Close calls...Many organisations underestimate the challenges and effort needed to successfully establish and run GBS operations.
Despite ranked third out of fifty-five countries by AT Kearney in the Global Services Location Index and having a 15% expected growth rate over the next five years - the allure of the Global Business Services (GBS) industry in Malaysia is distinctly more pronounced with employers than employees. The GBS value proposition to an employer is easily articulated and typically falls within the realms of efficiency and effectiveness of cost and processes. The same cannot be said when the population tries to grasp the value of being associated with a GBS entity.
Evolution
Typically starting out as a centralised Service Centre, then expanding into a Shared Service Centre (SSC) before evolving into a Business Service Centre – GBS offerings typically range from simple transactional, processing functions to more complex reporting, analytics and decision support offerings for local, regional and global organisations. In Malaysia there are approximately 500 companies that have set up GBS, creating close to 90,000 jobs. Most of the jobs span the functions of Finance, HR, IT, and Procurement.
As the global economy continues to face disruptions and gets battered from a multitude of challenges, the GBS industry is poised to flourish. Growth is also further supplemented by an array of incentives that is typically provided by governmental agencies to superficially induce attractiveness. The challenge for organisations now is to quickly close the actual and perceived gaps in processes, perception and people that hinder a smooth trajectory growth.
“In Malaysia, there are approximately 500 companies that have set up GBS centres, creating close to 90,000 jobs.”
Challenges
Hailed as the silver bullet to address common organisational ailments of lacklustre efficiencies – many organisations haphazardly set up a GBS in hope of getting back into the black. Many underestimate the challenges and effort needed to successfully establish and run GBS operations. The typical approach of treating a GBS as a sub-division of an existing company with people, processes and tools being boxed and ported over are common reasons why many abort their attempts within a few years. There needs to be an understanding that managing and motivating the GBS workforce is markedly unique. Processes and technology platforms cannot be copied exactly from parent companies. In essence, from the get-go, many do not have the right talent to organise and manage the intricacies of GBS operations.
There is also an emerging problem of employability that brings new challenges around talent attraction and retention. The contemporary workforce has been culturally conditioned to look at career development from a technical point of view. For example, if you are an accountant, you work to be a better accountant and from there you move up the ranks with the ultimate goal of leading a group of accountants. However, due to the nature of how work is typically set up in a GBS, progression might not be as linear and timely as expected. Using the same example, the value proposition of a GBS would be career growth that goes beyond the accounting career development path. Many are reluctant to take this leap of faith as it is new, uncomfortable and unchartered.
Successful GBS operate differently with jobs that are unique and require a mix and match of different non-traditional competencies - this sadly leads to role fatigue, stress and monotony. The average attrition rate of 30% that plagues with GBS industry in Malaysia, reflects this.
Many potential entrants to the industry hesitate to do so because of the perception that joining a GBS equates to constant backend processes and functions. This jaded perception is caused primarily by the diversity of scope and uniqueness of jobs that typical GBS performs in Malaysia. This is compounded by a low awareness to the industry to start with, unlike in the Philippines and Indonesia, where the awareness of the industry is distinctly higher. The issue of perception and awareness is partly negated if the business who wishes to establish a GBS is an already established brand. But even with that proposition, the business succeeds in the short term and the industry standing remains dull.
In the current competitive landscape, GBS organisations have to engage in “battles for talent” with each other to convince why a prospective employee should work for them. To compound to this, GBS as an industry also needs to compete with other more traditional industries for talent.
Time is ticking...Most organisations are pushed to implement the GBS solution, and with this push there is typically a certain level of urgency.
Food For ThoughtA plausible start to work out a solution would be to have a tripartite approach of government, industry and academia working together on a coherent strategy to create an environment that GBS as an industry can thrive. Currently, there are pockets of efforts within the academia fraternity, primarily in a few optional electives that students can take to better their understanding of the industry – one such effort is by University Kebangsaan Malaysia’s course on GBS. Malaysian government’s show of support comes in the form of involvement from agencies such as Talent Corporation and Malaysia Digital Economy Corporation (MDEC). There is much work to be done to bolster this proactive tripartite model of collaboration.
The unfortunate truth is that most organisations are pushed to implement the GBS solution, and with this push there is typically a certain level of urgency. This has led to an increased number of organisations turning to consultancy firms to help them with their implementation efforts. This is understandably so, such firms offer a one stop solution, have the prerequisite experience and are usually an easy target when plans do not go as planned! A Google search on “Shared Services Practice Leader” will lead you a vibrant page of consultancy firms looking for new talent to feed this demand.
Tactically this is a sound move, however it is indicative of a myopic mindset that creates an unhealthy over-reliance on external parties. In implementing a GBS strategy, organisations need to strike a balance between internal and external talent. There also needs to be a realisation that there is merit to take the necessary time to build a solid talent bench right from the start. This will ensure sustainability and eventually a stronger organisational culture.
There is tremendous value in benchmarking with successful GBS organisations. There is no lack of GBS success stories – organisations like Siemens, P&G, BP and DHL are constantly on the Shared Services and Outsourcing Network’s (SSON) most admired list. Such best of class organisations, who have progressed further along the maturity scale are apt benchmarking targets. Success leaves both implicit and explicit clues, and given the right inquiry and time, a wealth of information can be gleaned.
Organisations need to begin with the end in mind. Starting small and scaling fast are fantastic strategies, but such efforts will be in folly if there is no end in mind in the scaling. Best of class GBS organisations define, own, source and operate their global process and service deliveries. Keeping this in mind – organisations need to ensure that they have the right talent to fuel the strategy.
Lastly, a clear and distinct people strategy needs to be present. Best of class GBS organisations invest almost double the resources to the engagement and development of their people and talents.
Fortune Favours Those That Constantly Improve
Despite the challenges faced, GBS will continue to be a plausible and critical tool that organisations will call upon. The concept is sound and the business case speaks for itself - the demand for timely information, high volume work, and scalability leads to the longevity of the GBS. However, the collective body of knowledge and experience within the domain is new and limited. The very nature of GBS calls on the constant push for continuous improvement. This hail should not be only for service delivery but the very core of GBS should be subjected to the same ideals. Only through continuous improvement of perception, people and processes will the real value of GBS be unlocked.
Foong Heng Huo has been involved in end-to-end talent functions, where he managed complete cycles of recruitment, on-boarding, development and engagement of employees. Over the past decade, he has been working with multinational organisations in the GBS industry. He holds a degree in Business Computing, has postgraduate credentials in Management and Information Technology and is a Certified member of the Australian Human Resources Institute.
