In today’s dynamic business landscape, organizations’ increasing focus on operational excellence and cost optimization has led to the rise of global business services (GBS). This global business services strategy involves centralizing and streamlining essential back-office functions like finance, HR, and IT across the enterprise.
Global Business Services: An Overview
Global business services (GBS) connect and standardize end-to-end processes across different departments, regions, and time zones. This lets organizations centralize support functions like finance, HR, and IT, helping them save money and improve the quality of services. For example, imagine a large retail chain with stores across the country. Traditionally, each store might handle its own payroll, inventory management, and IT support. This can lead to inefficiencies, inconsistencies, and higher costs. By adopting a global business services strategy, the company can centralize its back-office functions across all the stores. This enables it to leverage economies of scale, leading to cost control and cost reduction. Additionally, the approach helps to standardize processes to ensure quality and free up store managers to focus on sales and customer service.
According to SSON, a community of shared services, global business services, and outsourcing professionals worldwide, it is estimated that the GBS industry is likely to grow to USD 2.5 trillion by 2025.
The Benefits of Global Business Services
GBS has transcended its initial focus on cost savings and efficiency to emerge as a strategic driver of transformation and innovation. This shift reflects the growing understanding of GBS as a powerful tool for long-term value creation and competitive advantage.
According to a September 2023 survey by HFS Research, 33% of GBS organizations are likely to focus on new sources of value that leverage data-driven insights and emerging technologies over two to three years, as against 19% now.
In a nutshell, here are some benefits organizations can unlock using a global business services strategy:
- Strategic cost reduction: GBS enables a holistic approach to cost reduction, identifying and eliminating inefficiencies across various back-office functions. This goes beyond simple cost-cutting measures, optimizing processes and leveraging economies of scale to achieve long-term financial sustainability.
- Enhanced cost efficiency: Streamlined workflows, automation, and centralized resource allocation foster a cost-efficient culture of continuous improvement.
- Improved process excellence: Standardized best practices ensure consistency and quality across the organization, leading to less rework and fewer errors.
- Data-driven decisions: GBS unlocks the power of data and analytics, providing valuable insights for informed decision-making, optimized resource allocation, and strategic investments.
- Mitigated risk: Centralized governance and compliance measures minimize risk exposure, protecting the organization from potential financial and legal repercussions.
Strategies for Cost Optimization within Global Business Services
While GBS fosters transformation and innovation, cost control and cost reduction remain primary motivations for its adoption. Here’s how you can maximize the cost-saving potential within your GBS framework:
- Holistic end-to-end transformation: A holistic global business services strategy lets you unify data, processes, and technology across the enterprise. By standardizing and streamlining operations from end to end, organizations can eliminate redundancies, improve efficiency, and drive down costs. For example, consider a manufacturing company with departments like procurement, production, and inventory management. GBS integrates these functions, allowing them to react instantly to demand forecasts and optimize production, leading to lower costs and improved efficiency.
- Automation: Repetitive tasks, like data entry and basic calculations, can be significant cost drivers in any organization. GBS can identify these tasks through process mining and optimization techniques and automate them using technologies like robotic process automation (RPA). This frees up valuable human resources from tedious work, minimizing errors and allowing them to focus on more strategic and value-adding activities.
- Carve-outs: GBS can identify and ’carve out’ specific non-core functions for outsourcing or divestiture. This frees up internal resources and expertise to focus on core competencies.
- Gen AI intervention: By integrating generative AI (gen AI) into core functions like financial planning and customer service, GBS can automate complex tasks, improve data accuracy, and ultimately drive cost savings. This advanced form of AI leverages OCR (optical character recognition), natural language processing (NLP), and computer vision to enhance data capture and analysis, enabling better decision-making. From streamlining supply chains to enhancing customer interactions, gen AI empowers GBS to unlock new levels of efficiency and cost optimization.
Cost Optimization Through Global Business Services: Success Stories
Hexaware’s tailored GBS 2.0 solutions and innovative use of technologies have significantly enhanced cost efficiency and operational excellence for our clients. Here are some examples showcasing the impactful results from our GBS initiatives:
Cost Optimization Through Finance Ops Transformation
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Client
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Challenge
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Solution
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Benefit
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A global B2B brand specializing in professional in-house printing solutions
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Enterprise-wide transformation journey to optimize finance and sales administration operations across 11 European countries
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- Establishment of a flexible finance shared service center (SSC)
- Automation leveraging S/4HANA and RPA
- Multi-language support
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- 75% reduction in total cost of operations (TCO) for finance
- Enabling funding for S/4HANA implementation
- 60% reduction in manual efforts
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Cost Optimization Through Cloud-based Intelligent Automation
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Client
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Challenge
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Solution
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Benefit
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A leading food distributor and grocery retailer
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Inconsistent processes, low automation levels, manual-intensive tasks, and unstructured data across their four business divisions
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Consolidating invoice processing, automating cash applications, deploying document management solutions, and utilizing cognitive OCR
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- Net savings of $5.9 million over five years
- Over 80% straight-through processing (STP) in accounts payable
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Key Considerations for Implementing Cost Optimization Measures within GBS
While GBS offers significant cost advantages, successful implementation requires careful consideration of several factors:
- Strategic alignment and shareholder engagement: It is crucial to align cost optimization initiatives with the organization’s overall strategic objectives and secure stakeholders’ participation. Highlight broader value, such as increased control, digital transformation, and smoother integration of new acquisitions. This approach prevents an overemphasis on cost reduction and enables a balanced focus.
- Risk management and contingency planning: Identify potential risks associated with GBS implementation, such as performance issues with outsourced vendors or technology disruptions. Develop robust contingency plans to mitigate these risks.
- Compliance and governance: Ensure adherence to all relevant regulations and internal governance frameworks throughout the GBS implementation process. Maintaining transparency and accountability throughout the process is critical to avoid compliance breaches.
- Balancing cost savings with service quality and customer experience: While aiming for cost efficiency, prioritize maintaining high-quality service delivery and a positive customer experience. Prioritize investments in capabilities that enhance value delivery and customer satisfaction.
Future Trends: Innovations in GBS for Continuous Cost Optimization
The future of GBS is driven by continuous innovation and the integration of emerging technologies. Here are some trends to watch:
- Integration of emerging technologies: Expect deeper integration of technologies like AI, RPA, and big data analytics into GBS functions. This will further automate tasks, improve decision-making, and identify new cost-saving opportunities. Moreover, while the focus was traditionally on cost optimization, it will likely shift to leveraging the latest technologies to transform GBS into value-generating centers within organizations.
- From forecasting market trends to optimizing supply chain management, AI and gen AI empower organizations to anticipate challenges and capitalize on emerging opportunities with agility and precision.
- Harnessing advanced analytics enables GBS to decipher complex patterns, identify inefficiencies, and optimize resource allocation, empowering unparalleled efficiency and foresight, from uncovering hidden cost drivers to fine-tuning product strategies.
- Meanwhile, RPA’s ongoing revolution of repetitive, rule-based tasks will liberate human resources for higher-value endeavors by automating mundane processes across finance, HR, and IT functions, resulting in slashed operational costs, improved accuracy and speed, and elevated customer experiences.
- Evolution of GBS models: GBS models will likely evolve to adapt to changing market dynamics and business needs. This could include the emergence of industry-specific GBS models and the increasing adoption of hybrid models that combine internal resources with outsourcing and automation.
Ready to Harness the Power of GBS?
Hexaware’s GBS expertise, powered by generative AI and a focus on contextualized solutions, can help you unlock the full potential of cost savings, efficiency, and innovation.
Our global business services (GBS) 2.0 solutions epitomize a holistic approach, encompassing data, processes, digital, analytics, and UX/CX. Leveraging our expertise in GBS advisory, we guide organizations through every phase of their transformation journey, from meticulous assessment and benchmarking to the design and implementation of future-ready GBS models. Our comprehensive suite of services ensures failsafe setup and seamless delivery, enabling noise-free transitions and process consolidation across diverse enterprise functions such as finance, sales operations, human resources, and procurement. Focusing on rapid stabilization and steady-state operations, we foster a harmonious journey towards operational excellence, aligning with clients’ existing GBS/SSCs (shared service centers) through flexible engagement models.
Embark on a transformative journey with Hexaware’s GBS 2.0 solutions, designed to drive impactful, tailored transformation across finance, human resources, sales operations, procurement, and executive administration. Whether you’re seeking expert advisory, seamless setup, or comprehensive transformation, our deep domain expertise and partnerships with best-in-class solution providers ensure unparalleled results.
Learn more about our GBS solutions, or connect with us today to accelerate your path to operational excellence.
