Is 2024 a Year of GBS Reckoning? | Blog

From any vantage point, COVID was good to the global business services (GBS) model. For the first time in its short history, the model was tested, and it passed with flying colors. Show the enterprise how to work globally? Check. Prove that collaboration doesn’t have to happen in a conference room? Check. Exploit technology to the extent possible to close the books on time and resolve people queries? Check.

Because of stellar performance, and perhaps a better understanding of what the model actually is and does, leading GBS organizations have enjoyed respect.

But underneath, what’s really changed? Today, few GBS organizations have absolute mandates. We still fret about the state of our processes. Experience is illusive. The list goes on.

For all of us, January’s a clean slate, a new beginning. The beginning of the year always engenders hope that the world will be better/proverbial ships will come in/we’ll lose those stubborn 10 kilos. But other than the hype that generative AI will indelibly change the way GBS operates, I haven’t seen many prognostications, even out of some of my favorite running buddies (c’mon guys, put something on paper). Truth be told, I question whether the sugar rush we might call GBS optimism is warranted this year. Conditions have changed. As enterprises find out they can’t hike prices anymore, cost has reclaimed its crown. The implications of our current geopolitical mess won’t abate anytime soon, creating a distressing new normal. The funding for business services innovation is showing signs of drying up. In short, my thesis is the euphoria that GBS experienced as the hero of the enterprise is over, and the heady trajectory of more people, more scope, and more change is likely on hold in 2024.

So, what does this mean for GBS? I think it will be a year of reckoning. We’ll step back, perhaps fix what we ignored the past few years. Our growth trajectories will slow. GBS may be dislodged as a corporate savior.

Your guess is as good as mine—so here are nine guesses—or what my tea leaves are suggesting:

1.Cost containment will drive strategy and decision-making: Get ready for the return of the mandate to cut costs 5% or more each year, deemphasized during COVID and its immediate aftermath when keeping the enterprise wheels on was priority 1, 2, and 3 for GBS operations. GBS will be seen less as a pillar of enterprise transformation, and more as an instrument to keep margins as close to target as possible. As a result, GBS will likely put most of its eggs in the efficient and effective buckets, eschewing massive change in experience and ways of working unless their respective business cases are air-tight

2. Transformation funds will be scarce on the ground: Easy-ish money for GBS investment will dry up. This year, enterprises are going to have an exquisite focus on investments and change that drives growth, expecting GBS to do more with less and not get too fancy when it comes to change. And, as a byproduct, GBS professionals who brand themselves as transformers may find themselves experiencing “DJO—days job outstanding”—for much longer than they envisioned

3. Growth in new scope will mitigate somewhat: Moving to a GBS model costs money, and if the cash isn’t there, it can’t be created in thin air. GBS COVID momentum will no longer persuade the business owner who does not “get” GBS. Circulation of “GBS screwed up” stories will find new audiences. The ever-present belief that the business can do it better and cheaper, with more control, will get in the way of scores of migrating heads. Perhaps a breather isn’t a bad thing

4. Supply chain will grab the GBS headlines: There’s always an exception to any rule, and for me, that exception will come from the supply chain catalog of services. It’s not only fertile ground for GBS value creation, as most operations are only dealing with the tip of the scope iceberg, but the greatest opportunity to further institutionalize GBS as a partner to the business

5. Talent mobility will decline: The feeding frenzy for external talent has already started to tail off, and post-COVID euphoria continues to tamp down. GBS operations will focus on redirecting and upskilling talent in-house rather than chasing pricey external rock stars, not only as a cost containment measure, but finally as a result of the recognition that understanding stakeholders and the culture drives success as much as fancy dance moves. This is great news for GBS incumbents whose career progression may have been stymied by the belief that only an outsider can make change, not so good for those who change jobs every two plus years

6. Process improvement will become GBS’s primary fixation: The elephant in the room will no longer be ignored when appetite for scope and transformation declines and the threat of GBS dissolution becomes real. This year, GBS organizations likely will go back to basics, admitting that process excellence is the foundation of GBS performance. Investment in governance and business relationship management won’t pay off without decent processes. Investment in experience platforms has no ROI without seamless underlying processes. The ambition to craft end-to-end processes is merely a pipe dream without the basics. Perhaps this year, GBS will get the memo—it’s back to basics

7. The landlord model will get another look: GBS leaders will start to stop turning up their noses at a model many think isn’t sufficiently “GBS” in the quest to both show some value to the enterprise and cozy up to those in the business that still don’t understand GBS model fundamentals but know that offshore costs less than San Francisco or London. As leaders admit publicly that they are running blended models with a degree of success and can show the evolution to other forms of GBS delivery, perhaps 2024 will be the year of the landlord

8. Outsourcing relationships will continue to morph: The days of shipping 3000 jobs to your favorite BPO provider will continue to sunset in favor of more strategic, even temporal relationships. We’ll see more build-transform-operate-transfer relationships and at-risk contracts. Providers will complete their value chains by creating partnerships with new players, some tech, some focused on fulfilling an end-to-end requirement. Short-term transformation consultancy assignments may give the traditional advisory practices a run for their money. Providers who can successfully replicate a captive delivery experience will succeed, while those who continue slavish devotion to an FTE rate card will be the odd man out

9. The GBS construct/deconstruct soap opera will continue: It’s a fact of life, folks—GBS as a model ebbs and flows as CXOs change, business outlooks evolve, and most critically, how GBS is perceived as adding value to the enterprise (often not tied to reality). In 2024, we will still see stellar blow ups of organizations we thought were bulletproof, as well as new or returning entrants on the GBS bandwagon

Am I too negative? Will all of these trends come to pass? I’ll bet you six out of 10. In any event, however it manifests itself, 2024 will challenge the model and the professionals who drive its evolution. Count on it—we’re facing a year of GBS reckoning.

Don’t miss the webinar, Charting the GBS Course for 2024: Accelerating and Sustaining Success. We’ll examine what lies ahead for the GBS model and participants will gain valuable insights into the changing dynamics of GBS and how it plays a pivotal role in shaping enterprise-level strategies.

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