In brief:
- The traditional shared services model based on efficiency and cost-effectiveness is transforming.
- Next-generation shared services organizations are business partners that improve customer experiences, accelerate digital transformation, and deliver more value-added activities.
- From surging outsourcing demand to GenAI to new operating models, discover key trends shared services leaders need to know to navigate this critical juncture effectively.
The global shared services industry stands at the forefront of a new era. Amid advancing technology, labor shortages, economic uncertainty, rising geopolitical tensions, and new business needs, the traditional focus on transactional efficiency and cost-effectiveness is transforming.
And as the potential for greater service, digital capabilities, cost efficiency, and performance becomes clear, shared services leaders are defining a new future that embraces new capabilities and reimagines outdated operating models.
But identifying the right opportunities isn’t easy – and challenges are inevitable as roadmaps to a new era are drawn.
Here’s everything you need to know about key trends shaping the Global Business Services (GBS) industry in 2024, leveraging findings from the latest State of the Shared Services & Outsourcing Industry Global Market Report by the Shared Services & Outsourcing Network (SSON). From new operating models to surging nearshore demand to the real impact of generative AI, we help you understand the seismic changes that are shaking the sector so you can emerge better positioned for sustainable success on the other side.
1. Cost reduction remains the #1 shared services driver, followed by service excellence
In a constantly evolving environment, establishing an agile, efficient, cost-effective back office is more important than ever. And as enterprises move to optimize productivity, operations, and overhead, the GBS industry is well-positioned to play an essential role – expanding steadily year-over-year to reach at least 8,000 captive centers and more than 3,000 outsourced centers globally, according to SSON data.
But at the same time, a recent Boston Consulting Group (BCG) study found that only 41% of companies believe shared services create value. “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,” the BCG report asserts. “Marginal adjustments to GBS strategy are no longer sufficient.”
“Cost and efficiency” remain the #1 shared services driver (88%) amid persistent macroeconomic headwinds, according to the SSON report. But delivering “service excellence” (71%) has also become vital as organizations realize that centralization doesn’t automatically equate to quality service delivery or a better customer experience.
The number of shared services leaders citing “effectiveness” and “compliance” as key organizational targets increased dramatically over 2022 as well, reaching 66% and 56% respectively.
Source for all charts: SSON 2024 State of the Shared Services & Outsourcing Industry Global Market Report
Enterprises are increasingly looking to shared services organizations (SSOs) to function as true business partners – boosting efficiency, agility, and performance by creating a customer-centric approach, optimizing operations, automating processes, and providing real-time strategic insights that drive ongoing success.
When asked whether they are shifting their focus from transactional back office work toward core business support, 49% of GBS leaders said they are already moving in this direction, while 29% are thinking about it, and only 22% are not considering this in their agenda, the SSON report states.
2. Global Business Services is the preferred business model
Over the past five years, an increasing majority of shared services operators have shifted up the maturity curve toward global business services models. GBS stands as the operating model of choice for 84% of organizations, with 68% functioning as GBS centers and another 16% planning to adopt GBS operations soon, according to SSON’s report.
With centralized leadership and a global scope, GBS provides a more comprehensive solution for managing business operations – supporting more functions, performing higher-value services, and serving a greater geography than traditional shared service centers (SSCs).
As a result, enterprises reap benefits beyond standardization and cost reduction – leveraging cross-functional data, capabilities, best practices, and knowledge to improve customer experience, accelerate digital transformation, drive continuous improvement, and contribute to core value.
Global business services trends make it easier to build a future-proof workforce as well, drawing talent from diverse business units and regions.
They also enable shared services operators to strengthen ownership of end-to-end outcomes by introducing Global Process Owners (GPOs), providing the visibility and influence to tear down internal silos and drive process improvements. For instance, nearly half of shared services organizations are using GPOs to manage core end-to-end finance processes more effectively, the SSON report states.
3. Scope expansion tops agendas
Considered the shared services big three, Finance, HR, and IT represent the biggest chunk of activity – performed across 91%, 62%, and 57% of SSOs respectively (Deloitte Global Shared Services and Outsourcing Survey 2023). But multi-functional capabilities are expanding rapidly, with 85% of GBS planning to expand their scope of work as they look to generate greater value, according to the SSON report.
A whopping 26 processes are now in scope for at least 10% of enterprises, SSON’s report states. And while the highest growth comes from shared services staples like purchase-to-pay and record-to-report, there is also continued expansion in newer, value-add services like knowledge services and talent and risk management.
U.S. labor shortages and greater comfort levels with remote work are also prompting service demand to shift from well-understood, standardized processes to more advanced, core functions. For example, 67% of enterprises rely on their SSOs for financial planning & analysis (FP&A), Deloitte reports.
The shift toward global capability teams is further paving the way for the addition of non-traditional, interaction-heavy, center-of-expertise functions like engineering and R&D. Combined, these new initiatives underscore the model’s shift from labor arbitrage-focused back office to strategic business partner.
The chart below shows the top shared services functions performed by SSON survey respondents, with the complete list available in the SSON report:
4. Number of GBS locations increases amid search for best-available talent
SSON’s research also confirms an active location selection market and a trend toward more locations in the future.
Forty-five percent of shared services organizations have grown to four or more locations, while some leading GBS are running seven or more (18%). The number of organizations with just one to three centers decreased from 63% in 2021 to 55% in 2023.
Labor challenges and cost pressures are key reasons prompting organizations to refine their shared services footprint, moving toward more global locations and smaller staffs. Most often, these operating models involve smaller “spokes” radiating out from centralized hubs – maximizing access to the best talent based on the strengths and specialties of different regions and enabling tailored offerings for specific markets that complement standardized global processes.
This approach also helps distribute risk across various teams and keeps organizations globally resilient, allowing GBS leaders to rebalance workloads as needed based on geopolitical climate and other market conditions.
This trend toward more shared services locations, even within the same time zone, coincides with what we are seeing with our clients at Auxis. For example, many organizations that used to support the Americas from one SSC in Latin America (e.g., in Costa Rica), are now opening hubs in multiple countries within the region (e.g., Mexico, Colombia) to access a lower-cost market or tap into a larger pool of talent or specialized skills.
We also believe the broad acceptance of remote work after COVID made the multi-location approach even more seamless and less disruptive, since many GBS were already working in a hybrid or fully remote business environment.
5. Outsourcing demand surges amid new priorities
A steady 50% of shared services organizations rely on outsourcing to meet their targets every year. But in 2024, 41% said they plan to increase their outsourcing activity – a significant jump from 2022, when only 28% aimed to outsource more, according to the SSON report.
So, what’s driving surging demand?
In today’s tight labor markets, shared services leaders cite access to talent and skills that aren’t available in-house as a key outsourcing driver. Cost has ranked as the #1 factor every year except 2021, when pandemic-driven labor shortages made access to talent the top priority.
But what’s noteworthy this year is the sudden appearance of experience among the top three outsourcing drivers, bumping access to technology.
Customer experience is taking center stage as a key shared services objective and determining factor for success. And shared services leaders view reputable outsourcing partners as a quality solution for accessing the people, tools, and expertise, to streamline processes and drive better experiences for their customers.
6. SSOs leverage nearshore advantages
To increase the sustainability of their organizations, shared services operations are shifting more work to locations with deeper, more cost-effective talent pools, states Deloitte’s report.
But not all locations are created equal. And as executives rethink the challenges of offloading functions to the other end of the world, nearshore locations in Latin America like Costa Rica, Colombia, and Mexico are increasingly leveraged as strategic destinations for North American enterprises.
Locating captive or outsourced shared services within the same region offers real-time collaboration and language and cultural compatibility that enable your operation to function as a true extension of your team.
As new service demand requires higher-level skillsets, the bottom-of-the-barrel pricing and overnight shifts needed to align with U.S. business hours in Asian-based offshore locations like India and the Philippines leaves many enterprises struggling to attract top-tier resources who can support judgment-intensive activities. Top nearshore markets also solve labor shortages with access to higher-level skills that can be expensive and hard-to-find in other locations, like accounting and intelligent automation.
Geopolitical instability and serious infrastructure issues in India spotlighted by the pandemic further have enterprises looking to LATAM to diversify their locations, mitigating risk by augmenting existing Asian-based operations.
Costa Rica and Mexico currently rank among the 10 most preferred shared services destinations worldwide, according to Deloitte’s survey. Ranked among the top three countries in Latin America on the 2023 Global Talent Competitiveness Index, Costa Rica combines one of the region’s highest English proficiencies with the most mature shared services market in LATAM.
Colombia ranks #1 in LATAM for skilled talent availability on the 2023 IMD World Talent Ranking, offering multiple locations that can support scalable operations. It is also the most financially attractive of LATAM’s top markets, according to the 2023 Kearney Global Services Location Index.
7. Average GBS headcount is reducing
The average staff size is decreasing across the GBS industry, the SSON report states. Nearly half of SSOs (47%) maintain less than 500 FTEs across all their locations (including both captive and outsourcing), and two-thirds fall below 1,000 FTEs.
One hypothesis for this lower headcount: the trend toward “doing more with less” through successful productivity improvement programs including automation and standardization.
At Auxis, we believe this reduction also correlates with the increased number of mid-market companies that have established SSOs over the last few years. While the pioneers of GBS were very large enterprises, now organizations of all sizes are harnessing the power of shared services – even with headcounts of less than 100 FTEs.
Mid-market companies without the scale or global presence to tap into the right talent locations are opting for outsourcing as their preferred model, leveraging the expertise and footprint of a quality business process outsourcing (BPO) partner in those markets. This “hybrid” approach to shared services is another key trend that has been emerging in recent years.
8. Automation tops digital to-do lists while GenAI lags
Digital innovation is transforming shared services organizations, with nearly 83% acting as a core component of their company’s digital agenda, according to the SSON report. In 2024, shared services leaders are hyper-focused on cementing a digital and data backbone based on the latest analytics, automation, artificial intelligence, and cloud solutions to drive the highest levels of efficiency, agility, visibility, and performance.
About a decade after robotic process automation (RPA) first appeared in SSCs, automation remains the biggest digital enabler. And it’s still high on 2024 “to-do” lists as advancing technology like intelligent document processing, process mining, self-service portals, and other intelligent automation solutions offer new potential to help SSOs move faster, increase accuracy, enhance customer experiences, and lower costs.
But while most shared services leaders report significant benefits from automation, 34% saw savings fall below 10%, according to Deloitte’s report. In those cases, siloed automations and process and technical complexity ranked as the biggest barriers to success.
Another 40% pointed to talent shortages as their top challenge, up from 23% in 2022, Deloitte reports. As a result, GBS are increasingly turning to quality automation partners to support their digital transformation journeys – providing the talent and expertise to assess the organization’s digital maturity, identify the right use cases to achieve business goals, roadmap priorities, and implement fast, sustainable solutions.
The chart below reveals the most successful use cases for intelligent automation deployment at SSOs to date, according to the SSON report:
Despite constant chatter about generative AI (GenAI)’s ability to revolutionize the shared services industry, AI-driven automation is a much lower priority this year. While interest in GenAI is high, shared services leaders are struggling to cut through the hype to understand real-world applications and potential challenges like cybersecurity.
Only 10% of shared services organizations are currently deploying several GenAI use cases and 52% remain in the evaluation phase, according to the SSON report. Early use cases are largely focused on analytics & insights generation, improved customer experience, and classifying and structuring unstructured data.
9. Analytics holds the key to higher-value services
Mastering data and advanced analytical solutions is key to creating new, higher-value shared services offerings. With the right capabilities, SSOs can quickly harvest actionable insights from the immense amount of enterprise data they handle – replacing gut-based actions with clear-eyed, agile decision-making that drives business success in today’s fast-moving environments.
Not surprisingly, shared services leaders rank analytics tools as their biggest tech priority in 2024. Only 6% of shared services organizations have not implemented a reporting & analytics solution, SSON reports.
But while the majority (39%) remain at the lowest maturity level with historic reporting, the ability to deliver advanced, value-adding analytics is on the upswing. Thirty-two percent of SSOs can provide interpretative results, 18% deliver predictive insights, and 6% have mastered prescriptive analytics that can help enterprises identify the best path forward, according to the SSON report.
Conventional areas that served as early proofs of concepts like transactional finance are reaping the biggest benefits. Other functions are also experiencing increased success, especially “know your customer” areas like customer engagement.
But there are still many opportunities to mine. For example, data-driven insights offer great potential to support talent identification, management, and retention efforts. But most organizations still lack the right systems to generate significant wins.
As a result, many operators are turning to experienced third-party providers to accelerate their analytics journey, helping them get their data house in order and manage data initiatives start to finish.
10. In-demand skills shift while labor challenges force new recruiting strategies
Sixty percent of shared services rank talent skills and capabilities as the most critical factor to optimizing process performance, even above technology (56%), according to the SSON report. In the end, tools and solutions will not make an impact unless employees can embrace the change and have the skills to leverage the technology.
Problem-solving ranks as the most in-demand skill for SSOs in 2024, followed by process design/continuous improvement (#2) and data analytics skills (#3).
As enterprises shift judgment-intensive activities to shared services teams, critical-thinking skills are integral to successful delivery. “The more capable the GBS teams, as opposed to purely transactional, the more shared services move up the value chain,” the SSON report states.
SSON also highlights how “empathy” has increasingly become an in-demand skillset over the past few years. The ability to empathize with customers forms the foundation of good service and it’s encouraging to see operators embrace this skill at a time when diversity, equity, and inclusion command the spotlight.
However, finding and retaining the right skills at the right cost often remains out of reach in today’s red-hot labor market. To stand out, 62% of shared services leaders are focused on revising their employee value proposition to appeal to today’s workforce – emphasizing key advantages like remote work opportunities, organizational culture, career path, and diversity/inclusion.
Shared services organizations are also capitalizing on their company brand (58%) to attract potential recruits and nearly half are expanding their talent acquisition channels to include digital avenues like social media – meeting Millennials and Gen Z where they live, according to the SSON report.
Nearly half of SSOs are further relaxing location requirements in the challenging labor environment, recruiting on a regional or even global scale, SSON reports. Notably, increasing compensation and benefits is not a top three business strategy as shared services leaders balance finding the best talent with operating at the lowest cost.
Looking ahead to next-gen GBS
Despite some recent buzz questioning its long-term sustainability, 94% of business leaders surveyed by SSON believe shared services works – and 70% believe its scope and impact will continue to increase.
But there is no doubt the model must evolve – and as GBS leaders define what next-gen shared services looks like, “efficiency” and “effectiveness” are the themes that weave through their top objectives this year.
Technology and talent remain the biggest drivers as operators look to combine the right people and the right skills with the right tools and solutions to reach their organization’s full potential. In 2024, half of shared services leaders are focused on the immense value-add of redefining their workforce with higher-level skills that capitalize on the impact of the human touch, states the SSON report.
Two-thirds aim to leverage technology that can drive their capabilities beyond simple process automation toward seamless execution and actionable insights.
And as talent and technology evolves, 37% of shared services leaders are focused on adapting their operating models to better support modern capabilities – embracing new locations, more functions, and outsourcing solutions that help them transition from siloed, transaction-processing units to strategic business partners.
Why Auxis: Choosing the best path to sustainable success
The traditional shared services model has reached a pivotal juncture as enterprises demand value beyond legacy contributions.
Efficiency and cost-effectiveness remain best practices. But global business services trends are also calling upon organizations to leverage the power of advanced technologies and modernized operating models to deliver higher-value insights, capabilities, and service delivery.
An exceptional shared services partner like Auxis is key to navigating your organization through the unique challenges and complexities of transformation. From turnkey outsourcing solutions to clear strategies for improving sub-optimal operations to robust digital transformation capabilities, Auxis delivers the people, processes, knowledge, and tools you need to confront the industry’s crossroads and determine the best path forward.
Want to learn more about shared services consulting and nearshore outsourcing solutions? Schedule a consultation with our shared services leaders today! Or, visit our resource center to learn more shared services trends, strategies, and success stories.
