Most global companies are not only offshoring but also outsourcing headcount to create value for their shareholders. Since cost savings in labour are huge, companies are forced to include both within their workforce strategy if they want to remain attractive and profitable for their shareholders, therefore today the question is not why but how? However, as an undesired consequence of offshoring and outsourcing, organizational complexity grows undeniably with fragmentation, distribution and diversity not only driven by different people but also companies’ cultures. Hence, a Global Business Services (GBS) becomes the place where all these fragmented processes, distributed and outsourced teams with an exuberant diversity are co-located which besides saving money from labour costs must allow global companies to run operations as effectively and productively as with an onsite model. However, this is not only quite a challenge but also companies rarely know if they have succeeded. This is due to nature of absorption costing which makes highly visible labour costs while hiding productivity ones. Although GBSs might look very good on company’s balance sheets, the question which remains to be answered is: Are these companies at least equally productive in comparison with their former onsite model? Since they don’t know, almost all GBSs develop productivity programs to ensure companies are at least equally productive and sometimes ever more than they were with their former onsite model. However, to accomplish such productivity outcomes GBSs must be successful at managing processes fragmentation, distributed and outsourced teams as well as a level of diversity that could be either overwhelming or the source of organization’s greatest competitive advantage.

Adopting an E2E approach to cope with fragmentation

Many years have passed since Dr. Eliyahu Goldratt developed the Theory of Constrains (TOC) and from that moment it has been well-known that working in “silos” and thinking on individual process efficiencies not only won’t produce business results but also will put at risk organizational sustainability. Nevertheless, as knowing that smoking is bad for health doesn’t prevent people from smoking, TOC’s knowledge couldn’t prevent that most companies are still working in “silos”. Although this is an issue for an onsite operating model it is and ever bigger problem for offshoring and outsourcing due to processes are in different locations and with another time framework which leads to a more severe isolation with fragmentation as a consequence. Furthermore, if it is not easy to adopt an E2E approach with co-located in space and time processes why it would be easy for processes without co-location? First step is to develop awareness of both risks and challenges ahead to not only place at the heart of GBSs’ Target Operating Model (TOM) the E2E approach but also take proper countermeasures to mitigate risks and ensure its sustainability. Then in the same way that Agile was scaled, TOC principles must be escalated to develop a global E2E approach that maximize throughput while minimize inventory by identifying and managing bottlenecks within value streams and workstreams. Moreover, GBSs’ TOMs must ensure Lean Management as well as “just in time” delivery and operational effectiveness with an E2E approach and at a Global scale.

Building and coordinating distributed and outsourced teams

Another point to consider it that with offshore models, teams’ benefits from co-location, part of onsite models, are lost and therefore challenges from distributed teams must be faced. On the other hand, outsource models add more complexity since benefits from a common organizational culture are lost as well. Thus, from an operational perspective daily Huddles are necessary to coordinate distributed teams and make them perform as if they were co-located, which is one of main challenges of scaling Agile. Moreover, digital Huddles can be run either through Jira or other platforms, and sometimes onsite whiteboards can be replaced just by using SharePoint or Power BI to build a Digital Information Centre for holding team meetings. However, to achieve that outsourced team members not only perform as well as their peers but also share same values requires more than daily digital Huddles. First and foremost, onboarding is a key process to ensure cultural fit and required skills in outsourced team members. Hence, it is essential to develop an effective and agile onboarding process to accelerate the learning curve reducing ram-up’s lead-time while ensuring not only expected performance but also that company values and key behaviours are there in outsource team members. Furthermore, organizations must provide distributed and outsourced team members with comparable to onsite members’ employee experiences to ensure they act as co-located and to be only “one team”. Hence, not only onboarding but also talent development and compensation processes become essential to build distributed and outsourced teams which afterward must be coordinated through daily digital Huddles.

Developing Communities of Practices to seize diversity

To begin with, Global Business Services can be seen as a community of expats from their Business Units due to offshoring as well as their Companies because of outsourcing and in most of the cases also from their Countries. As it was mentioned, it will be required an active effort from GBSs to compensate co-location lost which is part of the onsite model. Firstly, an E2E approach must be adopted to cope with fragmentation and therefore GBS’ TOM will include key features from TOC and Lean Management. Secondly, HR capabilities including onboarding, talent development and compensation are key to build distributed and outsourced teams which daily coordination and performance management will require digital Huddles. However, there are new co-location benefits within GBS that can be seized through creation of Communities of Practice to which all the “expats” can contribute by sharing their knowledge and experiences as well as all of them can benefits from others’ contributions. Moreover, not only libraries with files and podcasts can be shared but also best practices and lessons learnt can be shared as well. Furthermore, a network of process owners and subject matter experts can be built not only to provide support at GBS level but also worldwide. As a conclusion, although one hand the loss of co-location faces GBSs with challenges that must be overcome by effective TOMs, HR capabilities and Lean Management, on the other create a co-located “Community of Expats” with an incredible diversity of knowledge and experiences that can be shared and taken advantage of through Communities of Practice that will enhance not only GBSs performance but can be also labs to develop new business ideas for product, services and process with an unlimited potential which is awaiting to be unleashed by companies with a long-term vision for GBSs which have developed a purpose for them beyond just cost savings.

Thanks for Reading.

Marcelo Sauro is an internationally experienced performance and improvement senior manager. He holds an Executive MBA and Master of Science degrees and has helped people and organizations to transform themselves. Not only he led E2E transformations in Global Business Services, R&D, Supply Chain and Finance organizations at all levels within the LATAM and EMEA Regions, but he is also experienced in several industries including Life Science, Healthcare, Insurance, Fintech, Technology, Telecoms, FMCG, Chemicals, Automotive, Energy and Mining. Since 2015, he has been researching and developing content in agile and resilience through Value Ways, while working under contract for customers such as MetLife, Novartis, Vertiv (Emerson NP) and Experian among others. Previously, he worked for more than 7 years as Master Black Belt for a LATAM-based consulting group, which had ASQ, Qualtec and Oriel as business partners. Prior to that, he worked for more than 10 years at BASF and GSK in positions of growing responsibility in the area of Operational Excellence. Marcelo is currently working at Ferring's “International PharmaScience Center” (IPC) for the Global R&D organization in Copenhagen. To find out more please visit www.value-ways.com.

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