Beyond outsourcing: Creating value through Global Business Services

Shared services and outsourcing is par for the course for many companies’ back office businesses—after all, 95 percent of companies say that these delivery models were either very or somewhat effective at reducing their costs.1 But saving money is no longer the top concern, as companies have come to expect more: namely, increasing process efficiency, improving organizational flexibility and scalability, and supporting global growth. In fact, most businesses rank these priorities ahead of cutting costs.2

As a result some leading organizations are trying a different approach, Global Business Services (GBS), which takes an integrated, customer-focused method to managing shared services and outsourcing and links everything back to business strategy. What’s changed? GBS organizations are tightly aligned with corporate strategy, so whatever a company’s business priorities, GBS becomes a lever to help support them.

Instead of relying on fragmented outsourcing contracts and shared services centers, businesses can change their entire approach with GBS, which centralizes everything. For example, one $10 billion company active in 80 markets worldwide used a GBS strategy to consolidate its disparate accounting functions into three regional shared services centers in Latin America, Europe, and Asia. With this change, the company reduced costs for providing those services by 25 percent in the first year. The centralized services environment also improved the quality of work and provided enhanced controls and compliance.

Aligning the services strategy with business strategy improves outcomes across the organization. Shared services and outsourcing estimated impact.

Aligning the services strategy with business strategy improves outcomes across the organization. Shared services and outsourcing estimated impact.

Should a GBS model be on your back-office radar? GBS has become a solution for many because it works with a company’s business strategy in four ways.

  1. M&A integration. A GBS model can help a company deliver on promised synergistic cost savings. For example, one global agribusiness that grew through M&A suffered inefficiencies because its support services overlapped. But it needed to deliver these services globally. So the company developed a GBS model for its back-office operations that created regional delivery centers and resulted in savings of $100 million a year.1
  2. Global expansion. Scaling into new and emerging markets is a benefit of GBS. One global conglomerate had a strong back office, but its shared services centers and outsourcing relationships couldn’t grow quickly into its new markets. After shifting to centralized management through GBS, efficient scaling of operations was easier.
  3. Improved business processes. Since GBS prioritizes customer and business needs, client service quality can go up. A multibillion dollar global card payment company that we worked with discovered this when it adopted GBS and developed a customer service operation that emphasized easy-to-use digital platforms. They ended up increasing revenues by over 10 percent a year while saving almost 10 percent in costs.
  4. New product and service offerings. A successful GBS model can generate new revenue streams for companies by taking internal services and adapting them to meet a market need. For instance, one large manufacturing company’s logistics group became so efficient through a GBS strategy that it became a subsidiary to offer similar services to external clients.

1 PwC and HfS Research, The Evolution of Global Business Services, 2011.

2 PwC and HfS Research, The Future of Global Business Services, 2012.