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GBS Model Poised to Replace Standalone Outsourcing and Shared Services

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December 18, 2013

GBS Model Poised to Replace Standalone Outsourcing and Shared Services

By Calvin Azuri, TMCnet Contributor

Global Business Services (GBS) business operating model is poised to replace standalone outsourcing and shared services, says a research commissioned by KPMG LLP and HfS Research, with around 60 percent of the organizations embracing GBS over the next three years. The research also predicted that expenditure on external GBS is expected to nearly double-up to reach $73 billion in 2017 as against US$ 40 billion in 2013.

In a release, Cliff Justice, Principal and US Leader at KPMG Shared Services and Outsourcing Advisory, said "GBS offers enormous potential for unlocking greater business value. However, due to its enterprise-wide, cross-functional nature, it also requires new ways of operating between GBS, corporate functions, business units, and their key external delivery partners."

The study analyzed data gathered from managers to C-level executives across 416 organizations in various regions and industries with reported revenues exceeding US$ 1 billion. The study also revealed that 64 percent of the surveyed executives opine that C-suite investment in the dynamic corporate world and coaching leaders to manage change are the key factors for success in migrating to a GBS model.

Speaking about the research findings, Phil Fersht, Chief Executive Officer at HfS Research, said “We are seeing an escalated focus on both automation and analytics from mature organizations, but what is clear is that centralization of governance and a GBS approach provides the building blocks to achieve more effective results.”

Furthermore, 40 percent of the organizations confirmed that cost cutting, operational analytics and process automation are the key areas of focus to roll-out a successful GBS program. This explains the fact that 37 percent of the respondents confirmed increased investments in technology while around 38 percent agreed to strategic investments in analytics, in a move to decrease dependencies on human resources.

According to the research report, inability to leverage data analytics, IT enablement and talent retention form the three major areas of concern towards driving a successful GBS model. In the current business scenario, inclination towards GBS model is comparatively high across consumer goods, pharmaceuticals and manufacturing industries, in that order.

KPMG LLP, the US business of KPMG International Cooperative, is a leading name in the audit, tax and advisory services sector. KPMG International is one of the leading professional services organizations with a presence in more than 155 countries. HfS Research is an independent organization providing research and strategy services with a focus on business and IT services sector.

Edited by Ryan Sartor

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