Author: Sakshi G

Unlock a New Source of Value Creation – Integrate Sustainability into the GBS Charter to Help BFS Firms Realize Their ESG Goals | Blog

Global Business Services (GBS) organizations have a big opportunity to champion Environment, Social, and Governance (ESG) in banking and financial services (BFS) institutions. To learn about six ways GBS organizations can help enterprises reach their ESG goals and unlock greater value, read on.

ESG is creating new opportunities for BFS Global Business Services organizations. Fast-evolving consumer awareness about social, political, and environmental values, emerging regulations, and increased demand for sustainable financial products are pressuring BFS firms to prioritize ESG goals in operations and employment.

Let’s explore the significant role GBS units can play in enabling ESG for enterprises.

ESG products and services emerge

To meet new customer and investor expectations along with regulatory mandates, BFS organizations are building ESG products and services – such as green loans, sustainability-linked loans, and carbon-neutral banking – to make their operations sustainable.

Capital market firms are embracing green underwriting, while asset and wealth managers are steadily moving toward ESG investing. These organizations are also focusing on workplace diversity, pay equity, and good governance structure to meet their ESG aspirations.

This has created a big opportunity for GBS organizations to move from being measured for their labor arbitrage and cost efficiency to the value they can deliver to enterprises. These units can become vital to the enterprise’s ESG agenda by expanding their sustainable service offerings and conducting ESG-specific due diligence and risk assessment. GBS centers’ strong visibility across the enterprise’s functions, operations, and capabilities to support their ESG initiatives will drive this new focus.

Six ways GBS organizations can support enterprise ESG goals and commitments

As BFS organizations increasingly look for ways to support and grow their businesses with an impact-driven mindset, GBS organizations should be at the forefront of defining and internalizing ESG goals.

The new environment has opened up many avenues for GBS organizations to maximize the value they can deliver and become ESG enablers for their enterprises. For a deep dive into the opportunities summarized below, please read our newly released research.

See how GBS organizations can promote ESG initiatives within the enterprise in the image below.

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GBS organizations can enable the following key opportunities for BFS firms:

  • Enhance sustainable investing practices – Support enterprise banks by running/enhancing sustainable investment initiatives, such as portfolio optimization and expansion, and positive and negative screening of these portfolios
  • Develop new sustainable products – Identify feasible opportunities to expand the green product portfolio for their respective enterprises following the regulatory and competitive landscape
  • Proactive ESG risk monitoring – Build on their roles in supporting enterprises in managing various risk types such as liquidity, credit, and operational so GBS can be leveraged as specialist ESG risk management centers by enterprises
  • ESG performance tracking and reporting – Set up dedicated ESG performance reporting teams at GBS centers, which, in turn, will own the management and execution of ESG performance tracking and reporting tasks
  • ESG compliance reporting – Track ESG-specific regulatory developments across different countries where the enterprise has an operational footprint. Accordingly, it can assess the impact of newly introduced mandates or disclosures requirements on the enterprise’s existing compliance processes
  • Implement ESG commitments of the enterprise – Undertake sustainability initiatives to integrate the ESG goals of the enterprise across its own operations, people, and functions. For example, a leading US investment bank committed to incorporating sustainability-focused features such as energy-efficient lighting and minimized water consumption policies in its new technology base in Poland. Similarly, a major European bank’s GBS center has been working since 2009 on a Train Green Program aimed at creating sustainability awareness among school children

Call to action for BFS GBS leaders

As GBS organizations take on more strategic roles, it becomes imperative for them to step up and become ESG enablers for their enterprises. To do this, GBS leadership must champion the development of ESG-specific capabilities and prioritize initiatives to drive enterprises’ ESG agendas, while embedding ESG and sustainability practices into their service delivery and operations.

To discuss how we can assist your enterprise with achieving your ESG goals, reach out to Sakshi Garg [email protected], Piyush Dubey [email protected], and Mohini Jindal [email protected].

Discover more about how to integrate sustainability and ESG initiatives into your organization in our upcoming webinar, Driving Larger-scale Adoption of Impact Sourcing from the Inside Out.

Metaverse Trends that Can Redefine the Hybrid Work Model | Blog

The metaverse offers promise to reinvent hybrid models by balancing remote work with social connections formed between avatar versions of employees in a virtual world. This emerging model holds the potential to enhance team collaboration, accelerate learning, and spark creativity. Learn the latest metaverse trends to watch in this blog.

Hybrid work environments – the answer to many of the issues of remote working experienced during the pandemic – have increasingly been adopted by global enterprises in all industries to offer work flexibility along with in-person collaboration employees desire.

Now the metaverse can take hybrid work into its next evolution – bringing together the advantages of the work-from-home environment with the social connections, teamwork, and fun of the virtual world.

In this exciting next phase, employees will work in a persistent immersive mega virtual smart space akin to a universe where people have seamless digital experiences that can extend to the real world.

Employees with 3D avatars of themselves will inhabit virtual office spaces to meet and collaborate with their teams remotely without feeling distant. Many metaverse solutions for the workplace, like Microsoft Mesh, NextMeet, and Meta’s Horizon Workrooms are already gaining popularity for work meetings.

Metaverse advantages in a hybrid work model

When operating in the metaverse, organizations reap all the benefits of remote work, including reduced operational costs for real estate and facility maintenance. Here are some of the other key benefits:

  • Enhanced learning and development – Through virtual learning, the metaverse can enable better collaboration, enhance learning outcomes, and improve employee training
  • Improved attrition and talent – The metaverse can reverse the rising attrition rates many companies experience when returning to in-office work by employees who leave because they prefer remote work. With metaverse, companies can differentiate their employee value proposition around collaboration and relaxation activities, resulting in better retention.

Organizations can deploy metaverse applications throughout the employee lifecycle, including attracting talent by distinguishing themselves, developing skills through virtual training, and engaging employees so they stay with the company

  • Better collaboration across geographies – As metaverse adoption increases, organizations will be able to further distribute employees geographically. Tasks like design work, planning, and strategizing that require teamwork and are difficult to perform in regular virtual modes can be done more effectively with creative virtual tools within the metaverse. This will enable increased talent sourcing for strategic roles from tier-2 and tier-3 cities as the metaverse diminishes the barriers to effective collaboration across geographies
  • Greater work-life boundaries – Metaverse can overcome remote workers’ top concerns of feeling isolated, having limited social interactions with coworkers, and lacking boundaries between work and personal time.

 A fully immersive metaverse environment functions exactly like an office space where employees can have the impromptu interactions needed to build a shared organizational culture. When working in the metaverse, employees work in different environments than their homes, providing a barrier between jobs and leisure

Challenges to the metaverse in hybrid work

The metaverse will have some challenges to overcome and these include:

  • Higher initial investment – Operating within the metaverse requires a high initial investment for developing metaverse platforms and procuring hardware. The low maturity of technology and hardware required is an obstacle to large-scale commercial adoption
  • Employee stress – Working in the metaverse for long hours is strenuous for employees who can feel fatigued and lose their sense of reality. Another employee concern is digital privacy and security
  • Graphic limitations – The metaverse technology available today only supports cartoonish avatars that do not look realistic or show human emotions, significantly limiting the effective expression of thoughts and non-verbal cues

Metaverse outlook

Most organizations are following a wait-and-watch approach when formulating internal and external metaverse strategies as most metaverse solutions offered today are in their initial development stages.

Widespread metaverse platform adoption is likely to take a few years because the infrastructure, applications, and computing power requirements for a very immersive metaverse experience are not yet available on a deployable scale. However, the metaverse offers an enticing value proposition that should be closely watched.

To discuss metaverse trends and their impact on the hybrid work model, contact [email protected], [email protected], and [email protected].

You can also view our LinkedIn Live event, Trust and Safety (T&S) in the Metaverse | With Great Power Comes Great Responsibility.

Will Ukraine’s Invasion Have a Domino Effect on Other Geopolitical Equations? | Blog

The Russian military action in Ukraine has already significantly impacted thousands of services jobs in this region, but the potential reverberations to nearshore European countries and the larger global services industry could be far more damaging – making it essential to integrate geopolitical risk management in your decision-making now. Learn the immediate steps to protect against risks during these increasingly unpredictable times as we continue our expert analysis on this critical issue.   

In our recent blog, we wrote about service delivery risk in Ukraine. Since Russian forces invaded Ukraine on Feb. 24, almost 150 companies operating out of the region supporting IT, Engineering, and Business Process services have ceased or at least suspended operations in the region, impacting thousands of jobs.

But the crisis is not limited to Ukraine, Russia, or even Belarus. Several Eastern European countries such as Poland, Hungary, Slovakia, and Romania are directly impacted. These neighboring countries are taking in refugees, providing financial aid, declaring states of emergency, preparing for military confrontation, and most importantly, witnessing a significant drop in employee morale as individuals and families experience anxiety over the recent events.

These nearshore European countries – Poland, Hungary, Romania, Slovakia, Czech Republic, Latvia, Lithuania, and Estonia – collectively host nearly ~1.5 million Full-time Equivalents (FTEs) in global services delivery, accounting for 15-18% of the total global services workforce worldwide.

We are advising our clients that significantly rely on Central Eastern Europe to stress test their Business Continuity Planning (BCP) strategies at the same time hoping that the ongoing conflict doesn’t escalate to the neighboring countries.

But while we hope for the best, we must prepare for the worst. One of the lessons from this crisis is to not assume that diplomats have everything under control. The events of the past few weeks are extremely disturbing and could embolden authoritarian leaders in some of the other countries.

Below is our analysis of some of the hostile geopolitical equations globally that could impact the global services industry in the event of a major escalation in the associated countries:

  Risk scenario Likelihood Locations impacted Global services Impact

(number of centers and FTEs)

Key players with large footprint
1. Russia versus NATO High Poland, Hungary, Romania, Slovakia, Czech Republic, Latvia, Lithuania, and Estonia ~1,000 centers

1.5 million FTEs

Amazon, Coca-Cola, Deloitte, Dell, Microsoft, E&Y, Nokia, Huawei, IBM, HCL, Cognizant, Accenture
2. China versus Taiwan

Or direct US versus China

Medium-High Taiwan (directly)

China (if US imposes sanctions on China)

~400 centers

320,000 FTEs

Barclays, Citigroup, ExxonMobil, HSBC, Microsoft, Accenture, Capgemini, Tech Mahindra
3. Gulf tensions – Iran versus US and Israel Medium Mainly Iran.

Could impact Kuwait, Iraq, and Lebanon in case of escalations in the region

~100 centers Alibaba, Apple, AT&T, General Motors, Volkswagen, LG Electronics, Accenture, Genpact, IBM, HCL
4. India versus Pakistan Medium-low Locations in Northern and Western parts of India (including capital city); Northwestern region of Pakistan ~2,000 centers

3.1 million FTEs

Amazon, Bank of America, Citigroup, Ford Motors, Dell, Nestle, Microsoft, Accenture, TCS, Wipro, IBM
5. India versus China Medium-low Locations in Northern parts of India; major global services hubs in China are too far out from border regions ~2,500 centers

3.3 million FTEs

Citigroup, ExxonMobil, HSBC, Ford Motors, Nestle, Microsoft, TCS, Wipro, IBM, Capgemini, Tech Mahindra

Risk management actions to take

While we can only hope that none of the above-mentioned scenarios take place, organizations need to be well-prepared to manage the risk impacts. Everest Group advises the following:

  • Move geopolitical risk management up your enterprise agenda
    • New risks require newer risk management systems. While most global companies invoke reactive measures to the changing risk environment, they lack integrated capabilities for managing the cross-enterprise impact of geopolitical risk. Integrate geopolitical risk management into a systematic process and move risk functions beyond the formal views of governance/administration to influence your firm’s core strategy
    • Deploy refreshed risk management mechanisms and take a portfolio view of risks to better understand the implications and interdependencies
    • Empower risk management teams with access to geopolitical intelligence relevant for not just short-term, but long-term challenges and opportunities. Ensure that updated assessments and implications of geopolitical risks regularly feed into the decision-making machinery across the firm
  • Anticipate business-risk implications
    • Examine and understand potential business consequences of geopolitical risks. More often than not, geopolitical movements lead to regulatory changes (e.g., sanctions), thereby impacting corporate risk exposure, with implications for tax rates, cross-border trade, and exchange-transfer risk
    • Scan the horizon for changing sanctions and resultant changes to your third-party ecosystem
  • Rehearse and stress-test the readiness of contingency plans regularly
    • Consistently run tests of work from home and other BCP models to ensure familiarity and effectiveness (in terms of devices, connectivity, collaboration, and project management tools)
  • Strengthen digital security and ensure tech readiness
    • Cyber risks are increasingly associated with political origins, including war and terrorism. Keep a hawk-eye on potential threats related to cybersecurity and invest in strengthening network infrastructures and stronger encryption algorithms to insulate against potential cyberattacks
    • Be aware that historical evidence suggests that cyberattacks are not restricted to just the conflicted zones and often spill over, causing collateral damage in neighboring countries and also putting them at risk
  • Maximize delivery portfolio resiliency
    • Diversification is becoming mission-critical. Instead of operating large hubs in one or two locations, look to dip toes in multiple talent pools across locations (while simultaneously assessing fragmentation risks)
    • Reassess your Global Business Services (GBS)/shared services and vendor portfolio to ensure enough overlap and redundancy across both operational and management processes
    • Invest in process simplification and re-design to reduce hand-offs, decision-points, and dependence on people
  • Increase BCP-led talent management
    • Cross-skill/cross-train the workforce across centers in critical processes to enhance BCP and resilience, and manage workloads in case of a country/center work stoppage scenario
    • Maintain select forms of dispersed/distributed workforce (not co-located with delivery centers). Examples include remote working models or “pods,” contingent and gig workforces

The nature of geopolitical risk is changing and becoming increasingly unpredictable. It is now imperative for organizations to integrate geopolitical risk management in decision-making processes across the organization.

If you have questions or would like to discuss this topic, please feel free to reach out to us at [email protected], [email protected], or [email protected].

As we continue to watch the events in Ukraine, you can access our  resource center where you’ll find our consolidated coverage of this evolving situation, or watch our LinkedIn Live event, “How to Manage the Ukraine-Russia Impact on Service Delivery.

Five Actions GBS Organizations Must Take to Address the Global Business Services Trends and Challenges of 2022 | Blog

2021 was a milestone year for Global Business Services (GBS) with most enterprises reporting the model exceeded expectations for global business services solutions and delivery. GBS provided the needed strength and agility to seamlessly supply value without disruption from the pandemic. GBS organizations also saw higher Net Promoter Scores (NPS), a metric showing customer satisfaction and loyalty, with an increase of 10-25% in 2020 and 2021, and established higher stakeholder engagement and service delivery expansion.

With this steady stride set in motion, GBS organizations are now looking to approach 2022 with a renewed focus on increasing the value of delivering global business service solutions. They are striving to boost proficiency, digitalization, and customer-centricity while taking steps to adapt to current challenges like inflation, a talent deficit, higher costs, and the ripples set in motion from the pandemic.

So, what should GBS organizations focus on now to establish and meet expectations for 2022 and beyond?

Challenges Abound – A Global Talent Shortage Compounded by Rising Costs

Based on our report, It’s Not a Talent War; It’s a New Reality – 2022 Key Issues in Global Sourcing, GBS headcount growth is expected to be steady, with average growth moving from 4-5% in 2020 to 8-10% in 2021. However, with the current global talent shortage and inflation rates reaching as high as about 15% for some roles in 2021, expectations for salary will increase by about 8.1% in 2022.

The talent shortage will not be a brief bump in the road and will require short- and long-term strategies. We’re seeing declining population pyramids across North America and Europe, which means fewer new working-age people in the coming years. Specifically, 2.4 million fewer new workers are coming into the market than in the past five to ten years. India will bring 1.8 million more people into the workforce in the next few years but is showing an impending decline about ten years out.

Top Priorities for GBS Leaders in 2022

GBS leaders should act swiftly in 2022 to make addressing these challenges a priority. Our Key Issues study reports that GBS organizations plan to make cost improvement their number one priority. With the current talent shortage, GBS organizations must also focus on shaping the workforce they have today, including better integrating a future hybrid working model and reskilling and upskilling their workforce to meet evolving needs, among other strategies. Finally, even though GBS organizations thrived during the pandemic, many are getting back on the innovation and growth path and picking up projects that were sidelined during 2020.

Five Actions GBS Leaders Should Take to Address 2022’s Challenges

As GBS leaders rethink cost and talent strategies in 2022, what actions should they consider today and in the coming months to continue delivering value?

Action #1 – Advance Efforts to Shift to Hybrid – If You Fail to Plan, You Should Plan to Fail

In 2022, GBS leaders will look at adjusting their leadership, governance, operating, and talent models to ensure career growth and preserve productivity.

As workers moved to a work from home (WFH) model during the pandemic, most were surprised to discover how well employees and organizations adapted. The GBS industry learned ways to manage remote teams very quickly, and many workers today prefer to continue working from home. The hybrid model is emerging as the preferred working model to reach a balance and retain the benefits of working from home and the office. Our research shows that 70% of teams are likely to operate in hybrid models moving forward. However, many have reservations about maintaining performance benchmarks and ensuring data security, among other concerns. But with the pressure to meet the needs of their employees, many are bending to incorporate the hybrid model to avoid risking losing talent to other more flexible organizations.

Action #2 – Reset Expectations on Cost Arbitrage from the GBS Model

We saw wages increase significantly in 2021, many by 10% and more. This increase is more apparent for IT and engineering skills; however, we’re seeing increases across various roles and skills, including finance, supervisory, managerial, senior executives, business operations, and others. We expect an average wage increase of 8.1% in 2022.

GBS leaders will need to rethink how best to control operating costs. This could be done by assessing the scale of real estate needed or managing talent to retain value without overspending. Leaders will also need to reset expectations in light of the current changes and challenges and focus more on business impact than historical expectations.

Action #3 – Pivot GBS to Support the CEO Agenda Through Innovation, Transformation, and Operation Resilience

GBS organizations will want to pivot this year to focus on supporting the CEO agenda. With the current challenges top of mind, CEOs are looking for innovation transformation and operational resilience. Mature GBS organizations that aim to deliver an increased services evolution beyond arbitrage can deliver twice as much total business impact, whether through enhanced end-customer experience, accelerated digital transformation, increased productivity, or other methods. To do this, we’re seeing many GBS organizations develop multiple types of Centers of Excellence (CoEs), either within or outside of the GBS, to alleviate cost pressure, an absence of existing capabilities or innovation, or an urgent need for business model or digital transformation. The CoEs might target core operations, IT, talent, automation, or sourcing and vendor management, to name a few, and focus on optimizing and innovating various aspects of people, processes, and technology.

Action #4 – Execute Battle Plans to Navigate the Talent Wars – Understand the Talent Shortage Poses Serious Risks to GBS Model Success

A multi-pronged strategy with various tactics is needed to address short- and long-term talent challenges. These approaches could range from making the best of existing talent through engagement, reskilling/upskilling, and evolving the delivery model to rethink talent acquisition altogether. For example, GBS leaders could consider ways to stand out during college recruiting, find new methods to retain talent, or even look into different locations through options like impact sourcing. Finally, many are considering if now is the time to partner with universities to improve education and training programs and develop more project-ready talent.

Action #5 – Obsess Over Employee Experience

For our final action, GBS organizations should consider how to drive GBS employee experience at the enterprise level. It’s no surprise that enhanced employee experience results in improved productivity, efficiency, and innovation, better retention rates, and, ultimately, increased customer satisfaction. If GBS employees have thriving employee experiences, they will better serve the enterprise functions, business units, and internal and external stakeholders. Further, GBS organizations that focus on improving the employee experience and offer hire-to-retire services will maximize their capabilities and help deliver a better overall customer experience.

To learn more, watch the webinar, “5 Success-driving Actions GBS Organizations Need in 2022,” for expert insights from our analysts and the complete, in-depth breakdown of these five strategy actions. You will also hear from leaders from Cargill and Novartis on their employee value proposition and plans for future working models.

Building Global Centers of Excellence (CoEs) in GBS Organizations to Drive the CEO Agenda

The Global Business Services (GBS) market has witnessed improvement in performance, enhancements in role, and growth across verticals and functions over the years. In fact, the pandemic served as a catalyst for GBS organizations to step up and deliver higher value-add services, becoming a pillar for enterprises to evolve at a much faster rate. However, as the world evolves, GBS organizations need to remain agile to keep up with advancing technologies, navigate the recent talent shortage, and maintain cost competitiveness and accelerate innovation to help drive the CEO agenda.

To achieve these multiple priorities, many GBS organizations are building Centers of Excellence (CoEs), which further facilitate collaboration and speed-up transformation and delivery for the enterprise. CoEs are entities that work across business (BU)s units, or product lines within a BU, and provide leading-edge knowledge and capabilities in targeted areas. CoEs have proven instrumental for GBS organizations to drive initiatives and deliver access to high-demand skills and competencies, accelerating improvements and pushing efforts forward for faster execution.

The five types of CoEs that drive the CEO agenda

The role of the GBS organization needs to pivot toward creating strategic impact for the CEO. CoEs and competency centers within GBS organizations are designed to streamline and set actionable steps for the CEO’s agenda and critical priorities. The following five types of CoEs help enterprises to drive stronger business performance.

Core operations and corporate services CoE: This CoE focuses on developing expertise for multiple departments within the enterprise, including reporting, finance, marketing, customer onboarding, and core operations

Next-generation IT and digital technologies CoE: This CoE targets the development and management of new skills and technologies, such as AI, analytics, cybersecurity, blockchain, and testing

Talent CoE: The talent CoE develops the strategic services, capabilities, and best practices for staffing, e-learning, and employee onboarding

Automation and/or innovation CoE: Today’s strategic CEOs are looking to quickly advance their organizations’ automation and innovation maturity. This CoE is dedicated to cultivating these initiatives within the enterprise and deploying and scaling technologies like robotic process automation (RPA) and intelligent automation (IA)

Global sourcing and vendor management CoE: The goals of global sourcing and vendor management within organizations are often changing to keep up with market trends. This CoE provides CEOs with needed processes, insight, and agility to manage their sourcing and vendor models as market trends fluctuate

Going into 2022, these five types of CoEs, built within GBS organizations, can advance and strengthen enterprises and push strategies toward next-generation digital technologies, automation, and innovation. We covered this in more detail in our webinar, 5 Success-driving Actions GBS Organizations Need in 2022.

Watch On-demand

Why GBS organizations are the right candidates for building CoEs

Multiple factors play into why GBS organizations are good candidates for building CoEs and ultimately offer significant benefits to enterprises and the CEO agenda. These include:

  • Deep process, domain, and technology expertise, providing a superior overall experience for the enterprise
  • Access to next-generation and niche skills at competitive costs, which accelerate enterprises’ digital transformations
  • Through a microcosm effect, offering high cross-functional and regional impact, the GBS-built CoE improves new product and services development
  • The ability to drive fast-paced, low-cost innovation enables top-line growth throughout the enterprise
  • Alignment with organizational culture and business goals improve overall productivity

How to develop an effective CoE

The various aspects of developing an effective CoE should be charted out to accelerate enterprise-wide adoption. Setting up a CoE is the first step for a GBS to embark on excellence, but it needs to ensure that it takes the right actions to establish success.

  • The first step is to map out a vision and strategy, think through possible risks, and mitigate them
  • Defining a governance and engagement model between the CoE and the enterprise is paramount to ensure that those goals and strategies are communicated, carried out, and met
  • GBS organizations will also need to design a talent model structured around growth and establish funding and financing mechanisms to initiate the process. Once the team is structured and goals are set, GBS organizations should incorporate a way to measure success through performance metrics and KPIs to collect the best data on impact delivered

Best practices for setting up a CoE

CoEs are designed to bring expertise and forward-thinking guidance, which often means taking risks and adapting; however, here are a few best practices to keep in mind when setting up CoEs:

Clearly articulate the “why”: If there is not enough clarity, the CoE is unlikely to deliver results aligned with the enterprises’ strategy

Take an entity-wide view: Combine the business case with an internal assessment of the company’s vision and strategy, requirements, and capabilities to identify concrete opportunity cases

Clearly define the governance and organizational model: The CoE should articulate the governance mechanism, reporting model, roles and responsibilities, and business units supported, so all parties are aware

Talent is the most critical success enabler: Leadership and team skills are often the most critical factor for a CoE’s success. Consider collaborating with external partners such as startups and academic institutions to fill gaps

Aim for quick wins in the initial stages to gain visibility and confidence: Select early use cases that allow the enterprise to develop confidence in the CoE

Ensure strong engagement and precise stakeholder management: Secure the right sponsorship at the right time, preferably in the early stages

For more information on how GBS CoE’s can drive the CEO agenda, watch our webinar, 5 Success-driving Actions GBS Organizations Need in 2022.

Watch the webinar on-demand

 

GBS Talent and Skilling Strategies for 2021 and Beyond: A Pinnacle Model® Study | Blog

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Global Business Services (GBS) organizations have positioned themselves as valuable partners of the enterprise, driving enterprises’ top priorities and aligning with overarching objectives. Currently, GBS organizations are evolving to become global talent hubs that house deep-domain expertise and next-generation skills for enterprises. However, with the pace of technology adoption intensifying, it’s becoming more challenging to find talent that can fill next-generation positions.

GBS organizations need a robust, futuristic skilling strategy and will want to take steps to hire talent and educate, train, upskill, and reskill their current workforce to fill these necessary roles. The below image illustrates talent-related issues that are arising for GBS organizations.

GBS talent-related challenges

Getting on the right path with a future-ready workforce

To deliver maximum value, GBS organizations should begin to strategize how to bring in next-generation talent and deliver development opportunities to advance current employees’ abilities and skills. With future-ready talent, GBS organizations will bring even more value to the table, encouraging enterprises to view them as operating units with increased leadership contributions and less as helpers. Having the right talent could also lead to expanding into additional areas in which GBS can be more involved and entrenched with enterprise strategy and decision-making.

Further, skilled talent will provide a competitive advantage for GBS organizations, with the most success coming from those that have invested heavily in their employees’ skills and competencies. Enhancing skills within the workforce will be key to augmenting strengths and differentiators for the GBS model in 2021 and beyond.

Talent strategy focus areas

There are a few specific areas where GBS organizations can adapt when it comes to acquiring talent and advancing current workforce skills, including:

  • Enhancing brand perception in the talent market
  • Utilizing out-of-the-box talent acquisition methods
  • Offering learning and development (L&D) and talent reskilling and upskilling

GBS organizations that are proactive with their talent strategies, open to adopting new tactics, and not tethered to traditional methods are among those that may see the most success.

Enhancing brand perception in the talent market

With access to high-skill capabilities being a top priority for GBS organizations in 2021, there are expected changes to GBS talent-related performance metrics, including a higher bar for quickly finding and hiring talent. Turning to non-traditional methods to catch attention is becoming more common. One of the most effective approaches is a stronger social media presence to boost brand awareness and to be viewed as a desirable place to work. Hiring strategies now include being active in niche group conversations on social media and using hashtags to get in front of the right crowds.

Out-of-the-box talent acquisition methods

GBS organizations are searching out a variety of ways to find talent. Some have found success by hiring talent with specific skills from alternative and adjacent industries. There is also a different approach when it comes to reaching junior-level talent. Organizations are partnering with educational institutions, not just to offer internships, but to co-develop classes and implement projects like campus ambassador programs and hackathons. This gives the student an opportunity to get to know the organization and develop relationships with employees. One other method of attaining niche talent is through acquihiring, where a company will acquire another company, primarily for the skills of the staff.

L&D and talent reskilling and upskilling

As GBS organizations strive to deliver higher-value and multi-function services, they will not only need to find the talent, but work to keep that talent. This could be carried out by incorporating career paths and L&D opportunities, so talent stays trained and relevant on new skills. Many organizations are developing in-house learning for employees through gamification-based programs, making learning fun and improving employee engagement. Another method taking shape is peer-to-peer learning, where employees can come together to be innovative and learn from each other.

By creating a culture of learning, investing in talent, and helping the workforce to continually develop skills, GBS organizations can create a cycle of upskilling and reskilling, which could ultimately close the talent shortage gap for good.

The 2021 Pinnacle Model study for skilling strategies in GBS organizations

To discover more about talent and skilling strategies within GBS organizations, Everest Group and The Conference Board have developed the 2021 Pinnacle Model study. The research accumulated from the study will narrow down future skilling and talent strategies and provide valuable insights around best-in-class, or Pinnacle, skilling strategies in leading GBS organizations based on our proprietary Pinnacle Model framework.

How will this research help you?

By contributing to this study, you will learn how your peers – and the best of the best – are designing and implementing their skilling strategies. We will share a complimentary summary analysis of the survey results highlighting how your organization compares against peer groups with respect to capabilities created and business outcomes achieved.

Take the Study

Are Offshore-heritage Service Providers “H-1B Visa Abusers” or “Sitting Ducks”? | Sherpas in Blue Shirts

Recently, an official from the Trump administration accused Indian IT providers of abusing the H-1B visa process by “flooding” the lottery system with applications, giving them an unfair lottery draw advantage. The statement again spotlighted the issue of importing foreign IT services workers to the U.S., thereby limiting job opportunities for domestic candidates. It also underscored the huge extent of outsourcing being done by U.S. corporations, especially to offshore-heritage providers. What it didn’t discuss was other types of companies’ usage of the H-1B program to import skilled talent into the country.

Everest Group conducted a quick analysis on the Labor Condition Applications (LCAs) employers filed to obtain H-1B visas in the last few years. We classified the employers into several categories:

  • Offshore-heritage service providers, such as Cognizant, Infosys, and TCS
  • Multinational service providers, such as Accenture, Capgemini, and IBM
  • Professional services firms, such as Deloitte, EY, and PwC
  • Product companies, such as Apple, Cisco, and Oracle
  • All other companies

Our findings?

  • While the total number of certified positions increased at a CAGR of 11 percent between FY 2011 and FY 2016, offshore-heritage providers’ share has dropped significantly, from 74 percent in FY 2011 to 40 percent in FY 2016
  • The biggest share grabbers are professional services firms, which are increasingly competing with traditional IT services players across deals. Their share in H1-B visas has increased from 7 percent in FY 2011 to 37 percent in FY 2016. On an absolute basis, that’s an almost ten-fold increase
  • The top 25 employers contribute ~50 percent to the total positions certified, which implies that offshore-heritage providers have only a 20 percent share of the total positions certified for H-1B visas by the Department of Labor between FY 2011 and FY 2016.

(For the uninitiated, a certified LCA (ETA Form 9035), is a prerequisite to H-1B approval. The LCA must be certified by the Department of Labor (DOL) before the H-1B petition (Form I-129) is submitted to USCIS. The LCA contains basic wage and location information about the proposed H1B employment. Please note that a certified LCA does not guarantee H-1B visa approval, however, certified position trends are good indicators of H-1B visa usage. Also, note that the data below includes positions certified for new H-1B visa applications as well as renewal and transfer of H-1B visa.)

H-1B visa and offshore service providers

One of the Trump administration’s suggested reforms is to increase the minimum wage for H-1B visas from US$60,000 to US$130,000. But as this minimum wage recommendation is applicable to companies that are “H-1B dependent” – and most offshore-heritage providers fall into this category – the required increase in minimum wage, whatever it ultimately is, will likely affect offshore-heritage providers more than any other type of organization.

At the same time professional services firms have quietly increased their leverage of the visa-led model, offshore-heritage providers have been the unfortunate recipients of far greater scrutiny and negative limelight. In order to successfully compete, offshore-heritage providers have no choice other than to prepare now for the impact of visa policy changes. As the old saying goes, “better safe than sorry.”

Trump-type Protectionism Threatening Global Services in APAC | Sherpas in Blue Shirts

On April 18, President Trump signed an executive order for interdepartmental review of the H1-B visa program, a move largely aimed at curbing the allotment of H1-B visas to entry level IT professionals from other countries. While it took months for him to officially make a move, his protectionism agenda seems to be spreading far and wide, with several countries in the Asia Pacific region embracing similar protectionist stances to address unemployment.

Australia pulled the plug on its most popular temporary work visa, the 457 visa program. This program allowed companies based in Australia to employ foreign workers, for a period of up to four years, wherever they faced a shortage of skilled workers in the domestic market. It was largely used by global IT companies to source workforce from other countries, mainly India. The Australian government has stated that it will replace the 457 visa program with two temporary visas for skilled professionals. Certain IT skills (e.g., web developer) have been already removed from the list of ~200 occupations that qualify for these visa programs.

In a similar event, the Singapore government restricted the number of visas that can be issued to foreign IT professionals. This has impacted both new visa applicants and those seeking a renewal.

And two weeks ago, the New Zealand government announced plans to tighten access to skilled work visas in a “Kiwi-first” approach to immigration.

Crackdown on visas to skilled foreign workers a threat to global service delivery models

Policy changes that restrict movement of skilled professionals across borders can cause several operational challenges for the prevailing global delivery models of almost all major service providers. The regional delivery centers of leading global and Indian IT service providers based in these APAC countries are likely to face the biggest challenge, as the restrictions against importing talent will make them reliant on local, expensive talent. This, in turn, might negatively impact their margins.

In the short term, enterprises’ and services providers’ cost of operations might witness a spike due to limited availability of landed resources in the onshore workforce. Typically, the difference in cost between a landed and a local resource in most geographies is 10-15 percent. And, based on recently completed research, we estimate that service providers’ margins from onshore operations could drop by up to 16 percent due to the proposed changes to the H1-B visa program. This will likely require service providers to recalibrate their pricing strategy and/or revisit their onshore-offshore delivery mix.

In the long term, service providers are likely to push towards offshoring as a lever to protect their overall margin. And there might be increased instances of even complex work being delivered from offshore locations to reduce dependence on work-visas for onshore locations, in turn requiring increased training and upskilling of employees in offshore locations.

Do you have or run global services operations in APAC? Have you and your teammates formulated an immigration issue mitigation plan? Our readers would love to know how you’re addressing this challenge!

Learn more about Everest Group’s Locations Optimization practice.

U.S. Domestic Locations for IT Services Delivery: Your Trump Card amidst H-1B Uncertainties | Sherpas in Blue Shirts

As part of President Donald Trump’s immigration reform efforts, the recently introduced legislation could make hiring H-1B visa holders significantly more expensive. The legislation calls for more than doubling the minimum salary of H-1B visa holders to $130,000.

The technology sector is the largest consumer of the visa. And about 70 percent of the 85,000 visas issued every year go to Indian workers employed by technology and outsourcing service providers to provide IT services to leading American enterprises.

Such a massive hike in the proposed minimum salary for H-1B visa holders is forcing enterprises and service providers alike to rethink their talent strategy from offshore to onshore. Factors such as adoption of agile methodology and regulatory requirements are also driving up the demand for onsite resources, and those will likely need to be sourced locally from within the U.S. as the landed resource model become challenged.

This increased focus on onshore resources has both enterprises and service providers alike considering the merits of potential U.S. locations. The landscape of IT services delivery from within the U.S. is complex, with more than 150 leverageable locations. The help simplify the view, Everest Group has classified delivery locations in the country into various tiers based on socio-economic status, maturity of IT services delivery, talent availability, and operating costs.

US Domestic Sourcing for IT Services

Deciding on the best location for U.S.-based IT services delivery must be based on a business case that considers multiple factors, and perhaps some trade-offs. For example, Tier-2 locations offer the twin advantage of moderate operating cost and breadth and depth of skills, but you might have difficulty attracting resources with extremely specialized skills to move from a Tier-1 city such as San Francisco to Dallas or Atlanta. And although Tier-3 and 4 locations are suitable for low-cost transactional IT services delivery, they may not be appropriate options if you need, or anticipate needing, more advanced skills.

US Domestic Sourcing for IT Services 2

While the proposed legislation hasn’t yet become law, turbulence and disruption of this potential magnitude demands significant research and pre-planning. As Benjamin Franklin, one of the founding fathers of the United States said, “By failing to prepare, you are preparing to fail.”
For more information on this topic, please read the following Everest Group reports.

Leaping on the Shoulders of Evolution: F&A Delivery from Global In-house Centers (GICs) | Sherpas in Blue Shirts

While Finance & Accounting (F&A) is one of the most outsourced functions, it is also one of the first to be delivered through offshore global in-house centers (GICs) on a large scale.  Indeed, the GIC market for F&A delivery (by FTEs) now comprises ~13 percent of the overall GIC market. During this insourcing process, the F&A function has grown by leaps and bounds, and has evolved along the following key themes.

GICs are gradually moving from the functional definition of F&A to an end-to-end definition

The functional definition of F&A has been evolving gradually, giving way to an outcome-focused approach in which organizations are looking to break down functional silos and achieve effective process delivery. F&A processes are no longer being treated as stand-alone activities with independent objectives. Instead, they now have a broader mandate of being delivered in tandem with related procurement and supply chain activities. For instance, accounts payable is both a transactional F&A process and a transactional procurement process. It has  been “repackaged” under the Procure-to-Pay (P2P) definition, which takes into account end-to-end delivery of accounts payable, travel and expenses, invoice processing, Requisition-to-PO, sourcing support, and catalog management. Similarly, Order-to-Cash (O2C) and Record-to-Report (R2R) are end-to-end processes now included within the F&A definition. Thus, mature GICs are offering seamless delivery of F&A processes with limited duplication of work.

end-to-end process F&A pic

GICs are increasingly leveraging nearshore locations for F&A delivery

Nearshore locations, such as Central and Eastern Europe (CEE) and Latin America, are increasingly playing a greater role in enterprises’ GIC location footprint for F&A delivery. Apart from time zone advantages and cultural affinity with onshore geographies, nearshore locations offer language capabilities that are essential for delivery to multiple onshore locations. For instance, Poland is being leveraged to serve Western and Eastern European countries due to the availability of language and finance talent. Nearshore locations, particularly in the CEE region, are also being leveraged to deliver niche/complex F&A work.

Companies that have chosen the GIC delivery model prefer to keep judgment-intensive F&A functions in-house

Many companies that have adopted the GIC model extensively prefer to deliver judgment-intensive F&A processes through the same in-house model, rather than outsourcing them. One of the key reasons for this preference is that the nature of work requires greater interaction with senior management.

Companies have evolved to a global delivery model for F&A services

Although many parent organizations initially considered F&A a shared function characterized by shared services centers across various regions, they are increasingly looking to break the regional silos and deliver F&A through global delivery centers, which work toward specific business outcomes. Many companies have been able to derive significant cost savings from this transformation through staff reductions, simplification of processes, and integration across functional silos in the global delivery model.

 Multiple GICs have been transformed into Centers of Excellence (COEs) for delivering specific capabilities within F&A

 COEs are expected to push beyond stipulated delivery mandates by unilaterally focusing their talent and investment on specific aspects of delivery, and transforming them to help derive additional value for the parent organization. In F&A, analytics and reporting COEs are being created to deliver analytics processes such as management reporting. By making use of data modeling and information analysis, these COEs can help the parent company make impactful decisions.

In addition to the above themes, GIC-based F&A delivery is witnessing critical changes in terms of operating model characteristics. GICs are fairly aggressively adopting analytics to reduce costs and increase operations profitability. They are also running pilot programs to measure the cost advantages offered by technologies such as Robotic Process Automation (RPA) for transactional F&A processes (primarily, accounts receivable, accounts payable, and general ledger). Although cost savings are the immediate motivation for most GICs, RPA will eventually become an intrinsic part of F&A delivery, as it will impact location decisions and future offshoring of work.

Everest Group has conducted a deep-dive analysis of this market, covering the current F&A delivery landscape from GICs, the evolution of delivery across key themes, descriptions of F&A process maturity achieved by GICs, and key operating model elements.

For more details, please see Everest Group’s latest report, “Finance & Accounting Delivery from GICs: Trusted Partner to Move F&A Beyond Delivery to Value Creation.”

 

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