Once a revolutionary organization inside many companies, global business services (GBS) today stands at a crossroads. Created in the 1990s to centralize transactional tasks for finance, HR, and other internal units, many GBS functions have reached a strategic tipping point—requiring corporate leaders to make crucial decisions on the future of their GBS organizations.

A recent BCG study showed that only 41% of companies believe that GBS creates value. With that in mind, the leaders of these support functions must raise their game at a time when companies around the world face unprecedented challenges in how they operate. Marginal adjustments to GBS strategy are no longer sufficient.

As the limitations of traditional models become evident, GBS must transition from a purely operational role to a more strategic one. Although global business service organizations have been at the forefront of change in the past, they now need to reinvent themselves to build support and enabling functions that are more resilient, flexible, and scalable. They also need to expand their charters and provide more value-added activities such as collections and payments, customer management, and even sales functions.

The next generation of GBS functions are becoming more closely intertwined with corporate success—and the GBS model, as a key amplifier of change, is about to take center stage, creating value beyond its legacy contributions. GBS can lead the transformation of areas such as customer experience, operations, and worker training. This requires corporations to adopt a new mindset—and a new framework that we call “Beyond GBS.”

A Bold Vision for Global Business Services

Under the traditional GBS model, C-suite and GBS executives alike have focused largely on consolidating tasks, maximizing transactional processing efficiency, and minimizing costs by bundling resources and operating from low-cost locations around the world.

But the legacy model may have hit its limits: between 2009 and 2021, overhead costs—as measured by sales and general administration—grew 35% more than overall corporate margins, giving rise to what’s known as the “GBS value dilemma.”

This creates three imperatives for GBS organizations:

• To further strengthen their ownership of end-to-end outcomes
• To run GBS like a business in terms of performance, cost, and service levels
• To attract more attention from the C-suite

The “Beyond GBS” model puts these imperatives into practice. It offers a bold vision, strategy, mandate, and governance structure that is aligned with the company’s strategic direction and initiatives and promoted by the group, business, and functional leadership. “Beyond GBS” organizations lead digitization initiatives, scale their best practices internally around the world using consistent structures and processes, and provide new value-added services adjacent to their core delivery.

Taking Support Functions to the Next Level

“Beyond GBS” is the highest of five levels in the support-function journey. At the first, or bottom, level are the roughly 15% of companies that either have no GBS function or have standalone centers siloed across multiple geographies. Companies at this level suffer the most: one company we’ve studied has 117,000 accounting cost centers for 72,000 employees, 150 reporting lines between shared services and the business units they support, and a $5 billion gap in cost optimization versus their peers.

The second level, representing 40% of companies, are those organizations still running multifunctional service factories. The third level and fourth levels, each representing another 20% of companies, consist of organizations with integrated global support functions.

The fifth, and highest, level consists of the roughly 5% of all companies who have gone beyond GBS. These companies have digitized transactional activities and developed effective platform deliveries and end-to-end solutions. They achieve all this while rebalancing workloads seamlessly between global worksites.

Reaching this top level remains a challenge for many companies. In our experience, GBS organizations achieve roughly 80% of the potential gains—the low-hanging fruit, in other words—if they depend on labor arbitrage, process efficiencies, and the first-time digitization of processes. Despite the complexity and high costs of most GBS initiatives, GBS teams tend to hit an early ceiling and incremental improvements tend to be small. This is particularly true for laggard GBS functions, which represent about two-thirds of all organizations.

The success of GBS organizations is mainly limited by weakly aligned top-management GBS priorities, a nonaligned target picture, and subsequently having a very rigid governance and ineffective steering of the GBS model. Leapfrogging from a less mature GBS model to an advanced one has only proven successful in isolated cases, given the lack of synchronized implementation across the organization. Thus, rather than focusing on incremental improvement of traditional practices—which add value for no more than 10% of companies—companies need to completely rethink and redesign the GBS function.

How to Get Started

Before implementing the best practices of the “Beyond GBS” model, corporate leaders must ensure that they have a firm foundation in place. That starts with an enhanced digital and data backbone with the latest technology solutions and continues with the following three building blocks:

• An agile internal customer front line that brings GBS close to its customers and fosters rapid delivery of services and a responsive iteration of new offerings
• A highly effective delivery platform that drives exceptional operations, focuses on value-adding activities, and attracts high-quality employees
• A digital innovation center that delivers a steady stream of new capabilities and technologies, enabling constant improvement in the GBS unit’s interfaces and delivery platforms

Assured that a solid foundation is in place, organizations can then begin implementing the “Beyond GBS” model. There are five steps companies should take to unlock the most business value:

1. Forge internal “value partnerships.” This step repositions GBS teams from a siloed, transactional processing unit to a partner that can help other business units optimize their processes to create total company value through outcome- and impact-based solutions.

2. Boldly rescope your mandate. Leaders need to think beyond the transactional core mindset of the past to a bolder, broader, and even more radical vision of what GBS can provide. To be sure, transactional processing cannot be ignored. But by embracing AI and analytics, GBS can play a valuable role in ESG and compliance reporting and user experience design—all with a clear link to overall strategy and business outcomes. Once the foundation is secured, GBS leaders have an opportunity to sell the CEO and C-suite team on a broader charter.

3. Expand talent and capability access. To expand beyond extended-workbench thinking requires the creation of vibrant capability hubs and global capability teams that provide nonclassical GBS services, including R&D and other center-of-expertise activities. This shift allows these services to collocate to locations with the best mix of cost and talent. At the same time, attracting and retaining the best talent remain priorities and can be enhanced with upskilling and cross-skilling initiatives. This approach places greater emphasis on expertise and digital capabilities.

4. Rethink global ways of working. This critical step moves teams beyond the obligatory, if not forced, cross-functional and organizational alignment to a new model promoting institutionalized global ownership. This includes a globally organized mandate and the formation of distributed teams with global coverage. The goal is to maximize the contribution of global team members. GBS leaders can play a key role in fostering global functional ownership that enhances the contributions of these global teams.

5. Build in scale and resilience. The optimal setup for a “Beyond GBS” approach is a platform-based operating and technology model that provides agility, flexibility, and a healthy redundancy of globalized and localized services along a multicapability hub infrastructure that leverages external partners. The three key components of this model are a customer-centric interface, an agile (and digital) “center of competence,” and a global network of shared delivery platforms managed by the GBS team and vendors as needed. This setup ensures the company is globally resilient even as it scales—and enables the company to continuously rebalance workloads based on the geopolitical climate.

In the “Beyond GBS” model, vibrant service hubs are built around a globally consistent, modular approach that enables new “plug-and-play” services. This approach also allows for the collocation of noncore GBS functions at hubs to leverage GBS’s infrastructure costs and capabilities in the broader organizational ecosystem.

The main objective, of course, is to attract and retain the best talent while operating at the lowest costs. In addition, building out core process standards atop a digital and data backbone based on the latest tech solutions will create even more value. Leading these efforts are GBS’s global process owners, who will shape service operations globally and lead process optimization and digitization initiatives.

The evolution of the traditional GBS function into a more strategic business unit creates vast new opportunities for companies. By expanding beyond its historic back-office role, GBS teams can provide real value and drive impact rather than maintaining rigid structures and services. Solutions will become innovative and highly customized. And most important, “Beyond GBS” functions operate as business-like entities—actively managed by leading talent and measured against clear outcomes.