Advanced expertise is the key to the future of Service Centers

What challenges do managers of GBS/SSC/BPO units face and in what direction will such centres develop? Interview with Radosław Jankie, Partner at KPMG, Head of the Shared Service Centers and Outsourcing Advisory Team.

Wiktor Doktór, Pro Progressio: How do the specificities of Global Business Services (GBS) Centers vary depending on their location in the world? Where in the world there is the most going on right now?

Radosław Jankie, KPMG: Governments and sector organizations in a number of countries are focusing on improving their competitive advantage with regards to business services functions, however, I still believe that India and Poland will continue to play a key role in their respective regions. This is basically due to high availability of talent and significant footprint of business services sector. I am not depreciating the position of other countries like the Philippines or Malaysia in Asia, and Hungary, Romania and Slovakia in CEE region, however, due to high surge in demand we can observe that availability of labor pool is getting even more important than cost criteria.

 Organizations are still looking for locations where talent pool is less expensive, however, the key challenge is the availability of the human capital. Furthermore, as more and more complex and judgement-driven processes are being migrated and centralized, it is not only the matter of availability of the human capital but rather availability of the highly-qualified workforce. For that reason India and Poland play the key role on the global GBS map. Both countries offer diversity of locations which fulfill the specific needs of different multinational organizations. And this is why these countries are usually considered as some of the top locations. For India those locations include Bangalore, Pune, Mumbai, Hyderabad, Chennai, while in Poland, apart from mature GBS locations such as Warsaw, Cracow, Gdańsk, Poznań, Wroclaw, Katowice, Łódź or Szczecin, there is a group of so-called second-tier locations lead by Lublin, Rzeszów, Opole, Radom and others.

I’m not stipulating that economic, political and social environment are not important factors as they are, nonetheless, the key takeaway from the numerous meetings I have with GBS representatives, including center heads and human resources directors, is that for most of them the number one challenge is human capital management and its availability. This can be guaranteed only by the countries listed above. This statement is also confirmed by what we have been observing on the global GBS market for some time and what I have already mentioned, i.e. the growing appetite of global organizations for further transformation and centralizations of services with a higher level of complexity. As the leader of the Shared Services & Outsourcing Advisory area at KPMG, I meet with my colleagues from countries such as the US, the United Kingdom, Germany or India, as well as our foreign clients, which are most often global organizations. When our discussion steers towards GBS site selection for more complex and advanced processes, then it usually comes down to countries which will ensure the security of operations from the perspective of the quantity and availability of qualified human capital.

Which processes delivered by centres are those to which companies pay the closest attention?

Two thirds of centres around the globe expands their service portfolio. There are a number of aspects that are particularly noteworthy that speak to that trend.

First of all, centres are adding those services to their service menu that don’t lean on clear zero-one rules and principles. In GBS centres we can see functions from a broad spectrum of areas such as customer service, supply chain, legal or marketing.

What is interesting is that they are not only services that were taken over from local units, but also those that were newly designed and implemented and were not previously present in the organisation. The reasons for creating new functions are wide-spread and abundant. They include – among others – constant evolution of processes, their digitalisation, access to new technologies, or market pressure, just as in the case of sustainability matters. Why are new processes placed in the GBS centres? On the one hand, they hold a lot of experience in the plug-and-play model and they exhibit the ability to quickly build new competencies. On the other, it is the GBS centres precisely that hold a humongous amount of data that constitute the input to those novel processes.

Increasingly more often mature GBS centres outgrow their deliver repetitive services and become a power engine for business transformation. To name just a few examples of such transformative capacities, there is automation, digitalisation of processes (not necessarily limited to only those placed in the centres), post-merger integration of ERP systems, or Lean projects. Traditional Finance and Accounting processes gain much of the attention as well. Sky-high benchmarks set by market leaders, translate into making optimisation of cash allocation or payment-on-time a high point on the agenda of GBS Heads and their superiors.

A topic which quite suddenly and unexpectedly appears on the map for many enterprises is cybersecurity. Companies which fell victim of cyberattacks and suffered substantial losses, attempt to develop competencies in this area. This may be the reason why organisations are considering processes carried out of GBS centres not only in terms of their effectiveness and costs but also their security. Customer data protection, malware attacks, payment extorsion are sensitive topics which are getting increasingly more attention.

Cybersecurity, process automation, self-service tool development and advanced data analytics contribute to the shift in recruitment trends in GBS centres – from specialists experienced in selected business processes only, to expanding to include also those who are knowledgeable in specific programming languages. We observe with great interest how frequent it is becoming that the “required skills” section of job advertisements for GBS centres expands to list knowledge of programming languages along the usual fluency in foreign languages.

Which competencies are currently the most sought after? Does the GBS industry suffer from personnel shortages? If so, in which areas?

It seems that the dynamics of the SSC/BPO industry is not only not slowing down but is accelerating even more. New centres are founded on a daily basis and they are looking for qualified employees which will secure business continuity. In GBS centres there is an all -too-frequent expectation that since there are so many players on the market, it shouldn’t be an issue to find talent for the centre and launch processes in a short period of time. For this reason the salary pressure increases and there are shortages of suitable candidates for certain positions.

As a result of high level of automation, standardisation and quality of technological solutions, the more transactional processes are fairly easy to fill and specialists are replaceable. This is the reason why – despite a large number of offers in the “classic” centralization areas, i.e. finance and accounting processes: Accounts Payable, Accounts Receivable and General Ledger – companies manage to find candidates relatively fast. A far more difficult task is recruiting for more knowledge-based roles requiring making decisions. Thus, in FP&A area, for processes which are becoming the first choice when it comes to expansion of finance department portfolio, such as Controlling, Financial Planning and Analysis or Treasury, recruitment requires a more daunting search for specialists. Branching out from the finance area, centres are increasingly more often deciding to expand their offer with Procurement, Supply Chain, Tax or Legal processes

Finding an experienced employee who would understand the specifics of a process delivered for various geographical regions is often a real challenge, even more so that the market salaries significantly surpass the average salaries in the centres. Additionally, increased centralisation activities of banks simultaneously increases the demand on professionals with specialised experience. For this reason, centres are frequently unable to meet the work supply which local units would gladly offer but need to “wait their turn” to join the portfolio of serviced customers or processes.

With unwavering interest centres are looking for specialists who are not only experienced in processes out of centres’ portfolio but also know foreign languages. It is even more significant due to the fact that Asian centres are often unable to provide linguistic support at an adequate level, which causes for the companies operating in European languages to look for support on the Old Continent. The demand for people speaking German or French seems to be endless.

There is a lot of talk of robotization, also with regard to processes at global business services centres. How does it actually look? Are we still at the stage of fantasizing about it or are we witnessing actual implementation of robots at work and drawing benefits from the implementation?

Robotization in global business service centres is no longer just a plan for the future, but a reality that the centres co-create.

First of all, entities supporting trans- actional processes processing many repetitive, standardized, monotonous tasks are an ideal place to implement robotization. Then, there are companies that are struggling with the problem of hiring qualified employees to perform activities where expert knowledge is required. In such cases, RPA allows them to relieve the already employed staff in order to be able to shift them to more complex tasks that require decision-making. Companies, recognizing the importance of data in running and developing their business, are paying more and more attention to how and how quickly they can obtain information and how precise the conclusions drawn on its basis can be. When the robot generates reports for them, all attention will be focused on analyzing the results and drawing conclusions, which is a much greater value added.

Our observations show that centres are moving to the next phase where, apart from repetitive and time-consuming processes, more complex tasks are also considered for automation, thanks to additional functionalities introduced by suppliers, such as extensions of "ordinary" robots with AI or ML.

The employees’ attitude to the idea of implementing robots is also changing. While in the beginning we were faced with skeptical reaction and indication of limited possibility for robotization of processes and tasks in their area (mainly for fear of reduction or downsizing), with time they have become "the ambassadors of change", who even convince other people in their organization to take advantage of this opportunity, and subsequent implementations of robots spark even more further ideas.

An interesting phenomenon is also citizen development, which is becoming more and more popular, where people from business implement some simple improvements and automations for them- selves, using low-code/no-code tools.

Which areas within GBS industry should we definitely keep tabs on and which will particularly surprise us in 2023?

I think that the list of interesting topics is quite long. This is due to the fact that GBS sector is very dynamic and this dynamics is actually accelerating.

As consolidated models evolve further, we will be observing an increasing role of the Global Process Owners (GPOs) responsible for end-to-end process management. GPOs will manage process standardization across geographies as well as implementation of the leading practices, Key Performance Indicators and process automation. Some of GBS organizations might even measure their maturity or importance within their organization by counting the number of GPOs they have in their structures.

I also believe that we will witness further increase of the scale of complex and knowledge-based activities within the scope of GBS organizations as compared to high-volume transactional processes. We will witness the GBS transformation from processing factories to more value-creating organizations. And this trend has already been visible especially in the CEE region as companies have been moving activities like FP&A, Treasury, Data Analytics, Recruitment and increasingly more customer-facing processes from Business Units and Corporate to their GBS models in order to reduce the costs further and also to continue the process of standardization and consolidation.

Certainly, the areas that will remain of interest are the further use of the opportunities offered by the digitization of the GBS organization as well as the growing number of employees in the GBS / BPO sector. Some market organizations in their analyses predict that the demand for employees will continue to grow and, consequently, lead to a 20% increase in employment in the next 2–3 years. For me personally, the area of human capital management seems to be very interesting. This is now the number one challenge for most GBS organizations and I suppose we can expect some revolutionary changes in human resources management. They may concern e.g. offering a larger flexibility in terms of work from home or rather "work from wherever you want", or even the possibility of shortening the working week from 5 to 4.5 or even 4 working days.

Thus, on the one hand, further development of the sector looks very promising, in particular with regard to its growth, on the other. However, we must not forget about the challenges that will also arise for the sector leaders. All in all, in my opinion, business services sector both in Poland and globally, will respond to these challenges in an excellent way and more and more years of prosperity await the industry.

Thank you for the interview.

This article comes from magazine:
FOCUS ON Business #8 January-February (1/2023)