Tag: Global Business Services

12 Steps to Effective Change Management in Global Business Services | Blog

Global Business Services (GBS) organizations are at the forefront of driving transformation and efficiency across enterprises. However, they often fall short in one critical aspect: change management. Learn why GBS leaders must begin implementing change management strategies today, starting with a comprehensive 12-step program.

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Change is inherent in GBS, affecting processes, technology, relationships, and many other aspects. To succeed, GBS organizations must focus on helping stakeholders understand and embrace the change that the GBS model continually creates.

Everest Group research reveals that GBS leaders recognize the pivotal role of change management, with 75% of GBS organizations viewing change management as critical. Unfortunately, many struggle to manage change effectively or just don’t know how to do it well, leading to significant, long-term challenges.

To get to the bottom of why GBS organizations struggle to master change management, Everest Group surveyed 58 prominent GBS organizations worldwide. This important research reveals key insights into the strategic and operational aspects of current GBS change management practices. The findings also unlock a 12-step guide that will help GBS leaders through the pitfalls and roadblocks many currently face. Let’s explore this further.

The 12-step program covers vital aspects as change management adoption, work scope, internal alignment, organizational models, staffing and talent strategies, measurement approaches, and resource allocation to enhance change management competency within GBS. Below are the highlights of the key steps:

Step 1: Make systemic change management part of everything GBS does

Recognize that change is not a one-off event but a continuous process in GBS. Every team member should be trained in change management. Change must become a core capability that is integrated from the outset of every initiative.

Step 2: Communicate the importance of change management from the top

Emphasize the significance of change management by sending a GBS directive from high leadership levels. This ensures that change is recognized as a critical driver of GBS success and not treated as a temporary solution for individual projects that lack methodologies or measurements to take its ongoing pulse.

Step 3: Rethink the scope of change management

Expand change management to encompass communication, branding, business engagement, and stakeholder management as well as user and business support. A comprehensive approach can create a more significant impact for the enterprise.

Step 4: Understand change management is more than communication alone

While communication is essential, it should complement a well-thought-out change management strategy. By combining effective communication and change management, organizations can achieve maximum impact from their efforts.

Step 5: Align the GBS team with the imperative

Aligning the internal team with the need for change management is crucial. Emphasize that successful GBS change management is a team effort. Cross-training and rotating team members through the change function can help organizations develop a change-ready workforce and resolve resource challenges.

Step 6: Establish the right organizational structure for change management

Design a suitable organizational structure with fixed and variable staffing, dedicated full-time equivalents (FTEs) for methodology development, and ongoing change monitoring within the enterprise. Organization models that utilize interim workers, consultants, and gig employees may be beneficial in certain situations, but they don’t result in a sustainable, valuable change management organization in the long run.

Step 7: Acquire the right talent for change management

Ensure the right talent for change management. Avoid hiring resources who lack strong change management capabilities. While junior program managers may be suitable for getting the job done with strong direction from the top, they rarely have solid change management capability or the experience to provide leadership or best practice guidance. Consider GBS rotations or cross-training to build an effective change management team and to break down internal change management resistance.

Step 8: Promote staff development and retention by putting GBS career paths in place

Establish clear career paths for change managers within GBS and across the enterprise. This will encourage talented individuals to stay with the organization and contribute to the long-term change management success.

Step 9: Compensate GBS leaders appropriately

Recognize the value of experienced change managers and pay them competitively. Acknowledge that attracting and retaining top talent is critical for effective change management.

Step 10: Develop a deployable methodology

Create and consistently deploy an actionable methodology for change management. Focus on creating frameworks and playbooks tailored to the enterprise’s context and ensure the entire GBS team is appropriately trained on the approach.

Step 11: Establish measurable change management metrics

Move beyond measuring happiness and focus on metrics that reflect the true impact of change management, such as scope expansion, avoiding rework, and meeting milestones. This will provide a deeper understanding of the benefits derived from change management.

Step 12: Rethink funding strategies

Invest strategically in change management, considering its direct impact on the return on investment (ROI). Avoid relying solely on communications and inexperienced resources due to budget constraints. Recognize that skilled change management leaders are worth their cost.

To learn more and access the complete comprehensive steps, download our report, State of Play in GBS Change Management.

Adopt these change management strategies starting today

GBS organizations play a pivotal role in bringing value to modern enterprises – this part has been mastered – but success hinges on effective change management. Our study found that a significant number, one-third of respondents, do not have an organizational change management capability.

Neglecting change management can lead to attrition, rework, lost opportunities, and a cycle that can be difficult to break. Therefore, we recommend GBS leaders reflect on and potentially change the way they introduce, carry out, and measure enterprise change.

To better understand how successful change management is implemented, we recently hosted a webinar with Victoria Roehrich, Senior Director of Strategy, Transformation, and Change Management at PepsiCo. In the webinar, we discuss change management challenges and share best practices and examples of impactful initiatives. Hear PepsiCo’s change management evolution story here: Why GBS Change Management is the Key to Added Value and ROI.

To learn more about effective GBS change management strategies, reach out to Rohitashwa Aggarwal, [email protected], or Arushi Gupta, [email protected]

Key Issues 2023: Assessing the Global Services Industry’s Performance Against Expectations | Blog

The global services industry’s confidence waned in 2023 after a banner post-pandemic year. Leaders were more cautious and prioritized cost optimization. To gain valuable insights into how the year unfolded compared to expectations, read on.

Participate in the Key Issues Survey 2024 to better understand the current thinking of industry leaders across the globe.

Coming off a bumper year in 2022 with double-digit growth driven by pent-up demand after the pandemic, the global services industry entered 2023 with macroeconomic uncertainty clouding the forecast.

As a result of these concerns, global leaders adopted a more cautious stance going into this year, according to Everest Group’s annual Key Issues survey of over 200 global leaders across industry enterprises, Global Business Services (GBS) centers, and providers.

In the survey, price and cost margin pressures ranked as the top business challenge expected in 2023, and subsequently, cost optimization emerged as the highest business priority for the year.

As 2023 nears an end and leaders start planning for 2024, let’s reflect on how the year fared against global services industry expectations of the industry.

1. Macroeconomic uncertainty subdued industry growth in 2023

In the face of macroeconomic uncertainty, most industry leaders felt cautiously optimistic about 2023. True to their expectations, results from the first three quarters of this year indicate subdued industry growth similar to the pre-pandemic numbers. A mix of macroeconomic concerns, rising prices, fiscal tightening, and geo-political tensions have resulted in a slowdown in customer demand and growing margin pressures on the global services industry. While revenues grew, the escalated cost and price pressure resulted in stagnant or even declining operating margins for most providers, as presented in Exhibit 1.

Exhibit 1: Key financial metrics for providers for 2022-23

Picture1 2

2. Talent demand and supply mismatch eased but remain challenging for niche skills

With attrition at an all-time high and growing industry demand, talent supply continued to fall short of the demand in 2022. The talent/skill shortage was the top concern industry leaders highlighted as part of the Key Issues Survey 2022. However, as the industry prepared for the looming uncertainty in 2023, these concerns took a back seat. In line with the industry expectations, the talent situation eased in 2023. Data for the first half of 2023 show that attrition rates have declined, and most delivery geographies are reporting a narrowing talent demand-supply gap. An assessment using Everest Group’s proprietary Talent GeniusTM tool indicates talent demand for delivery of IT and contact center services has declined substantially compared to 2022, as shown in Exhibit 2.

Exhibit 2. a: Talent demand across select countries for delivery of IT services indexed to January 2022 (Jan 2022 = 100)

Picture2 1

Exhibit 2. b: Talent demand across select countries for delivery of contact center services indexed to January 2022 (Jan 2022 = 100)

Picture3

However, this improvement in talent supply has not applied to all global services, especially those requiring niche skills. Digital and next-generation technology services continue to witness a mismatch between talent demand and supply. This disparity is especially true for emerging skills like generative Artificial Intelligence (AI), where talent supply is even more limited. Preliminary estimates by Everest Group show that only 1% of AI talent has expertise in generative AI, pushing companies to focus on upskilling and reskilling their employed talent pools to bridge this gap.

3. Offshore locations and tier 2/3 cities are being considered to optimize costs

To manage growing cost pressures, a key strategy for global leaders entering 2023 was continuing to leverage offshore locations and exploring alternative delivery strategies, such as leverage of tier 2/3 cities. Global services trends in 2023 resonate with this approach. Offshore locations like India continue to be the destination of choice for global service delivery, given the significant cost arbitrage opportunities. Similarly, enterprises and providers alike are more enthusiastically exploring tier 2/3 locations driven by needs of cost savings, talent access, employee preference, and market competition management. Exhibit 3 shows how the leverage of tier 2/3 cities witnessed growth in 2023.

Exhibit 3: Trends in center setup across Tier 1 and Tier 2/3 locations (2022-23)

Picture4

4. Provider bill rates increased but at lower levels than expected

Despite the prevailing macroeconomic pressures, providers maintained optimism about bill rate increases in 2023, although they were expected to be at a lower rate than in 2022. Unlike other economic downturns, provider bill rates have continued to show positive growth despite the growing cost and price pressures in the first seven months of 2023. However, with the macroeconomic scenario hitting much harder than expected, input-based pricing has been subjected to hard negotiations. This has led to muted growth (0.5-2%) in bill rates across different functions, much lower than provider industry expectations going into 2023. For example, provider bill rates for traditional applications skill delivery in offshore regions grew by only 0.5-1% compared to the expected growth of 2-5% from January to July 2023.

5. Provider portfolios underwent significant rebalancing and consolidation to ensure better deal terms

Enterprises reported much lower satisfaction with providers in 2022 compared to 2021 when providers played a key role in supporting enterprises in navigating the pandemic. The leaders cited a lack of innovation and communication as the key reasons behind this dissatisfaction. Consequently, procurement leaders expected a significant change in their provider portfolios. Additionally, with macroeconomic concerns clouding all strategies, enterprises looked to consolidate and rebalance provider portfolios to negotiate better deal terms with limited providers. As expected, 2023 witnessed a shift in provider portfolios, with major providers winning deals that had vendor consolidation components.

6. Investments in strengthening the digital core are a priority over moonshot endeavors

Prioritizing resilience through uncertainty, the focus of the global services industry continues to be on pragmatic digital investments like cloud solutions, cyber security, analytics, and automation. While the advent of newer technologies like generative AI has created an industry buzz, the primary focus continues to be on strengthening the digital core and building a resilient technological foundation. Most industry verticals continue to wait and watch before diverting constrained resources to newer projects with limited use cases and industry adoption.

As 2023 comes to a wrap, the global services industry is at the forefront of another transformative shift – the need to create value and the need to create it fast. This becomes especially imperative as technological advancements like generative AI threaten to shift the industry’s current equilibrium and potentially start the next phase of a technological revolution. The global services industry must adapt swiftly to stay ahead of the curve.

Participate in our Key Issues Survey 2024 to capture the pulse of Information Technology and Business Processing industry leaders across the globe and uncover major concerns, expectations, and key global services trends that are likely to amplify in 2024. To discuss further, or for any questions, reach out to Ravneet Kaur or Hrishi Raj Agarwalla.

Don’t miss the Key Issues 2024: Creating Accelerated Value in a Dynamic World webinar to gain valuable insights into 2024.

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

 

Scaled and Sustainable: How to Plan Your Global Business Services WFH Strategy | Webinar

60-minute webinar delivered live on Tuesday, June 23, 2020

Download and view the presentation

The future is now for Work From Home (WFH). While WFH is not a new concept, COVID-19 has dramatically changed the way global leaders look at the need for, and benefits of, WFH. As a result, scaled WFH is inevitable in the global services industry, even after COVID-19-related restrictions ease.

In this webinar, we will share insights you can use in developing your global business services (GBS) WFH strategy including:

  • Convictions on the future state of WFH adoption
  • Business case for scaled WFH adoption
  • Best practices for integrating WFH into delivery models

You’ll get answers to questions such as:

  • What is the business case for scaled WFH in a post-COVID-19 world?
  • How do you determine the scale and scope of work for WFH adoption?
  • What are the key elements of integrating WFH into the GBS delivery model?
  • What talent and operating model changes are needed to build a remote workforce for the future in GBS?

Who should attend and why?
This session will help leaders across organizations evaluate impact and uncover opportunities:

  • Global Business Services / Shared Services Center / Global In-house Center Executives
  • IT Executives
  • Strategic Outsourcing and Vendor Management Executives
  • Service Provider Executives

Can’t join us live? Register anyway!
All registrants will receive an email (typically within 1-2 business days of the live presentation) containing the link to the slides and on-demand playback.

Presenters
Rohitashwa Aggarwal
Practice Director
Everest Group

Shirley Hung
Vice President
Everest Group

Eric Simonson
Managing Partner
Everest Group

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