pollination of resources by breaking functional barriers. We believe that a siloed approach to digital enablement will not work, and that shared services centers need to break silos and provide employees with wider exposure to functional roles across the firm. This will not only improve knowledge flow and increase productivity, but also stimulate innovation. For some GICs, creating CoEs for select digital capabilities has significantly enhanced the pace of adoption, and sharing of skills and best practices

All these aspects, along with dedicated enterprise leadership, have enabled Pinnacle GICs to champion organization-wide digital services delivery.

If you’d like insights on how your shared services center stacks up against the competition on the digital maturity front, please feel free to reach out to me at [email protected].

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