Global Business Services (GBS) organizations have become essential to the enterprise as these shared service centers help to optimize costs and build talent strategies for the future. Read on to learn more about the benefits GBS offers.
In today’s rapidly changing business landscape, enterprise CEOs face unprecedented organizational pressure to cut spending across technology, operations, and talent. To achieve these goals, CEOs are turning to GBS organizations for support. Designed to provide a broad range of shared services, GBS organizations can help enterprises streamline operations and resources, reduce costs, and reach needed talent, all while driving innovation.
Learn more about our latest thinking on how GBS leaders can accelerate impact for the enterprise.
Three optimization approaches
To help bring about cost optimization for enterprises, GBS leaders are adopting the following three key approaches to drive critical transformation:
- Increasing talent model resiliency by improving and optimizing the locations mix to expand access to skilled talent – especially for niche skills – and build a solid presence in markets, creating a stronger employee value proposition
- Optimizing near-term costs through a mix of salary structure and delivery pyramid rationalization, automation, and productivity improvements
- Accelerating the expansion of GBS’ scope of services across operations, technology, and corporate functions to drive cost savings and reduce the cost of talent acquisition and retention in key markets
Building talent model resiliency at the right cost in the right locations
Enterprise executives are looking beyond the obvious measures to drive structural cost takeout, and we are seeing GBS leaders leverage workforce and locations strategy to aid in this pursuit. While some are reviewing the competitiveness and sustainability of existing locations, others are carefully adding newer locations that offer lucrative cost propositions and access to diverse talent pools.
With a carefully structured locations mix, enterprises are finding that they are better positioned to balance and optimize their locations portfolios and increase offshoring to optimize costs. We’ve observed that:
- More than 50% of new GBS center setups in 2022 were concentrated in Asia Pacific (APAC)
- Center setups in tier-2/3 locations increased from 72 (in 2021) to 103 (in 2022)
- 65% of GBS organizations are actively evaluating adding satellite/spoke offices
With the right approach, executives can leverage a variety of locations to find the right talent for the right cost, allowing them to drive growth, optimize cost, and stay competitive in the market.
Strategies to optimize near-term costs
Inflation is putting cost takeout pressure on businesses worldwide. In fact, cost pressure was ranked as the number one business challenge in our annual key issues survey for 2023.
Enterprises expect their GBS organizations to help alleviate some of the cost pressure by reducing operations costs or by doing more with the same, or lower, budget and
resources. With costs inflating in 2022, enterprises see opportunities now to optimize costs across the business, and GBS organizations are in a position to help lead this effort.
GBS leaders can help enterprises achieve their cost-takeout goals by deploying one or more of the following cost-saving methods:
- Effectively optimize the cost of talent by implementing a mix of salary structure, pyramid optimization, and improved talent acquisition and retention strategies
- Do more with less or the same resources by incorporating process automation, productivity enhancement measures, and providing cross- and up-skilling opportunities for employees
- Optimize location and sourcing strategies by leveraging tier-2/3 cities, outsourcing functions, and implementing vendor rationalization processes
Expanding GBS’ scope of services to streamline operations and lower costs
The increased need for transformation and cost optimization initiatives among global CEOs is driving enterprises across industries to leverage the GBS model to improve services delivery and cost competitiveness. Here are a few key statistics that illustrate the growth of GBS globally:
- The in-house delivery model share of the overall sourcing mix increased by 50% in the last ten years
- More than 250 new GBS centers were established in 2022
- GBS organizations are expected to create more than 360,000 new jobs from 2023 – 2025 in India, and over 500,000 jobs globally
- More than 60% of GBS organizations are adding more work, including additional scale, new processes, and new functions
A significant push is underway by enterprises to insource and outsource more work across core operations, IT, and corporate functions. The GBS model is proving to be an effective choice to improve operations and remove unnecessary costs. By enabling enterprises to reach their budget requirements without losing competitive advantage, GBS leaders are strengthening their foothold as trusted and vital partners.
To discover how GBS leaders are using these strategies for cost optimization and about our latest research, contact [email protected], [email protected], or [email protected].
Learn about the three key themes to deploy near- and medium-term strategic and operational levers to optimize cost for the enterprise.