How Global Business Services (GBS) Model is Transforming Corporate Operations

“What is going to change in the next 5-10 years?” - is a common question keeping global leaders busy around the world. However, an equally important question that often gets overlooked is “What is not going to change?” Amidst the rapid changes in the world’s business landscapes, certain things remain constant for every business. For instance, every organization wants to optimize their costs. Every organization wants to attract and retain the best talents. Every organization in the world wants to create value and be efficient. And they always will. Amidst the wave of new technologies and business models being introduced everyday, one business model has been checking all of the above boxes for many corporations around the world, and that is Global Business Services (GBS) model. It is reshaping how organizations manage essential functions like finance, HR, IT, tax and more. GBS consolidates these functions into centralized hubs, departing from traditional models that scatter processes across departments. While initially focused on cost optimization, the role of GBS is now transitioning towards broader, more value-driven outcomes. Recognizing its potential, businesses are increasingly leveraging GBS for innovation and competitive advantage. In this blog, we will delve deep into what GBS is, and how it is transforming corporate operations across the globe.?

What is GBS?

Global business services (GBS) refers to a centralized approach to service delivery, encompassing shared services, outsourcing, and centers of excellence (COEs) to serve multiple business units. Its scope includes but isn’t limited to functions like finance, IT, HR, procurement, tax and many more. GBS operations can be located either onshore or offshore.

According to Deloitte’s 2023 Global Shared Services and Outsourcing Survey, finance, HR, IT, procurement and tax are the most commonly performed functions by GBS. Among them, the most predominant function is finance. In fact, 91% of organizations that use GBS use it to perform financial functions, which is very ahead of the function in 2nd place: Human Resources. The top financial processes performed by GBS are accounts payable, accounts receivables and fixed asset accounting.

?

Instead of each department or business unit managing these functions independently, shared services enable the pooling of resources, expertise, and technology to provide more standardized and cost-effective services.?

How GBS is Transforming Corporate Operations

1. Cost Optimization

Cost reduction is one of the most prevalent reasons why organizations adopt the GBS model, and GBS is very successful at attaining that. As of 2021, 83% GBS organizations report achieving their cost reduction goals. GBS specializes in finding ways for companies to save money while maintaining the quality of their operations. By consolidating tasks and services into centralized hubs, GBS helps businesses streamline their processes and eliminate unnecessary expenses. For example, instead of each department handling its own tasks independently, GBS brings them together, allowing for better coordination and efficiency. This consolidation also allows companies to take advantage of economies of scale, which means they can negotiate better deals with suppliers and reduce overall costs. Additionally, by standardizing processes and leveraging automation tools like robotic process automation (RPA), GBS helps companies reduce errors and increase productivity, further contributing to cost savings. Many countries offer a wide range of incentives for setting up offshore GBS centers, including tax breaks, employment grants and investment grants. Overall, GBS enables companies to do more with less, freeing up resources to invest in other areas of their business and stay competitive in their industry.

2. Automation and Standardization

The GBS model enables organizations to have more standardized and highly integrated processes. Most organizational processes operate in silos, for instance the finance department manages the accounts payable process and the procurement department manages purchasing and buying. The GBS environment makes a transition from silo operations to integrated, end-to-end processes such as procure-to-pay, order-to-cash, record-to-report etc. Another core aspect of standardization which GBS makes more attainable is centralized analytics reporting and performance dashboards. Standardization ensures consistency across operations by establishing uniform procedures and workflows. This reduces errors, promotes collaboration, and makes processes transparent. Standardized practices also support scalability, adapting easily to changes in workload or business needs.

3. Developing a Talent Hub

Every organization seeks to attract the best talents, and adopting a GBS model can assist them in developing a talent hub. Firstly, expanding to a new location to establish GBS gives organizations access to better and larger talent pools. Consider this: an employee at a GBS center is working on a function of a global organization: performing highly specialized tasks, developing and owning end-to-end processes, solving problems for various markets. The prospect of solving this challenge for a large scale global entity can attract top talents from a market. Furthermore, GBS models often leverage advanced technologies and methodologies, providing employees with exposure to cutting-edge tools and techniques, which enhances their skill sets and makes them more marketable. These diverse challenges, process ownership, exposure to cutting edge technology, specialized tasks can develop employees into specialists and functional experts. Given the wide range of processes performed in a GBS, it also covers a wide breadth of job roles, making it perfect for rotation, upskilling and cross-skilling opportunities. Overall, by adopting a GBS model, organizations can create a talent hub that attracts, retains, and nurtures top talent, driving innovation and competitiveness in the marketplace.

4. Focus on Strategic and Value Creating Activities?

The level of standardization and automation enabled by GBS allows companies to redirect their resources and energy towards activities that truly drive growth and innovation. By handling routine and non-core tasks, GBS frees up valuable time and resources that companies can then invest in strategic initiatives and value creation.

This shift in focus allows organizations to prioritize activities that have a direct impact on their competitiveness and long-term success. Instead of getting bogged down in administrative tasks, teams can concentrate on developing new products, expanding into new markets, or enhancing customer experiences.

Furthermore, by leveraging the expertise and capabilities of GBS centers, companies can tap into specialized skills and knowledge that may not be available internally. Whether it's harnessing data analytics to gain insights into customer behavior or leveraging emerging technologies to improve operational efficiency, GBS enables organizations to stay ahead of the curve and seize new opportunities. Ultimately, the emphasis on value creation enables companies to differentiate themselves in the marketplace and stay agile in the face of changing business dynamics.

5. Digital Transformation and Innovation

GBS holds significant potential in spearheading a company's digital transformation endeavors while simultaneously minimizing associated risks, thanks to its extensive scale and access to a global talent pool equipped with the requisite skill sets. By tapping into global expertise, GBS quickly adapts to changing technologies and industry trends. It also acts as a growth accelerator by facilitating the adoption of cutting-edge technologies like RPA, AI, and ERP, which improve operations and drive innovation. GBS teams foster creativity and forward-thinking by generating innovative digital ideas and leading automation and digital transformation efforts across functions. This not only enhances efficiency but also develops new capabilities, keeping the company competitive. Discussions on emerging technologies further fuel creativity and drive the exploration of new solutions to business challenges. Overall, GBS is essential for companies navigating the digital landscape, driving sustainable growth and success.

In conclusion, as the business landscape rapidly evolves with the introduction of new technologies and business models, complexity continues to grow. Yet, at its core, corporate leaders grapple with fundamental concerns like cost optimization, standardization, efficiency, and talent attraction. Here, Global Business Services (GBS) emerges as a solution that helps organizations address these fundamental challenges head-on by providing access to a broader talent pool, streamlining operations, and enabling leaders to focus on strategic and value-adding activities. Moreover, it facilitates digital transformation and equips leaders with the latest technology, empowering them to navigate the ever-changing business landscape with confidence. By effectively addressing these fundamental concerns, GBS is indeed transforming corporate operations for the better.