The pros and cons of Global Business Services in an uncertain world

Companies face challenges and opportunities that require constant adaptation. As organisations seek greater efficiency, agility, and cost management, the Global Business Services (GBS) model has become a popular solution. Unlike traditional shared services, GBS integrates multiple support functions (such as finance, HR, IT, and procurement) under one roof, operating with a unified governance structure to streamline services globally. While GBS offers a compelling path to resilience, it is not without challenges, especially in an environment of economic volatility, regulatory shifts, and changing workforce dynamics.

Through my peer network in the last 6 months I have spoken to well over 50 GBS professionals to get their take on the pros and cons of adopting a GBS model, examining the macro trends that are shaping its future using real-world examples of companies navigating their own GBS journeys.  From these discussions there are some definite themes that I believe will shape the future for GBS moving forward:

Global Business Services - the pros . . .

Cost Efficiency and Economies of Scale

GBS enables companies to consolidate functions across geographies, achieving economies of scale that lower operational costs. By centralising functions, businesses can leverage lower-cost locations, streamline processes, and reduce redundancy.  This hasn’t changed over the last 20 years.  It remains a hard fact – and from my discussions it is a key contributing factor to companies embarking on the GBS journey.  

One of the best examples in this space is Unilever.  They implemented GBS to consolidate finance, HR, and IT operations across multiple regions. By centralising procurement and leveraging automation, Unilever saved over €1 billion in operational costs over a decade, allowing for reinvestment in innovation and sustainability initiatives.

No surprises so far, right?.  Shock horror, cost reduction is still a huge driver for GBS. 

Process Standardisation and Quality Improvement

We also know that with a centralised structure, GBS allows for consistent processes and quality standards across the organisation. This reduces errors and improves overall efficiency, which is crucial for compliance and customer satisfaction.  Again, no surprises here.

 For example, PepsiCo began its Global Business Services (GBS) journey in 2011 and adopted GBS to bring standardisation across its global finance and HR functions. The GBS model enabled PepsiCo to harmonise payroll and invoicing systems, leading to a 20% reduction in processing errors and faster service delivery to internal stakeholders.  Over the following years, PepsiCo has expanded its GBS model, incorporating more sophisticated automation and analytics capabilities to drive further efficiencies and standardize processes globally.

This implementation allowed PepsiCo to consolidate operations across various regions, resulting in reduced operational costs and a more unified approach to service delivery across its international markets.

So far, no surprises.  In highly competitive global markets, striving for operational excellence is an absolute given.  GBS can be the driving force and positive energy for operational excellence initiatives.

Flexibility and Scalability

GBS offers a modular approach, where companies can quickly scale services up or down depending on business needs. This is particularly advantageous for companies with fluctuating demands or in growth sectors where agility is essential.

In 1999, Procter & Gamble began implementing its Global Business Services (GBS) model.  P&G was one of the pioneers of the GBS concept, aiming to streamline and centralise back-office functions such as finance, HR, IT, and customer service on a global scale. This move was part of a larger strategy to drive efficiency and focus on core business areas while reducing costs through shared services and standardised processes.

Over the years, P&G’s GBS model has evolved to incorporate new technologies and automation, including the use of data analytics, robotic process automation (RPA), and artificial intelligence (AI), allowing it to continually improve operational efficiencies and service quality.

Advanced Technology Integration

By adopting GBS, companies can create centres of excellence focused on emerging technologies such as robotic process automation (RPA), artificial intelligence (AI), and data analytics. These technologies drive efficiencies, enable real-time reporting, and support predictive decision-making.

 In 2014 Siemens implemented GBS in part to support its digital transformation. With a centralised approach, Siemens deployed AI-powered analytics across its procurement and supply chain functions, resulting in more accurate demand forecasts and improved supplier relationships. The move was part of a broader initiative to streamline Siemens’ internal services and improve operational efficiency across its diverse business sectors. Siemens GBS consolidated several support functions, including finance, human resources, supply chain management, and customer service, under a single global service unit. This centralisation aimed to reduce costs, enhance service quality, and allow Siemens’ core business units to focus on innovation and customer-facing activities.

In recent years, Siemens has continued to expand and innovate within its GBS model by integrating advanced technologies, such as automation and AI, to further improve service delivery and responsiveness across its global operations.

Global Business Services - the cons . . .

Change Management

Moving to a GBS model requires significant organisational change, which can meet resistance from employees and leadership who fear loss of control over specific functions. Successful implementation requires not only time and resources but also substantial change management efforts.

Nestlé initially faced challenges when consolidating its HR services under GBS. Regional offices resisted the loss of localised control, which delayed implementation and resulted in friction between corporate and local teams. Nestlé addressed this by embedding change champions across its regions, gradually easing the transition.

Operational Risk

GBS operations in centralised or offshore locations expose companies to geopolitical, economic, and environmental risks. Global disruptions, such as the COVID-19 pandemic, highlighted the vulnerabilities of heavily centralised service models and forced many companies to reassess their reliance on a few key locations.

General Electric faced service continuity issues during the pandemic as travel restrictions impacted their GBS centres in India. This experience highlighted the need for distributed, resilient service hubs to minimise disruption.

Local Knowledge

By centralising services, GBS can sometimes sacrifice the local knowledge held by local teams. This can lead to inefficiencies in meeting region-specific regulatory requirements or customer preferences, impacting service quality and compliance.

HSBC centralised its back-office functions but struggled to align these services with diverse regulatory standards across countries. Their GBS model had to be adjusted with local compliance liaisons to bridge the gap, which partially eroded cost savings.

Initial Investment

GBS requires significant upfront investment in technology, process reengineering, and relocation of services. This can make the model financially challenging, particularly for mid-sized companies. Additionally, ROI may not materialise as quickly as anticipated, especially if the transition process encounters unforeseen setbacks.

 IBM undertook a comprehensive GBS restructuring to consolidate services globally. While the strategy eventually yielded benefits, IBM experienced several years of high transition costs before seeing significant ROI, making the initial years financially strenuous.

Macro Trends . . .

In addition to the hopes and aspirations of organisations that are looking to GBS to drive a competitive advantage, from my discussions with GBS peers, there are also a number of important macroeconomic trends that are working for and against the GBS model:

Trends working for GBS

1. Digital transformation

As companies expand internationally, the need for consistent processes and systems across regions has intensified. GBS can support this by creating a unified structure that facilitates global standards, making it easier to achieve operational alignment.

2. Automation and artificial Intelligence

The rise of RPA and AI has accelerated the appeal of GBS, allowing companies to centralise repetitive, low-value tasks and apply intelligent automation. By automating back-office functions, companies can improve efficiency while enabling employees to focus on high-value tasks.

3. Cost pressures

In uncertain economic times, companies are under pressure to reduce operational costs. GBS offers a model that can streamline operations and reduce overhead, making it a valuable tool for cost-conscious organisations.

Trends working against GBS

Geopolitical volatility

Increasing geopolitical tensions and economic uncertainties challenge the global GBS model. As companies face tariffs, sanctions, and regulatory shifts, maintaining a centralised GBS model can become increasingly complex and costly.

Localisation and Agile Operations

With a growing emphasis on regional autonomy, some companies are pivoting toward more localised or distributed service models to stay agile and responsive to market changes. This approach may counter the centralisation efforts that are core to GBS.

Rising labour costs in established hubs

Countries that were traditionally attractive for GBS (e.g. India, Philippines) are experiencing rising labour and infrastructure costs. This erodes the cost benefits that originally attracted companies to these locations, prompting some to explore alternative or hybrid models.

What does the future hold for GBS?

From my recent discussions with industry peers, the GBS model continues to offer a robust framework for companies seeking efficiency, scalability, and innovation in global service delivery. However, in an uncertain world, GBS also brings its share of challenges that need to be carefully managed. The decision to implement GBS must be tailored to each company’s unique needs, considering factors like cost pressures, market volatility, and the capacity for change management. 

Real-life examples from leading companies illustrate the potential benefits and risks of GBS. While Unilever, PepsiCo, and P&G highlight how GBS can create operational efficiencies and top-line growth, companies like Nestlé and GE reveal the critical challenges, from local resistance to resilience gaps in centralised models.

Ultimately, the success of GBS in the future will depend on a company's ability to balance centralisation with agility, leverage technology strategically, and build resilient operations capable of adapting to global disruptions. For businesses that navigate these challenges well, GBS offers a pathway to both cost savings and competitive advantage in an increasingly interconnected world.