A discussion of key findings from our 2023 Global Business Services Key Issues research with The Hackett Group Global Business Services Advisor Penny Weller, GBS Global Practice Leader Martijn Geerling and Principal and Finance Transformation GBS Leader Kevin Church.
Welcome to The Hackett Group’s “Business Excelleration Podcast,” where week after week we hear from experts on how to avoid obstacles, manage detours and celebrate milestones on the journey to world-class performance. This episode is hosted by Penny Weller, Global Business Services advisor for North America at The Hackett Group. Her guests today are GBS Global Practice Leader Martijn Geerling, and Principal and Finance Transformation GBS Leader Kevin Church. Today’s episode will discuss the key findings of The Hackett Group’s annual 2023 Global Business Services Key Issues Study.
To begin, Martijn highlights the most notable things that surfaced from this year’s study. Key concerns for leaders across enterprises include economic downturn and the risk of recession in the upcoming year. We do expect budget constraints to reflect this planning. Also at the enterprise level, we see talent shortages and issues around the Great Resignation as another key concern. Additionally, central banks are responding to the expectation that inflation will stick around but hopefully begin to come down. From a GBS perspective, we also see that those concerns from the enterprise level also resonate. Key issues for GBS leaders include labor shortage, cost of labor and access to talent. Last year’s top issue of digital transformation is now being pushed aside for 2023. The key themes are the need to disrupt the business by continuing digital transformation and concerns about being disrupted by a potential recession, politics, etc.
Then, Kevin shares his own findings from working face to face with The Hackett Group’s members and clients through ongoing engagements. Certainly, many of the macroeconomic challenges are prevalent in the field. The Russian invasion of Ukraine has shed a light on geopolitical risk and urged organizations to analyze their own mitigation strategies. From the results of the study, we see an estimated growth in 2023 of about 9% for GBS and a staffing percent increase at 4%. This is causing a productivity increase of about 5%. Rising labor costs are also straining GBS budgets but are expected to increase by 6% compared to 5% in 2022. In technology investment, there are expectations of 7% capital expenditure. However, potential economic or political disruptions could prevent these from actually happening.
Listen as Martijn sheds light on what GBS leaders are planning to do in 2023. Not surprisingly, many GBS leaders have major initiatives planned around digital transformation. Additionally, they want to improve GBS value to the enterprise, act as strategic partners to the business, and upgrade skills and talent within the GBS organization. Creating value for the enterprise is the perennial problem for GBS organizations. Often, GBS is not recognized by the business in terms of the value they can deliver. Analytical capabilities are another key area of their focus.
Next, Kevin shares how the data compares to his day-to-day work with clients. Especially in higher-value type roles, talent shortage is really the biggest risk. Another issue from the top 10 list is the failure to transform the business – an ongoing issue for the last decade. Hear the list The Hackett Group formulated of the key actions GBS leaders should take in 2023. The first category is all about being ready to disrupt service delivery through automation. Organizations should continue focusing on digitization in several areas like cloud-based IT architecture and strengthening digital operations capabilities. They should also keep focus on the front end of GBS organizations, and how they are interacting with customers both digitally and personally. The other category involved being ready for disruptions and having plans in place to address potential risks like a recession. The final point is that talent shortage is a real issue that is not going to be going away.
Before wrapping up, Martijn discusses how well GBS is currently aligned with the key functional concerns and challenges. Ranking in the top three concerns is the challenge of insufficient budgets. By the nature of being cross-functional, GBS organizations should be able to help companies weather the storm better than most. Finally, Kevin touches on the top priorities of GBS. The first is to improve the GBS value delivery to their enterprise. This is followed by acting as a strategic partner to the business. Skills and talents, as discussed, is another key priority. Finally is the ongoing effort to improve and expand on GBS customer service.
- 0:56 – Welcome to this episode hosted by Penny Weller.
- 1:45 – Summarizing the most notable issues from this year’s study.
- 4:48 – Kevin highlights his own key findings.
- 6:16 – What are GBS leaders planning to do in 2023?
- 8:17 – How the data compares to Kevin’s day-to-day client work.
- 9:12 – What risks are companies taking already?
- 12:28 – How aligned is GBS with functional concerns and challenges?
- 13:27 – The top priorities of GBS.