• Sesank Kandalum, Senior Manager |

COVID-19 has created new challenges and opportunities for GBS organisations. Above all, it has given a clarion call for accelerating Virtual Service Delivery.

We are in a period of massive change for GBS. New digital infrastructures (cloud-enabled enterprise systems, evolving intelligent automation) and a shift in demand from cost savings to more value delivery have been disrupting the Global Business Services landscape . Leading GBS organisations have responded by re-skilling their teams: offloading transactions to robots and replacing it with functional- and business expertise based work. Despite these trends, mainly for historical reasons, the GBS delivery model has mostly remained wedded to centralised physical ‘mega centres’ in low-cost offshore locations. However, the current crisis has demonstrated that collaborative technology has developed to the point where physical co-location is no longer a necessity. GBS leaders are also wanting to move away from a single super-centre and distribute their risk. The ‘perfect storm’ has arrived for the mega centre: GBS Leadership teams must now challenge these legacy models and take advantage of digital investments to forge a path to Virtual Service Delivery.

What is Virtual Service Delivery

Virtual Service Delivery (VSD) has both components of the traditional model - Placement (what work gets done, where and by whom) and Management (Governance, Interaction models, SLAs and KPIs), but delivers outcomes through an optimum combination of geographically distributed workforce and a physical centre for tasks in the lower end of value chain that cannot be eliminated or automated. Imagine a model where the team leader of your payables process works from home somewhere in Europe, your processing analysts are scattered across Asia and third parties scan invoices that are not yet delivered digitally in either their facilities or yours ‘in market’.

The case for Virtual Service Delivery

Apart from ensuring continuity of services in the event of a crisis, there are significant benefits:

  1. Talent Pool. GBS organisations are constrained for talent to the city in which the mega centre is located. With VSD, the world truly is their oyster. Along with access to international talent pool at the higher end of the job families, comes a greater benefit of flexibility at the lower end from part time or on demand hiring. Reduced fixed pay roll costs is natural. It provides new opportunities for unemployed and reduces potential for discrimination. Imagine a flexible hire, processing invoices in hours between school runs… Win-win! This will of course require a separate Work from Home policy, and an outcome-based measurement of performance and productivity
  2. Office Costs. Running a mega centre can cost a company around £1,000 per FTE annually for the facilities alone, and requires a 10-20 year investment mindset. There are significant savings to be banked for organisations by revisiting what space they need. A number of leading GBS and BPO organisations are considering a 30%-70% drop in their future space requirements. Associated costs (to a large remote workforce) will include reduced expenses on staff transport, food, office supplies, etc. There will be some offsets from supporting the remote working infrastructure for employees , but still a net savings possible.
  3. Carbon footprint. Lock-down has triggered a dramatic fall of 17% in the daily global carbon emissions in early April. Large monolithic office spaces were significant contributors to this, especially when they operate out of developing countries where reliance on fossil fuels is significantly higher to run and maintain them. Organisations can now sustain their own footprint reduction by releasing surplus space from their physical delivery centres
  4. Productivity and Employee engagement. There is enough data around from the last 3 months to dispel the myth that working from home is unproductive – and existing data supports a strong correlation between remote working and improved employee engagement. The new working day built around personal flexibility will reduce unscheduled absences and eventual attrition. There is a certain virtue to be made from remote and virtual working.

Maturity considerations for moving to VSD

  1. Digital maturity of processes. Digitization is the backbone that gives business services the unique opportunity to redirect human capital towards more value-add work, expand their scope and provide new offerings. VSD is much easier with processes that have transitioned human intervention to supervision. Adopting analytics, big data and other emerging technologies is imperative to the demands around value. However, only 25% of the shared services organisations seem to have started the digital transformation.
  2. Process Ownership evolution. A governance framework with ownership for process outcomes that also acts as a bridge towards the functional stakeholders is critical with a move to virtual service delivery. An organisation with established Global or Regional Process Owners will find moving to virtual delivery easier than the one without. Driving efficiency and effectiveness continues from a physical to a virtual world when there is an organisational structure behind.
  3. Level of Enterprise Service Management (ESM). GBS centres are the backbones of enterprise resilience and continuity. Many centres have struggled to support remote working as legacy systems are incapable of meeting the demands of the new normal. Early adopters of ESM however have leveraged it to transition to virtual ways of working with lesser tension than those who have not. Now is the time to start deploying a scalable service management solution.
  4. Culture quotient of the workplace. Remote and virtual work environments need organisations to revisit their values in a different light and even re-write in some instances. An organisation that rewards values of trust is likely to be much healthier in adopting VSD. Traditional cultures where supervisors fear loss of control and abuse of home working are unlikely to be able to transition to VSD smoothly. That apart, in a world where there is no cafeteria or water cooler discussions for informal bonding and war / project rooms for creativity, a company with collaboration as part of its core values is less likely to struggle in finding ways to bring the power of working as a team together.
  5. People development models. Some organisations may not have yet inspired confidence in their people development programmes.Employees may still cite career fears as a reason not to work remotely. Successful organisations overcome this issue with outcome-based measurement systems, productivity versus presenteeism attitudes. Teleworkers who maintain regular communications (telephone, email, instant chat, even the occasional face-to-face meeting) with traditional co-workers and managers find career impact is not an issue.

The mega centres may not have an imminent death, but they will start inching towards a much smaller footprint in future: GBS organisations considering expansion or a new greenfield site need to take into account the lessons in 2020. The task of transitioning to VSD may be challenging, but many of us have experienced the Proof of Concept and the direction of travel certain.

The priority must be to enable virtual service delivery and once stabilised, to make it strategic and effective. The journey can begin with GBS leaders revisiting their operating model assumptions and maturity with the future in their minds. Start small and test the waters Ask is there a need for a smaller centre? Nevertheless, Commencing or accelerating digital and service management capabilities will be key foundations while a strong culture and people development models will be accelerators in this journey.