Creating Outcome-Based Agreements

Transforming GBS into Value-Driven Structures

In our previous discussion on mature GBS organizations, outlined in my LinkedIn article "Unlocking value in mature GBS contracts," we explored how transitioning from FTE-based models to outcome-driven approaches could redefine the role of GBS as strategic partners rather than operational cost centers. Building on that foundation, we delve deeper into how moving towards business outcomes can be a natural progression for mature GBS setups, enabling them to unlock greater value and establish stronger client partnerships. One critical step toward this transformation is adopting outcome-based agreements.

Moving Beyond Transactional Transformation

For decades, traditional GBS contracts have focused on transactional transformation, emphasizing metrics like cost-per-transaction or turnaround times. While these are important for operational efficiency, they fail to capture the broader business value that a mature GBS setup can deliver. Outcome-based agreements provide an opportunity to pivot from mere process execution to driving meaningful business outcomes.

These agreements align the goals of the GBS organization with the strategic priorities of the client. Instead of measuring success by process efficiency alone, outcome-based agreements incentivize shared accountability for results, such as revenue growth, customer satisfaction, or innovation adoption.

Laying the Foundation for Outcome-Based Agreements

Transitioning to outcome-based agreements requires more than a contractual shift. It demands a reimagining of the GBS structure, culture, and capabilities:

1. Define Clear Outcomes: Identify and agree on specific business outcomes that the GBS and the client aim to achieve. These could range from increasing market share to improving supply chain resilience.
2. Invest in Capabilities: Enable the GBS organization to take on higher-value roles. Investments in upskilling team members, particularly in analytics, decision-making, and domain expertise, are critical.
3. Adopt Commercial Models that Encourage Gain Share: Moving away from FTE-based pricing models, outcome-driven agreements often involve gain-sharing mechanisms, where both parties benefit from achieving targeted outcomes.
4. Foster a Partnership Culture: Encourage GBS teams to act as strategic partners, not just service providers. This cultural shift enables a collaborative approach to solving business challenges.

Benefits for All Stakeholders

By implementing outcome-based agreements, clients can perceive their GBS as partners equally invested in business success. This shared accountability leads to several benefits:

• Enhanced Client-Provider Relationships: By aligning objectives, service providers become trusted advisors, fostering deeper collaboration.
• Accelerated Team Development: The focus on outcomes encourages faster upskilling and innovation within the GBS organization, cultivating a workforce ready to tackle strategic challenges.
• Business-Centric Service Delivery: With the GBS team actively contributing to business goals, clients benefit from solutions tailored to their unique needs and objectives.

A Call to Action for GBS Leaders

Outcome-based agreements represent a significant opportunity for GBS leaders to demonstrate the strategic value of their organizations. The journey begins with courage—the courage to step beyond transactional transformation and embrace a role as a value enabler. By prioritizing outcomes, investing in capabilities, and fostering a partnership mindset, GBS leaders can redefine how their organizations are perceived and deliver lasting impact.

As the global business landscape continues to evolve, GBS must remain a step ahead, championing innovation and driving measurable results. Outcome-based agreements provide the blueprint for a future where GBS is not just a function but a key driver of business success.