For more than two decades, Global Business Services (GBS), the centralized service delivery model leveraging a mix of internal shared services and\/or 3rd<\/sup> party outsourcing, has been a tried-and-tested modus operandi for large enterprises to save costs, drive process discipline and improve compliance.<\/p>\n However, with the rapid advent of real generative AI capability, the current GBS model is dated, fails to deliver much (if any) value beyond cost and efficiency and has struggled to create viable career opportunities for ambitious talent.\u00a0 Let\u2019s face it, GBS is still stuck squarely in the back office and fails to provide a career track for the best and brightest to pivot their firms into the generative AI era.<\/p>\n After persisting with this tired old business operations model for so long, GenAI is forcing a major shift for ambitious enterprises striving to attract the talent they need to remain competitive and innovative. \u00a0Many enterprises firmly glued to the old GBS model are in real peril of being left behind, lacking the culture, mindset and direction to remain relevant, viable businesses.<\/p>\n The ability for generative business services<\/a><\/em>, where advancing AI technologies such as Large Language Models and autonomously-capable apps are driving the speed and predictive capability of enterprises to function with so much more agility, creativity, and intelligence.<\/p>\n Simply put, the time to make the move from back office to OneOffice is finally upon us (we introduced OneOffice seven years ago<\/a>) and GenAI is the catalyst<\/em> to force this change.<\/p>\n However, at HFS, we see two massive problems the current GBS proposition must overcome:<\/p>\n How often does your CFO tell you, \u201cWe loved that 30% you took off the bottom line last decade; just relax and enjoy life\u201d.\u00a0 With the advent and maturity of ERP platforms and outsourcing\/offshoring, the role of shared services and GBS has been largely centered on the centralization of processes to drive efficiencies and partnering with outsourcing service providers to exploit lower-cost labor to reduce costs.<\/p>\n However, with most GBS organizations having maximized the cost and efficiency levers in recent years, the onus is now firmly shifting to genuine business transformation to provide faster, smarter data to drive rapid decisioning.\u00a0 That is the new lever that must be pulled by GBS to keep driving new thresholds of performance out of the business and support the growth agenda.<\/p>\n Cost savings are important but no longer sufficient to keep most operations leaders in their jobs.\u00a0 Minimizing costs to a desired level is one ceiling of achievement, but ambitious enterprise C-Suites have to keep striving for new sources of value to stay competitive in today\u2019s era of rapid AI deployment.<\/p>\n Our research of over 600 business services decision makers across the Global 2000 reveals nearly 50% GBSes are happily focused on cost savings today. However, it is expected to halve in the next 2-3 years (See exhibit below). GBS services of the future must align with the enterprise growth agenda, not just better, faster, and cheaper operations.<\/p>\n Click to Enlarge<\/em><\/a><\/p>\n GBS has a critical role in helping organizations balance the current digital dichotomy that nearly every enterprise faces: balance the macroeconomic \u201cSlowdown\u201d with the \u201cBig Hurry\u201d to innovate.<\/p>\n Research we conducted on employee experiences of 1800 business services staff shows close to 9 out of 10 want to feel more challenged (and are bored), 61% will jump to a competitor for a pay hike, and 75% believe they can easily find a job as good as the one they currently have:<\/p>\n It\u2019s no wonder business services staff are quitting in droves in search of something more challenging when there is so much demand for workers to perform elsewhere.\u00a0 Now that next job may turn out no more challenging than their current gig, but if there\u2019s 30% more money for doing it, why not?<\/p>\n Now we can moan and groan about the attitude and self-entitlement of some Gen-Zs and Millennials who have no loyalty, don\u2019t care about longevity on their CVs, etc., but put yourself in their position:\u00a0 you\u2019re ambitious, and other companies are offering you more challenging work, more money, and are simply more exciting places to work.<\/p>\n Why would you want to suffer a life of soul-crushing work for a company that still operates the same way it did 30 years ago?\u00a0 And can you blame staff for preferring to work from home than suffer from the monotony of a stuffy cube kingdom where most of the management isn\u2019t even there<\/em>?\u00a0 Let\u2019s be blunt:\u00a0 it\u2019s often the management who have become self-entitled, not the staff.\u00a0 The problem ultimately lies with bad leadership, not bad working attitudes, which is the reason why GBS has failed to provide real career options for our best and brightest.<\/p>\n Global talent is what created the GBS model. Centralization, standardization, lean\/six sigma, offshoring, nearshoring, technology augmentation and, more recently, anywhere shoring have been the pillars to drive down costs and improve productivity. The core business case for GBS revolves around 30%+ upfront arbitrage-driven cost savings and 5-10% YOY productivity with a veneer of better stakeholder experience and improved business outcomes. For enterprises that have been at it for decades, start realizing there is a limit<\/em> to how much juice you can squeeze from a lemon and start witnessing diminishing returns. As we mentioned already, your C-Suite has long since stopped celebrating the costs you trimmed in the past, they will soon be demanding new thresholds of value that aligns with their innovation agenda (if they are not already).<\/p>\n GBS leaders searching for the next big thing after \u201coffshoring\u201d may have their prayers answered with the dawn of GenAI. It promises a significant productivity improvement (not just incremental) on voice-based work, coding, testing, and transactional processing \u2013 the core of any GBS operation. What\u2019s even more interesting is the ability of AI-driven operations to support autonomous decision-making, exception processing and the capability to handle a more creative scope of work (think art, writing, design) beyond mundane and boring activities.<\/p>\n The dawn of GenAI has created an inflection point<\/em> for GBS to jump to a new S-curve of value creation:<\/p>\nThe GenAI era is finally driving much-needed change in business operations<\/strong><\/span><\/h3>\n
Problem #1. Cost and efficiency are now hygiene. Enterprises are on a mission to find new sources of value<\/span><\/h2>\n
![\"\"](\"https:\/\/www.horsesforsources.com\/wp-content\/uploads\/2023\/08\/GBS-today-versus-2-Years-1024x563.png\")
<\/a><\/p>\nProblem #2. Young people don\u2019t see GBS as an attractive career. It\u2019s just not sexy<\/span><\/h2>\n
![\"\"](\"https:\/\/www.horsesforsources.com\/wp-content\/uploads\/2023\/08\/GBS-EX-1024x612.png\")
<\/p>\nThe dawn of GenAI creates a once-in-a-lifetime opportunity for GBS to pivot<\/span><\/h2>\n
GenAI is driving a whole new innovation agenda and GBS leaders must be part of the conversation<\/strong><\/span><\/h3>\n
![\"\"](\"https:\/\/www.horsesforsources.com\/wp-content\/uploads\/2023\/08\/GBS-is-dead-1024x576.jpg\")
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![\"\"](\"https:\/\/www.horsesforsources.com\/wp-content\/uploads\/2023\/08\/GBS-as-Innovation-Orchestrator-1024x570.png\")
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