The Global Business Services EvolutionBy Martin Conboy Global Business Services(GBS) is the holy grail of shared services. The Global Business Services model has taken root within the outsourcing and shared services industry in the last few years. It evolved out of the Shared Services model for delivering business services and processes. Rather than separate centres servicing particular regions or business functions, Global Business Services integrates and centralises support functions to deliver end-to-end processes that support an organisation’s operations across the globe. Global Business Services provides Cost- Effective Business Solutions for Information Technology and Business Processes. According to to PWC, “In today’s business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships. However, the majority have yet to benefit from combining shared services and outsourcing into one integrated global business services framework”. “A well-executed global business services strategy is distinctly different from the narrower focuses of shared services and outsourcing strategies. It identifies corporate objectives and encourages internal functions to collaborate with each other and third-party service providers to create breakthrough, strategic operational capabilities that drive business outcomes that can result in real marketplace differentiation and competitive advantage”. Difference between Shared Services and Global Services Shared services organisations first appeared in the US in the late 1980s and has quickly expanded across the globe. Many large corporations currently have shared services organisations in most of the regions of the world in which they do business.
“In today’s business environment, nine out of every ten enterprises have shared services and 97 percent manage outsourcing relationships. However, the majority have yet to benefit from combining shared services and outsourcing into one integrated global business services framework”.
GBS goes beyond the narrow focus of outsourcing and shared services, providing a more holistic and strategic approach to sourcing and managing end-to-end business processes.
- Economies of scale: savings driven by leverage/size of organization
- Economies of scope: savings driven by leveraging management and expertise across multiple service offerings
- Simplification: savings driven by removing (often unneeded) steps from a process
- Standardization: savings from having one standard method or process
- Visibility: value derived from having visibility across an enterprise (e.g., human resources knowing how many engineers there are in the company and where they are located)
- Access to talent: value derived from the ability to harness the best talent pools in the world
- Labour arbitrage: savings from lower-cost resources in different locations throughout the world
- Skill arbitrage: value derived from access to higher-skilled labor (implied at lower costs/ economically feasible costs)
- Pure arbitrage: value derived from the ability to shift work from one location to another to take advantage of shifts in the factors of production