Global Business Services (GBS) must evolve and, as the iconic Queen song references, “break free,” from outdated practices. This blog explores how GBS organizations should move beyond their comfort zones when it comes to managing hybrid models, finding a balance for in-house and outsourced resources.
Since the inception of Global Business Services (GBS) almost two decades ago, enterprises have been experimenting with its resourcing model—whether to perform the work with their own resources, outsource the work, or create a hybrid resourcing model that is a strategic blend of both in-house and outsourced resources. In the early days of the model, enterprises leaned on business process outsourcers to get transactional delivery up and running. But, over time, as they mastered the art of location, hiring, and delivering processes, in-house delivery has increasingly become the option of choice when it comes to the delivery of work that is highly contextual and requires proximity to the stakeholder. As a result, GBS is often relegating third-party delivery for activities with standardized workloads, variable volume, and those that require specialized expertise and/or technology. Today, the norm is a hybrid of both resourcing models.
During the last six months, Everest Group interviewed eight GBS leaders across industries and asked them to shine a light on how they manage their GBS hybrid resourcing models. All aspire to put science and discipline into their operations, with some semblance of guiding principles and criteria that guide what is delivered in-house and what is delivered by third parties. However, in reality, GBS leaders’ biases—as opposed to data-driven decision criteria—have governed who does what, when, and how. No surprise—the leaders’ resourcing strategy is driven by a comfort factor and received industry wisdom. It’s usual to weigh past experience and beliefs about the value of contextual understanding, proximity, and the same name on the paycheck to stakeholders. As one of our study participants stated, “Proximity dictates the game—be it language, culture, or time zone,” while another said, “We find comfort in leveraging proven methods from our past successes because it minimizes risk.”
However, as scope increases, technology advances, and the level of partnership with the business changes, managing and governing hybrid models must evolve, ensuring that the right work is delivered by the right source in the right location, and that as conditions change, the model can flex to deliver to new business exigencies.
Why do GBS organizations fail to optimize their hybrid models?
There are inherent, real challenges in the way we manage our hybrid GBS models today.
- Rigid contracts: One big obstacle is that GBS organizations usually enter inflexible outsourcing supplier contracts. These contracts are usually easy to ramp up, but when it’s time to scale down, it’s like pulling the vendor’s teeth
- Management handoff: Often, the task of managing suppliers gets passed off to procurement or vendor management groups. But managing a hybrid resourcing model goes way beyond just keeping tabs on SLA performance. Currently, we don’t govern how we resource; we only govern contract compliance
- Neglecting supply and demand planning: For hybrid management to be effective, GBS leaders must be able to forecast demand, evaluate it against current and potential supply and capability, and be able to extend their talent pools. The GBS model lacks the kind of focus on workforce management principles—such as making the optimum decision about the right source and shore—that their IT brethren have mastered
- Master-servant dynamics: Most GBS get it wrong—looking at outsource providers as servants rather than another resource source or part of an ecosystem of capability. The best outsourcing arrangement is not a master-servant relationship. Yes, someone is always a client, but the model is about building a mutually beneficial partnership where both sides bring something valuable to the table
- Resistant to change: Unfortunately, many GBS organizations are reluctant to upset the leadership team’s apple cart. Defining new roles and changing the way the team works is often uncomfortable. Often, the budget is used as an excuse to preserve the organizational status quo
The current chaos and the proposed unified model
As Everest Group has found, currently very few organizations have a focused hybrid management function with processes aligned to optimize operations. The function in and of itself is “hybrid;” it must connect the dots between a number of decisions that GBS organizations commonly make in a vacuum. Today, procurement or a dedicated GBS vendor management team manages compliance to a contract while GBS’s management team looks at other metrics, perhaps only those of in-house delivery. The strategy function is focused on locations and perhaps the business case for one source of labor or another in which location. HR has been taking a stab at workforce planning but failing in execution. And service delivery leaders usually focus only on in-house delivery without regard to how the outsourcer is performing. If we only took one step back, we would realize that each decision is connected to each other, and only when they are joined up can a GBS make optimum resourcing decisions. This disconnected approach means that important decisions are not well-coordinated, leading to suboptimal outcomes.
Now, consider a power trio working together seamlessly. At the top, the central strategy team guides where and how work should be done—onshore, offshore, nearshore, in-house, or outsourced—to balance cost, efficiency, and quality. On one side, HR handles workforce planning and talent management, ensuring the right skills are in place. On the other side, the unified service delivery team, an evolved form of the current GBS vendor management team, monitors performance, manages contracts, and ensures compliance to desired service levels.
To make this trio effective, two things become critical: investments in efficient tools and technology, and clear governance mechanisms to ensure all teams are on the same page. This interconnected approach is how GBS leaders can make hybrid resourcing not just functional but exceptional.
Why make the change now?
Let’s unpack the imperative and potential advantages of taking hybrid model management to the next level:
- Business agility and capacity flexibility: The evolving business landscape demands constant adjustments in GBS capacity and capability. By designing, implementing, and governing a resourcing model that can quickly accommodate additional capability, by accommodating peak loads and reassigning work between both methods, GBS organizations can quickly flex
- Virtualization of work: The concept of performing more work remotely, exacerbated by COVID, has opened up new possibilities for work placement. Hybrid working models now can more easily tap into new pools of global talent
- Advancements in technology: Improving automation and AI tools that are focused on frictionless workflow and service experience, such as ServiceNow and Remedyforce, are now enabling the operation of hybrid models, creating one service experience regardless of the resourcing model, and supporting workforce deployment capabilities.
- Expanding GBS scope: As GBS organizations take on more—and often more complex work—the capabilities to deliver become more critical and varied. Integrating third-party expertise into the resourcing mix allows GBS organizations to tap into specialized skills and knowledge not necessarily found in house
- Optimal business investments: By tapping into both in-house and outsourced resources, companies can both optimize and avoid investments in technology and facilities, optimizing GBS’s business case and creating an optimal cost-benefit equation
- Business Continuity Planning (BCP): In a hybrid model, GBS can enhance resilience by diversifying delivery risk across multiple resourcing channels, avoiding operational disruption operations even in the face of disruptions
- Preserving business intimacy: GBS organizations can enhance the relationship with stakeholders in the make-or-buy decision by acknowledging where business context is critical in performing work, and where it does not matter
As the Queen song says, “I’ve got to break free.. I want to break free,” it hits home for GBS organizations, right? Most of them have recognized the need for change but are struggling to nail down the perfect formula for the trinity of right place, right work, right time. The fact is, there’s no one-size-fits-all solution here. GBS leaders are in for some trial and error, tinkering until they find that perfect mix. So, don’t fret if you’re still figuring it out. Keep experimenting, keep tweaking, and who knows, you might just stumble upon that magical hybrid balance that’s tailor-made for your tribe. Reach out to us to explore this topic further.
