More than 50% of GBS centers expanded their digital capabilities in areas such as advanced automation, analytics, cloud and platform-based engineering
2020 was not a bleak year for Global Business Services (GBS*) organizations after all. According to new research from Everest Group, the GBS market witnessed improvement in performance, enhancements in role, and growth across verticals and functions.
Despite the pandemic, the GBS center set-up activity continued to experience strong growth, with 200+ GBS centers established across onshore and offshore/nearshore locations in 2020. Approximately 27% of the US$214 billion global services (sourcing) market is attributed to the GBS model.
The COVID-19 crisis further strengthened the value proposition for evolved GBS organizations, as GBS centers exhibited resiliency and earned spikes in Net Promoter Scores in 2020. The pandemic acted as a catalyst across most verticals for accelerating adoption of digital initiatives, thus providing an opportunity for GBS organizations to step up and deliver higher value-add services for enterprises. More than 50% of GBS center set-ups expanded their digital capabilities in areas such as advanced automation, analytics, cloud, and platform-based engineering to meet evolving business expectations and priorities.
The GBS focus on value addition beyond cost arbitrage remains critically important to future growth. Everest Group, tracking more than 3,500 offshore and nearshore GBS centers, reports that the top 5 expectations from the GBS model going into 2021 are (in rank order from highest importance):
- 1. Enable digital transformation
- 2. Drive cost excellence
- 3. Accelerate innovation
- 4. Drive agility and cross-functional collaboration
- 5. Enhance service delivery resiliency.
Accordingly, Everest Group advises that GBS priorities include:
- Reevaluation of operating models, especially geographic diversification
- Designing a workforce strategy that is holistic and based on design principles.
- Winning the talent wars
- Embracing productivity as a superpower
- Addressing issues with the Work from Home model
- Ensuring cost-competitiveness to overcome inevitable third-party economic comparisons
These findings and more are discussed in Everest Group’s “GBS State of the Market Report: Top 2021 Priorities for GBS.” This report provides an extensive assessment of the GBS landscape and adoption trends, along with a deep dive into emerging trends driving the future of GBS organizations.
Key findings regarding the GBS landscape:
- India continued to be a leading delivery location for GBS market activity, accounting for more than one-fourth of center set-ups in 2020, followed by Rest of Nearshore Europe and Rest of Asia.
- While the overall GBS center set-up activity was dominated by U.S.-based companies, firms based in Asia Pacific have gained significant traction over the last three years (increasing APAC’s share of center set-ups from approximately 10% to nearly 25%).
- Enterprises are increasingly leveraging the GBS model to establish digital hubs and Engineering, Research and Development (ER&D) centers in order to create successful digital customer and employee experiences, thus driving differentiated strategic capabilities.
- The contribution of new adopters in the overall GBS model has increased significantly over the last three years; more than 70% of the companies that established GBS centers in 2020 were new entrants with no existing offshore/nearshore GBS center.
- Interestingly, small companies (i.e., with revenue less than US$1 billion) accounted for almost half of the center set-up activity in offshore/nearshore locations in 2020, with technology and communication companies leading in terms of center set-ups.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com/
*Everest Group uses GBS as the preferred term for in-house set-ups, which are otherwise also referred to as Global In-house Centers (GICs), shared services, global capability centers, or captives. GBS centers are enterprise-owned, centralized units that deliver IT, business process or engineering services to other business units of the enterprise.