Tag: GBS

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.

Outsourcing Demand Held Steady in Q4 2021 as Global Sourcing Industry Exhibited Modest Signs of Post-COVID Recovery | Press Release

Setups of Global Business Services centers increase in India and China, providing evidence of post-COVID economic recovery

In its latest quarterly report on the global outsourcing industry, Everest Group revealed outsourcing demand held steady from Q3 to Q4 2021, with 404 transactions reported in each quarter. Activity in offshore locations experienced an increase, providing evidence of post-COVID economic recovery, particularly in India and China; however, offshore activity has not yet reached pre-COVID levels.

Notable Global Services Trends in Q3 2021:

  • North America experienced a decrease in its share of outsourcing deals. “Rest of Europe” (excludes U.K.) and “Rest of World” (comprising Asia Pacific, the Middle East, Africa and Latin America) geographies recorded higher transaction activity compared to the previous quarter, due to an increase in deals across the energy and utilities sector.
  • The demand for digital services such as automation, blockchain, cybersecurity and Internet of Things (IoT) experienced an increase in offshore GBS centers, driven by cloud-based contracts as businesses continue to migrate toward cloud infrastructure.
  • During Q4 2021 setups of new Global Business Services (GBS) centers in offshore/nearshore locations numbered 45 as compared with 37 in Q3 2021.
  • Notably, GBS center setups increased in offshore Asia (primarily China), driven by companies in the manufacturing industry seeking to leverage engineering research and development (ER&D) services involving software development, systems integration and testing of autonomous, connected, electric and shared (ACES) mobility offerings.
  • GBS activity also increased slightly in India, with 16 setups in Q4 2021 to deliver ER&D and digital services, compared with 15 setups in Q3 2021.

Key Service Provider Developments:

  • Revenue for both global and offshore heritage service providers experienced a rise on a sequential and annual basis, but operating margin decreased in Q3 2021. In fact, the average operating margin of offshore heritage service providers is at its lowest when compared to the last two quarters. Although revenues have increased, an increase in employee, subcontractor and hiring costs as well as lower utilization of resources have negatively impacted margins.
  • Merger and acquisition (M&A) and alliance activity among service providers experienced an increase, driven by heightened demand for digital-based capabilities, especially artificial intelligence (AI) and cloud. Forty-four acquisitions were documented for Q4 2021 as compared to 25 in Q3 2021. Alliances also experienced a significant increase.
  • The number of setups of delivery centers by service providers remained similar to the previous quarter. Centers established in onshore regions decreased from 10 in Q3 2021 to four in Q4 2021; on the other hand, the number of new centers in offshore regions increased from four in Q3 2021 to 10 in Q4 2021.
  • Service providers are now deriving 40-45% of automotive engineering services revenues from engagements involving ACES mobility services, a market which is expected to increase through 2025 at a rate of 20%.

Everest Group’s Market Vista Report
In its newly published report, “Market Vista™: Q1 2022,” Everest Group highlights the key trends and developments in the fast-evolving global offshoring and outsourcing market. The study provides data, analysis and insights on major outsourcing deals, Global Business Services (GBS) market dynamics, trends in offshoring from emerging destinations, and service provider developments (including latest developments on next-generation technologies such as digital services). The report includes assessments of 29 leading service providers, including 4 engineering services providers.

In its on-demand webinar, Key Global Services Trends Shaping 2022, Everest Group experts break down key global services market developments and explore trends in outsourcing and the global in-house market. The speakers also report insights on talent, location activity, service provider M&A activity, and the key trends likely to shape the global services industry in 2022.

About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our research also covers the technologies that power those processes and functions and the related talent trends and strategies. Our clients include leading global companies, service and technology providers, and investors. Clients use our services to guide their journeys to maximize operational and financial performance, transform experiences, and realize high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

The War in Ukraine May Have Supply Chain Implications beyond Energy | In the News

When Russia invaded Ukraine, most of the stories on the economic impact of the war focused on energy and wheat. Gas prices, which were already high, have continued to spike, and while harvest time is months off, Ukraine, like Russia, is a major producer of wheat, especially in the Middle East.

Based on a call I had last week with Eric Simonson, Managing Partner with Everest Group, there may also be an impact on engineering projects and ongoing technology services. Everest Group is a boutique Dallas-based research and consulting firm. Simonson says that up to 100,000 technology jobs could be disrupted as a result of the Ukraine conflict.

Read more in Supply Chain Management Review

Now is The Time to Refresh Your Global Talent Strategy | LinkedIn Live


Now is The Time to Refresh Your Global Talent Strategy

January 27, 2022 |
8 am CST | 9 am EST | 2 pm GMT | 7:30 pm IST

Could Africa be the Next Great Talent Pool?

According to Everest Group research, Africa has almost six times more people entering the workforce than North America will have this year. So, what does that mean for global business services (GBS) organizations and the global talent pool?

In this live discussion, our experts will detail how GBS organizations can confront today’s talent struggle through a forward-looking approach that spans geographies, targeting regions that have growing talent pools, like Africa, and doubling down now in areas where talent already exists.

Watch the replay below of our LinkedIn Live session to learn:

  • How to address the talent challenge by focusing on untapped populations
  • Where the top emerging hotspots for talent are
  • How to future-focus your talent strategy with a five to ten-year global outlook

Our Latest Thinking

The talent shortage is a top priority for organizations today. The new executive brief, “Talent Strategy for Today and Tomorrow – Look Around and Look Ahead” will help organizations address the talent challenge by revealing the top emerging hotspots for talent and offering approaches to future-focus your talent strategy.

Request the Executive Brief

Our Experts

5 Success-driving Actions GBS Organizations Need in 2022 | Webinar


5 Success-driving Actions GBS Organizations Need in 2022

Access the on-demand webinar, which was delivered live on January 13, 2022.

Whether you call them global business services (GBS) organizations or global in-house centers, they have earned “rockstar” status within their respective enterprises in the last couple of years by remaining resilient in the face of the pandemic.

As we move into 2022 and organizations transition back to the office, GBS/GIC organizations will need to not only maintain the momentum of delivering value-add to enterprises but also address the challenge of the talent shortage, while maintaining cost competitiveness, accelerating innovation agenda, and transitioning to a long-term hybrid working model.

Join us as our experts uncover five actions that GBS/GIC leaders must take right now to position themselves for success in 2022.

Our experts  explore the following vital topics:

  • Top issues and challenges for GBS/GIC leaders going into 2022
  • Top 5 actions that GBS/GIC leaders should take now
  • Best practices and success stories for GBS/GIC leaders heading into 2022

Who should attend?

  • GBS/GIC leaders
  • Enterprise leaders
  • GBS strategy leaders
  • Workforce strategy/planning leaders
Aggarwal Rohitashwa gray square
Vice President
Sakshi Garg
Vice President
Janssen MichelRefresh gray square
Chief Research Officer

The Road Ahead for GCCs – 2022 and Beyond | Blog

At the forefront of innovation across products and processes, Global Capability Centers (GCCs) today are creating a competitive advantage for their global enterprises and those based in India are particularly well-positioned to accelerate to the next level. With increasing global leadership roles, these Centers are providing end-to-end support on complex work areas to deliver business impact that goes well beyond cost savings and operational improvement.

Year 2021 saw many GCCs initiate their transition to a new normal post the pandemic – one anchored on increased endorsement for the GCC model, increasing responsibilities beyond traditional workstreams, and accelerated adoption of digital technologies. However, these organizations will still face the challenges of navigating through factors such as accessing niche talent, adopting newer digital technologies, handling rising consumer expectations, increasing demand for analytics, and rapidly transforming business models driving the need to regularly recalibrate strategies.

According to Everest Group conversations with more than 100 GCCs to learn their priorities in planning for 2022 and beyond, the following five areas emerged as being critical to the success of these Centers.

Read more on NASSCOM


Amid Global Talent Shortage, Everest Group Identifies Skilling Strategies that Drive 3X ROI for Talent-Focused Organizations | Press Release

Five Global Business Services (GBS) organizations are set apart by strategic skilling initiatives that significantly improve business outcomes, employee experience

Exacerbated by COVID-19, the war for talent is more intense than ever. According to Everest Group, the only way enterprises can build the necessary skill base to remain competitive is to realign employee skills with emerging business needs and provide employees with opportunities for personal growth. Easier said than done, but Everest Group has identified five best-in-class Global Business Services (GBS) organizations* that are leading the way.

In its newly published report, “Skilling Strategies for GBS Organizations—Pinnacle Model® Analysis 2021,” Everest Group examines 40 GBS organizations and of those identifies five Pinnacle GBS™  organizations—those best-in-class entities that are achieving superior outcomes because of their advanced skilling capabilities. These Pinnacle GBS organizations have generated three times more cost savings and return on investment (ROI) through their skilling initiatives compared to other GBS organizations.

Everest Group defines skilling efforts as post-onboarding interventions focused on improving employees’ skills and competencies to better deliver existing work and/or to deliver more complex or new work. The mode of intervention can range from self-learning to classroom-based training and beyond, including job rotation and cross-functional assignments.

Pinnacle GBS organizations have been able to achieve significant business impact by effectively driving their skilling initiatives, as differentiated by capabilities and characteristics such as the following:

  • A dedicated skilling team focused on GBS skilling.
  • Commitment and participation from the GBS organization and enterprise senior leadership.
  • Active collaboration with business units on all aspects of the skilling journey (such as funding, program design, skill gap assessment, and content creation and delivery).
  • Periodic assessments of the existing skill inventory and gaps against a standardized skill taxonomy. The study also reveals key skill gaps that GBS organizations are facing.
  • Incentives and career-developing motivators for employees, such as accelerated career paths and internal mobility.
  • Use of technology and ecosystem partners as accelerators for skilling programs and to improve employee experience.

Among those GBS organizations that track cost reduction impacts of skilling initiatives, the contrast among outcomes is significant:

  • ROI on skilling spend: 15-20% for Pinnacle GBS organizations compared to 3-5% for others
  • Reduction in operating costs: 13-18% for Pinnacle GBS organizations compared to 4-6% for others
  • Reduction in hiring costs: 9-13% for Pinnacle GBS organizations compared to 4-6% for others

“The firms we’ve identified as Pinnacle GBS organizations have created unique positions and developed scaled skilling programs to help the overall enterprise. They are developing their GBS organizations into global talent hubs,” said Sakshi Garg, vice president at Everest Group. “In the current Pinnacle Model analysis, we look at skilling strategies that GBS organizations have adopted and highlight those organizations that have achieved superior business outcomes. The journeys of these best-of-the-best companies provide insights into the key enablers needed to achieve desired outcomes and point to the investments required for the greatest speed to impact. Whether companies want to make incremental changes or achieve major transformations, Pinnacle GBS organizations exemplify the way to success.”

***Download a complimentary abstract of the report here.***

About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global companies, service providers, and investors. Clients use our services to guide 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

*Note: For the purposes of this report, Everest Group uses the term GBS to include Shared Services Centers (SSCs), Global In-house Centers (GICs) and Global Capability Centers (GCCs), although distinctions in these business models can be made.

How Long Will the Acute Talent Shortage Last? | Blog

Companies now face an acute talent shortage, particularly for digital skills. As I described in my recent blog, this talent shortage means companies must now pay a lot more for new talent and pay more for existing talent to keep them from leaving. Consequently, it will bust corporate budgets for 2021, and it is already causing a boom in offshoring. Company executives now ask me whether I believe this will turn out to be a short-term imbalance between supply and demand or if secular forces at play that will make the talent shortage a much longer-term issue.

Read more in my blog on Forbes

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