Impact of COVID-19 on shared services and GBS

Physical proximity is required to run effective processes

Organizations traditionally believed that physical proximity was critical to getting many processes, particularly more complex ones, done effectively. Through COVID-19, many learned that this is often not the case. Multiple GBS and shared services leaders said their operations, including highly complex processes, continued to perform well after movement to work from home (WFH). Our respondents ranked “lack of in-person management oversight” the lowest among operational challenges. For several companies, productivity remained near, and sometimes exceeded, pre-pandemic levels.

Many companies with highly face-to-face-intensive processes like financial close and financial planning and analysis shifted and performed them virtually, demonstrating that face-to-face interactions may not always be required for effective process performance. Some organizations also reported that employees appreciated the flexibility that WFH has given them. It can also open the door to new talent pools of onshore or offshore workers who WFH and are able to remotely complete complex processes that had traditionally been performed face-to-face.

Future opportunities

WFH or virtual will likely be elevated as a service delivery model option and may no longer be optional. Eighty percent of respondents listed expansion of WFH capabilities as a key change expected in the future as a result of COVID-19. We anticipate that organizations may see one-third or more of their labor force working from home in the future, compared with just one-tenth before the pandemic. Organizations should reexamine their work for remote delivery fitness across dimensions such as proximity, regulatory, process complexity, and service level disruption. Examples to consider include moving to digital mailrooms, virtual business partnering, and HR processes—recruiting, interviewing, onboarding, and training—which may shift to occur remotely.

Real estate capacity and locations should be aligned with demand as work shifts out of brick-and-mortar locations and likely continued social distancing adds constraints and requirements to current office and site spaces. Newly remote shared services employees will need new ways of working, including access to, and training on, collaboration tools for virtual meetings with videoconferencing features and virtual facilitation methods. Additionally, leaders should be trained to manage hybrid workforces working both in-office and virtually.

Shared services and outsourcing scope is mainly for transactional operations

The second traditional service delivery orthodoxy tested by the pandemic revolves around the belief that shared services and outsourcing are mainly for back-office or transactional operations. As described above, work that previously required proximity transitioned effectively to a virtual environment during the pandemic, breaking down conventional wisdom in this area.

This has expanded opportunities on the potential scope that can be delivered through shared services and outsourcing delivery models. Several interview participants discussed intentions to build resiliency into their operations while managing future cost pressures, potentially through moving complex work to new locations, diversifying service delivery across locations, or identifying medium- and low-cost service delivery models.

Organizations also referenced working with their outsourcing partners to scale up or down to help meet changes in their needs. In many cases, outsourcers’ ability to shift labor forces across industries and processes provided flexibility to meet changing demands for existing services and support new demand (such as small business loans). Overall, shared services and outsourcing models helped increase their ability to add flexibility and resiliency in response to the pandemic, not only for simple transactional processes, but also for complex processes that were not previously considered for remote delivery.

Future opportunities

As economic pressures increase and organizations develop a new focus on business resiliency, they should evaluate their service delivery models and consider diversifying across locations. We anticipate that organizations will seek to expand their scope of services and change the mix offered through their shared services centers, WFH, and outsourcers. The expanded scope could include processes that may have previously been considered too complex to be delivered remotely, such as business partnering roles across major functions, analytics, and complex issue resolution. Additionally, organizations will likely strive to find the right balance between offshore and onshore locations to help reduce their risk exposure.

Current business continuity plans are sufficient

The third notable orthodoxy to be challenged was the belief that merely having a business continuity plan (BCP) is sufficient to meet the company’s needs. The COVID-19 pandemic is an incident of unprecedented scale and revealed that many existing BCPs were not adequately prepared or robust.

Some BCPs were outdated and had not been tested. Changes made to systems and processes over the years were not generally accounted for in the plans. Where key processes and recovery times had been identified, they were not tested to ensure they were achievable with the current infrastructure. Additionally, many of the plans did not provide detail on the steps to recovery. This resulted in precious time being lost in deciding how to implement the existing, but vague plans.

Undocumented processes and “tribal knowledge” also created difficulties for others performing the services for absent team members. Having backup staffing through cross-training or clearly documented processes could have eased the challenges of maintaining effective operations.

Future opportunities

Revamping BCPs should become a key area of focus moving forward, especially as new pandemic scenarios suggest that revived COVID-19 infection rates could result in several additional waves of shutdowns. BCPs should be enhanced holistically—not just from a technology perspective, but also for people enablement.

To effectively prepare for the next crisis, organizations should consider testing and revising their plans regularly to discover and address potentially overlooked issues and to confirm that their goals are achievable using the business’s current infrastructure. BCPs should shift to sustain remote delivery at scale across a few key areas:

• Revise BCP requirements across an expanded set of scenarios

• Revisit permissible remote work

• Reexamine personal infrastructure to account for WFH

• Reengineer and scale remote access and connectivity

• Build staff resiliency

Legacy systems are good enough, and some manual processes are acceptable

The fourth orthodoxy to be tested by the pandemic centers on whether nonagile legacy systems can still be effective. The COVID-19 outbreak demonstrates that in some cases, the answer is a resounding “no.” Although some organizations have experimented with advanced digital tools and cloud platforms, some have been slow to adopt and migrate to these solutions, based in part on a long-held belief that these are “nice-to-haves” and not “must-haves.” The experiences of GBS and shared services organizations during the pandemic are demonstrating that the continuation of manual processes or legacy systems that are not agile may not be a viable option moving forward.

Additionally, some major service issues occurred where manual or paper-based activities were still a part of end-to-end processes (for example, organizations that still mailed out paper invoices and suppliers that wanted to be paid with a manual check). It turns out that even a small volume of manual processes can create disproportionate difficulties. While some organizations put these manual processes on hold until they could return to the office, others took this as an opportunity to transition to automated systems, such as moving to electronic invoice submission and payments.

Future opportunities

During our interviews, executives suggested that the pandemic emphasized the importance of technology modernization, digital labor, and automation. Additionally, many of the technologies that some CIOs have been trying to implement for years are suddenly being utilized and leveraged. Due to changing work conditions, such investments and initiatives are now demonstrating their value. Post-pandemic, companies should renew their pressure to maintain—or potentially increase—investments in new technologies. Business leaders should not be content to rely on existing technology solutions; instead, they should continually be updating their technology infrastructure. Similarly, companies should consider migrating to the cloud to improve data security and agility and continue to innovate toward a digital labor force.

Physical sites (brick-and-mortar) are required to maintain security

The final orthodoxy challenged by the pandemic centers on the belief that data security can only be ensured by having teams of people working together in centralized locations. GBS and shared services organizations had to quickly accelerate the pace and implementation of new technologies to support the data and security needs that arose from the new remote work requirements.

To succeed in these difficult conditions, these organizations implemented short-term technology solutions to address potential security concerns and secure sensitive data. These included enabling the ability to remotely lock down an employee’s computer, camera recognition on devices to prevent picture-taking by onlookers, voice recognition for customers, privacy screens, and several other solutions. Some companies also had employees sign NDAs that specifically referenced not showing screens and data with people in their household. Where such security challenges could not be addressed, some work was forced to stop completely. Some roundtable participants noted that to protect data, they had to amend contracts for BPOs to allow them to continue working. Ultimately, many of these solutions provided short-term fixes that likely must be addressed for the long term.

Future opportunities

As organizations move toward a new normal, it will likely be imperative to invest in the tools, technologies, and process changes that can help derisk data security concerns for remote work. With potentially one-third of the workforce working remotely and the potential risk of future lockdowns, it will no longer be an option to ensure data security only within the four walls of an organization. Automation and reducing manual processes will likely be accelerated, as it makes processes much more flexible, resilient, transparent, and cost-effective.