A common scenario for companies is that they have an outsourcing relationship for Information Technology Applications Development. Or they have an outsourcing relationship for a narrow set of tasks within a business process to provide resource flexibility or fill capability gaps. Now these companies are looking to outsource a broader scope of Information Technology or business processes. These companies are typically looking to shift the focus of their outsourcing relationships to more of a partnership to drive transformation and innovation.

Wait a minute, you say. Why does generative AI need a savior? After all generative AI is the talk of the town. According to various reports, ChatGPT, one of the leading generative AI tools, has the fastest-growing consumer application user base of all time.  But it is one thing for hundreds of millions of users to download a generative AI application for personal productivity such as improving an essay. It is quite another thing to apply generative AI to core business processes. 

Business services organizations are continuing to add scope beyond traditional back office functional processes. Outsourcers are touting their front and middle office process capabilities. While there are similarities between traditional BPO and front and middle office process outsourcing, there are also distinctions in how you evaluate and contract for these services.  Before you jump in, consider the following ways in which you may need to re-orient yourself.

SSON Research & Analytics' (SSON R&A) recent 2022 Outsourcing Report uncovered a very interesting and seemingly paradoxical finding that SSON called the Outsourcing “Conundrum”. In brief, the report found that in terms of past performance, benefits received, and overall happiness, while both outsourcing and captive shared services yielded positive results, in sum, captives win against outsourcing. Despite this historical performance reality or perception, most organizations plan to increase their percentage of outsourcing levels vs. captive. But before you jump on the outsourcing bandwagon too quickly to deliver these digital benefits, consider that historically transformation and innovation have been rated as among the lowest levels of achievement by outsourcing from buyers of services. 

COVID-19 has put the spotlight on needing to work in a more connected fashion. Supply chains have been disrupted, points of customer contact changed, and employees challenged to stay connected while working remotely. Whether you are an end consumer buying more product or service on-line, an employee working from home, or a business partner looking to build productive relationships remotely, simply receiving the output of a process against product specification and service levels at a right price/cost point is no longer enough.

Most industries have seen growing adoption of integrated business service models so, relative to your competitors, if you’re not moving forward through the evolutionary business services stages, you’re losing ground to leaders in your industry.  Worse, if you are not moving forwards, you’re at a very significant risk of regressing. There’s a natural gravitational pull towards pure functional models rooted in comfort and culture.  Take a look at our recently published article for practical advice on fostering a culture that supports and sustains the GBS journey. 

One common scenario in the marketplace is companies starting with a Global Capability Center (GCC) model and seeking to transition into a Global Business Services (GBS) model. Stakeholders accustomed to the GCC model frequently misunderstand the differences between GCC and GBS.  We find it important to carefully distinguish between how you lead and manage under the two different models. Otherwise, a company can go sideways on a whole range of topics including scope, service management, process management, outsourcing relationship management, financial management, and governance to name but just a few.

Outsourcing some, or all, of your business processes is a big step but what happens when the contract is due to expire? Maybe your provider has already approached you with a proposal for renewal, but is that the best option? If you’ve outsourced, this will eventually become your reality – and a great opportunity.

We’ve always been intrigued by the shifts in organizational models among business services organizations. Just in the last month we observed one highly acclaimed multifunctional global business services (GBS) organization get split apart. At the same time, another organization is moving to a highly integrated multifunctional GBS model. If there is one key lesson learned for business services leaders it is that you need to be prepared to pivot to shifting models.

Global Business Services (GBS) leaders are exploiting a unique opportunity to enhance their value to the overall enterprise by becoming the “go to” organization for experience management. Experience management has emerged as a distinct capability focused on measuring and improving the experiences enterprises provide to their customers, employees, suppliers, and other stakeholders. It builds upon traditional customer and user service improvement techniques. It differentiates itself by emphasizing hyper-personalization through alternate delivery channels and utilizing advanced data and digital tools. 

Covid-19 served as a catalyst for many companies to accelerate their digital transformations.  Global Business Services (GBS) organizations were a hidden gem for many companies to weather the pandemic through digital initiatives because of their unique capability to work across the enterprise. 

A burning question asked by business services leaders is "Which is best: Multi-functional Global Business Services (GBS) or single function shared services such as individually managed Finance or Human Resources shared services?" Read our recently published article including lessons learned from the front lines to help you define which model is best for you.