​GBS vs. Shared Services: What Leaders Need to Know to Stay Competitive

The global market for business process outsourcing is expected to grow significantly, projected to reach $525.23 billion by 2030. In this expanding landscape, both Global Business Services (GBS) and shared services play critical roles in shaping an enterprise’s strategy for operational excellence. 

The decision between GBS vs shared services hinges on key factors such as scalability, agility, and strategic impact. For organizations striving to stay ahead in a rapidly evolving marketplace, selecting the right approach is essential to enhance resilience and enable swift responsiveness.  

What Are Global Business Services? 

Global business services is a unified enterprise service model, combining back and front office operations into a single unit. It streamlines processes and enhances customer-centric and digitized flows for end-to-end operations.  

By centralizing services, GBS improves service quality, fosters innovation, and enhances decision-making. This makes businesses more efficient and agile. By offering flexibility, scalability, and improved financial performance, the GBS model supports global standardization.  

Benefits of GBS 

Global business services enhance operational efficiency through centralized services and advanced technologies. Here’s how this model boosts performance and the company’s bottom line:  

• Cost Effectiveness: GBS reduces repetitive work and streamlines processes for better efficiency.  

• Improved Service Quality: It implements best practices for consistent service delivery across regions.  

• Strategic Alignment: GBS aligns support services with organizational goals for better decision-making.  

• Talent and Retention: GBS provides career growth opportunities and attracts a diverse workforce.  

• Increased Agility: It adapts to changing market conditions and manages resources efficiently.  

• Solid Partnerships: GBS helps collaborate with third-party service providers for advanced solutions. 

Challenges of GBS 

Despite these advantages, global business services face multiple hurdles. Here are some of them:  

• Cultural Differences: Managing diverse teams across many regions can lead to misalignment due to differences in communication styles, collaboration, and understanding. 

• Security Risks: There is an inherent risk of data leaks or breaches unless robust security measures are put in place.  

• Lack of Quality Control: Meeting expected quality may be difficult if standardized processes are not integrated.  

• Integration with Internal Systems: Seamless coordination with internal operations can sometimes be lacking unless effective measures minimize gaps and inefficiencies.  

What Are Shared Services? 

Shared services is another enterprise service model where similar processes and functions are combined into centralized units. These include finance, HR, IT, and procurement in most cases. This model streamlines operations, reduces costs, and enhances efficiency by eliminating redundancies.  

By operating as an internal service provider, shared services allow businesses to focus on core functions. High initial investments and managing employee mindsets are some of the challenges faced by companies adopting these models. Successful implementation requires strategic planning and ongoing management to address hurdles.  

Benefits of Shared Services

Shared services enhance efficiency, reduce costs, and improve service quality for businesses. Here’s more on their advantages:

• Cost Efficiency: They reduce operational expenses through economies of scale and consolidation. 

• Improved Service Quality: Shared services ensure consistency to meet business needs more effectively.  

• Better Data Management: They centralize data handling, reducing errors and enhancing decision-making.  

• Enhanced Control and Compliance: They improve visibility and adherence to regulations and internal policies.  

Challenges of Shared Services

Shared services face issues such as limited reach and issues with scalability and perception. Some of these cons are listed below.  

• Limited Global Reach: Most shared services are confined to regional operations.  

• Process Over Service Focus: Although the current business focus requires prioritizing customer satisfaction, this model leans towards process efficiency.  

• Scalability Issues: Expanding shared service models worldwide demands investment in technology and leadership.  

• Perception Issues: Shared services are viewed as costly, deterring their role in digital transformation initiatives.  

GBS vs. Shared Services: Key Differences

Global business services and shared services are both models that can aid in streamlining operations. However, they differ in scope, structure, and focus. While GBS operates globally and uses advanced technologies to foster innovation and efficiency, shared services target cost reduction within localised units.

Here are the core differences between the two: