This article forms part of the GBS series for the month of August.
Introduction
In today’s globalized economy, the success and efficiency of businesses no longer rests on the provision of services from one location. Fueled by the transformative power of the technology and the internet, various business operations and Information Technology (IT) – enabled services can be delivered to clients across the globe. These services fall under the term Global Business Services (GBS). This article provides an understanding of GBS, delves into its significance across the business landscape, showcases leading countries in the industry, and explores how Ghana can harness this model for its economic development.
Understanding GBS
GBS is an integrated approach, through which companies outsource a wide array of services, varying from business process outsourcing (BPO), information technology outsourcing (ITO), knowledge process outsourcing (KPO), to clients in different offshore locations. This approach enables businesses to streamline operations, reduce costs, and focus on their core competencies. As a result, many organisations operating on a global scale relies on the GBS industry to serve their customers. Examples of industries that use these services are the airline industry, e-commerce industry, the fin-tech and banking industry, the telecommunications industry, to mention a few.
Global Business Services can be broadly categorized under three main umbrellas. These are:
Business Process Outsourcing (BPO): This includes handling business processes such as customer service, finance, HR, and supply chain management.
Information Technology Outsourcing (ITO): This encompasses IT services like software development, network management, tech support, and IT consulting.
Knowledge Process Outsourcing (KPO): This involves specialized, knowledge-based services such as market research, data analysis, legal services, and financial analysis.
Global Business Services can be further divided based on their nature and function. These are:
Voice Services: These include customer service and support delivered through phone calls, which are typically managed by call centers and help desks.
Non-Voice Services: These services are provided digitally via email, chat, or data processing and include tasks like accounting, data entry, and back-office functions.
Back-Office Services: These are internal business functions that do not involve direct customer interaction, such as finance, HR, IT support, and supply chain management.
Front-Office Services: These are customer-facing functions, including sales, marketing, customer support, and technical support.
The Growing Importance of GBS
The role of GBS in the global economy is expanding due to several key benefits:
Cost Efficiency: Outsourcing to countries with lower labor costs can significantly reduce operational expenses for businesses.
Focus on Core Competencies: By outsourcing non-core functions, companies can concentrate on their primary business activities and strategic goals.
Scalability: GBS allows companies to quickly scale their operations up or down in response to market demands and business needs.
Access to Global Talent: Companies can access a diverse pool of skilled professionals worldwide, enhancing their capabilities and innovation.
Technological Advancements: Modern technology facilitates seamless collaboration and service delivery across international borders, making GBS more efficient and effective.
GBS Powerhouses: India and the Philippines
Philippines: The Voice BPO Leader
The Philippines has established itself as a global leader in voice-based BPO services. According to the shared services state of Industry report 2023 for the Philippines, it is estimated the GBS industry in the Philippines directly employs over 1.3 million people and currently accounts for roughly 13% of the global GBS market. It is a significant contributor to the country’s Gross Domestic Product (GDP). The country’s success in this sector can be attributed to several factors:
Talent Pool: The Philippines has a large, educated, and English-speaking workforce. The country’s strong emphasis on education and training ensures a steady supply of skilled professionals.
Infrastructure: The Philippines boasts robust telecommunications and IT infrastructure, which supports efficient service delivery.
Government Support: The government of the Philippines has implemented policies and incentives to promote the BPO industry, including tax breaks for global BPO companies and investment in infrastructure to support the sector.
Cultural Compatibility: The cultural affinity with Western countries, particularly the United States, enhances the effectiveness of customer service and support functions.
India: The IT and ITO Giant
India is renowned for its dominance in IT and ITO services, as well as a strong presence in BPO and KPO sectors. The industry in India is estimated to employ over 5 million people directly, contributing significantly to the country’s GDP annually. The sector is also a major foreign exchange earner for India, accounting for a substantial portion of the country’s export earnings.
Key factors contributing to India’s success include:
Talent Pool: India has a highly skilled workforce, particularly in IT and engineering. The country’s education system produces many graduates in technical fields each year.
Infrastructure: India has developed advanced technological infrastructure and IT parks, which support the growth of the IT and ITO industries.
Government Support: The Indian government has implemented various initiatives to support the IT sector, including Special Economic Zones (SEZs) and policies that encourage foreign investment.
Cost Advantages: Competitive labor costs make India an attractive destination for outsourcing.
Quality of Services: India’s focus on quality assurance and process improvements has built a reputation for delivering high-quality services.
Factors Contributing to Success
The success of the Philippines and India in the GBS sector can be attributed to several key factors:
Skilled Workforce: Both countries have invested heavily in education and training to ensure a steady supply of skilled professionals.
Cost Advantages: Competitive labor costs make these countries attractive outsourcing destinations.
Quality Infrastructure: A strong IT and telecommunications infrastructure has enabled efficient service delivery.
Government Policies: Supportive regulations and incentives have fostered the growth of the GBS industry.
Cultural Compatibility: Alignment with the language and culture of client countries enhances the effectiveness of service delivery.
Lessons for Ghana
Ghana has the potential to become a competitive player in the global GBS market by adopting strategies from these leading countries. Key areas of focus include:
Developing a Skilled Workforce: Investing in education and training programs to build a pool of talented professionals. Ghana should focus on improving the quality of education, particularly in areas such as IT, business management, and communication skills such as “The Accra to Paga Coding Caravan”, a sponsor partnership between the Institute of ICT Professional Ghana, and the Ghana Chamber of Telecommunications, aiming to equip senior high school students and teachers with essential coding and technological skills.
Improving Infrastructure: Enhancing IT and telecommunications infrastructure to support GBS operations. This includes investing in reliable internet connectivity, modern office spaces, and technological resources.
Government Support: Implementing policies and incentives to attract foreign investment and support local businesses. The government can create favorable business environments by offering tax incentives, streamlining regulatory processes, and investing in infrastructure development.
Cost Competitiveness: Leveraging competitive labor costs to attract international clients. Ghana can position itself as a cost-effective outsourcing destination by highlighting its lower operational costs compared to other countries.
Cultural and Language Training: Providing training in languages and cultural understanding to improve service delivery. Enhancing language proficiency, particularly in English, and fostering cultural awareness will enable Ghanaian professionals to effectively communicate and collaborate with international clients.
By embracing these strategies, Ghana can position itself as a hub for GBS, driving economic growth and creating numerous job opportunities for its citizens. The development of a robust GBS sector can contribute to Ghana’s economic transformation, enhance its global competitiveness, and create a sustainable future for its workforce.
As Ghana looks to the future, the development of a robust GBS sector could play a pivotal role in its economic transformation. By learning from the successes of global leaders like the Philippines and India, Ghana can carve out its own niche in the world of global business services.
Conclusion
Global Business Services (GBS) has revolutionized the way businesses operate by offering a unified approach to outsourcing various business processes and IT services. The significant cost efficiencies, scalability, and access to global talent have made GBS an indispensable part of the global economy. Countries like India and the Philippines have set benchmarks with their successful GBS models, driven by a skilled workforce, advanced infrastructure, supportive government policies, and cultural compatibility.
Ghana stands on the cusp of an exciting opportunity to leverage these insights and develop its own GBS sector. By focusing on enhancing education and training, improving infrastructure, offering government support, maintaining cost competitiveness, and fostering cultural and language proficiency, Ghana can position itself as a competitive player in the global GBS market. This development will not only drive economic growth but also create sustainable job opportunities, contributing significantly to the nation’s economic transformation.
As Ghana embarks on this journey, it can look to the successes of global leaders for inspiration and guidance. With strategic planning and concerted efforts, Ghana has the potential to carve out its niche in the world of global business services, enhancing its global competitiveness and building a brighter future for its workforce.
This article is written in cooperation with the Institute of ICT Professionals Ghana and the Special Initiative ‘Decent Work for a Just Transition”, an initiative of the German Federal Ministry for Economic Cooperation and Development (BMZ) and implemented by GIZ.
For comments, contact info@iipgh.org
