Global Shared Services: Streamlining Business Operations

Businesses worldwide are restructuring their corporate functions amidst a volatile economic landscape and shifting consumer needs. By harnessing cutting-edge technologies, organisations are improving their efficiency, adaptability, and responsiveness. This technological transformation is also evolving how companies organize themselves, characterized by leaner corporate centers and the expansion of shared service centers. 

Wondering what are global shared services and where these delivery models fit in? It refers to a centralized delivery model of functions that provides standardized services across multiple business units. Key to organizational evolution, they enable companies to achieve economies of scale, improve quality, and enhance control over shared resources.

What are Global Shared Services?

GSS is a strategic framework that unifies and streamlines diverse organizational functions, elevating service quality and operational performance. Central to a GSS is its commitment to transparent, uniform processes, promoting impartiality and adherence to regulations. By consolidating tasks, GSS empower teams to shift their attention from routine duties towards strategic pursuits such as employee development and organizational structure.

Traditional shared services typically focus on back-office functions that are repetitive, transactional, and may be standardized.

• • Finance and Accounting: Encompasses tasks like general ledger maintenance, accounts payables and receivables, financial reporting, and tax compliance
  • Human Resources: Includes activities such as employee onboarding, administration of benefits, payroll processing, performance management, and talent acquisition
  • Payroll: Involves calculating employee wages, processing deductions, and ensuring compliance with tax regulations and labour laws

• Procurement: Includes activities like sourcing goods and services, negotiating contracts, and managing supplier relationships
• Information Technology: Focuses on tasks such as helpdesk support, network administration, software maintenance, and data backup and recovery 

In recent years, organizations have expanded the scope of shared services beyond traditional functions to include core business activities. This trend is driven by the recognition that shared services can provide strategic value by enhancing customer experience and driving innovation.

• Retail: Includes customer relationship management (CRM), inventory management, supply chain planning, and omnichannel retail operations
• Logistics: Encompass transportation management, warehouse operations, customs clearance, and reverse logistics
• Manufacturing: Involves quality control, production planning, maintenance management, and supply chain management

This innovative approach dismantles departmental barriers, inviting employee participation in HR-related matters and cultivating a climate of openness and trust. The result is reduced costs due to streamlined administrative tasks, combined with increased overall efficiency, as teams assume greater responsibility for their work. Ultimately, GSS drives organizational transformation, harmonizing processes, empowering teams, and optimizing operational effectiveness.

Key Trends

Global shared services are taking the lead in providing transformational capabilities to their companies and are getting more aligned with the C-suite. Shared services centers (SSCs) and GBS models are evolving to be more agile, digital, and cost-efficient – all while aiming to enhance both customer and employee experiences.

• Cost Reduction as a Priority: GSS prioritize cost reduction in response to fluctuating global economic conditions. To achieve this, they strategically optimize their SSC footprint by relocating operations to more cost-effective regions. The tight labour market and escalating costs influence these footprint adjustments within GBS organizations.
• Key Enablers to Drive Value: GBS organizations rapidly embrace automation, unified ERP systems, and workflow tools to streamline operations. There will be a growing trend towards standardized global processes, centralized data analysis, and self-service capabilities in the coming years. As GBS matures, they are increasingly adopting a comprehensive end-to-end process ownership model, taking responsibility for the entire lifecycle of business processes.
• Major Role in ESG: These organizations are conscious about Environmental, Social, and Governance (ESG) initiatives, with nearly half of them identifying ESG as a core focus area. A primary ESG goal for many GBS organizations is promoting social responsibility and diversity, with over 60% actively supporting a wide range of ESG objectives, including ESG reporting.
• Close Alignment with C-Suite: GBS organizations with a history of over seven years typically report to a dedicated GBS leader. In contrast, newer GBS organizations, operating for one to three years, often find their leadership within the C-suite, with a third reporting directly to a CXO. Among C-suite executives, CFOs emerge as the most frequent leaders of GBS organizations.
• Providing Value as Business Partners: GBS organizations are evolving from traditional administrative roles to strategic partnerships by prioritizing customer and user experience. This shift extends beyond efficiency, emphasizing the delivery of exceptional value. Over half of GBS organizations have implemented advanced capabilities such as automation, analytics, process optimization, end-to-end ownership, and business continuity planning – demonstrating their commitment to transformation and innovation.
• Building Agile and Resilient Talent Models: GBS organisations are increasingly adopting flexible work arrangements, such as work-from-home and flexible hours, to attract and retain top talent in a competitive job market. Additionally, they are accelerating digital transformation initiatives to enhance operational efficiency and employee satisfaction.

Challenges

The transition to Global Shared Services is not without obstacles. One significant challenge lies in the adoption of new technology. From outlining requirements to choosing appropriate tools, this process demands careful planning and investment of time. Employee resistance is a common hurdle, often rooted in a lack of familiarity with new systems. 

Overcoming this requires a strategic focus on upskilling initiatives. To validate the costs associated with this transformation, a comprehensive ROI analysis is essential to highlight the long-term advantages. Furthermore, the standardized nature of shared services may not perfectly align with specific organizational needs, necessitating customization. Balancing standardization with flexibility is a delicate task. 

Shared services have been a corporate strategy for over two decades, and their relevance continues to grow. While much has evolved over the years, the fundamental objectives remain consistent: to reduce costs while maintaining or enhancing service levels and data quality.

Traditionally, companies established captive shared service centres. However, there’s a growing trend towards outsourcing these functions. Additionally, many organizations are shifting their focus within shared services from transactional activities to higher-value tasks. While financial considerations often drive the initial implementation of shared services, the ultimate goal is often to create multifunctional centres that deliver comprehensive support.

To see if your business can leverage global shared services to drive efficiency and innovation, get in touch with ANSR’s team of experts. From developing a strategy to executing a BOT model, we can help you achieve operational excellence, manage risk and attract the right talent.

For further information, here are some global shared services insights.