Shared Services vs GBS vs Outsourcing: Key Differences Every Leader Must Know

“Efficiency is doing things right; effectiveness is doing the right things.” – Peter Drucker

It’s no surprise that shared services, Global Business Services (GBS), and outsourcing are transforming how businesses operate. The shared services market is on track to increase from $58.98 billion in 2024 to $473 billion by 2035. As shared services mature, GBS emerges as a smarter, more integrated model – 70% of GBS organizations streamline multiple functions, and 83% are laser-focused on customer experience. Meanwhile, the global outsourcing market, including Business Process Outsourcing (BPO), was valued at approximately USD 280.64 billion in 2023 and is projected to grow to USD 739.4 billion by 2033. For companies looking to scale efficiently and sharpen their competitive edge, outsourcing is more than a strategy—it’s a catalyst for sustainable success.

What Is a Shared Service Model (SSM)?

• A Shared Service Model consolidates core business processes—such as finance, HR, IT, and procurement—into centralized units that serve different parts of an organization. Instead of each business unit duplicating these services, a shared center streamlines them to reduce costs and increase efficiency.
• Imagine a multinational company that operates in different regions. Rather than maintaining separate payroll teams across countries, it establishes a Shared Service Model that handles payroll operations for all its offices from a single location. This approach standardizes processes, ensuring uniformity and delivering cost savings.
• Data reveals that 53% of organizations have operated shared services for over five years, with Europe leading adoption at 56%, followed by North America at 24%.

Benefits of SSM

• Cost Efficiency: By centralizing services, companies achieve economies of scale, reduce redundancy, and drive down operational costs.
• Process Standardization: A Shared Service Model ensures consistent, standardized processes across regions and departments, enhancing quality and efficiency.
• Improved Service Delivery: Centralized units often deliver higher service quality, with faster response times and better accuracy.
• Stronger Compliance and Control: A shared approach allows organizations to better manage regulatory compliance and maintain tighter control over processes.

Benefits of SSM

• Cost Efficiency: By centralizing services, companies achieve economies of scale, reduce redundancy, and drive down operational costs.
• Process Standardization: A Shared Service Model ensures consistent, standardized processes across regions and departments, enhancing quality and efficiency.
• Improved Service Delivery: Centralized units often deliver higher service quality, with faster response times and better accuracy.
• Stronger Compliance and Control: A shared approach allows organizations to better manage regulatory compliance and maintain tighter control over processes.

Challenges of SSM:

• Limited Global Reach: While efficient, many shared services operate regionally. Currently, 31% are country-specific, limiting their ability to scale globally.
• Process Over Service Focus: Only 64% of shared service models prioritize customer focus, meaning many are more process-oriented than service-oriented.
• Scalability Issues: Expanding a Shared Service Model globally can be resource-intensive, often requiring significant investment in technology and leadership.
• Perception Issues: These models are often seen as cost centers rather than strategic enablers, which can limit their role in broader digital transformation initiatives.

What is Global Business Services (GBS)?

• Global Business Services (GBS) is the evolution of the traditional Shared Service Model. It integrates multiple business processes across geographies and business units, delivering global business solutions through a unified governance model.
• Unlike shared services, GBS combine technology, talent, and third-party partnerships to drive digital transformation and provide end-to-end services. GBS organizations focus on delivering higher value, beyond just transactional processing, by offering strategic support and consulting services.

Benefits of GBS

• Customer-Centric Service Delivery: With 83% of GBS organizations focusing on customer needs, they enhance both internal and external stakeholder experiences.
• Value-Driven Functions: Global Business Services offer consulting (72%), decision support (73%), and pricing/budgeting advice (58%)—adding strategic value beyond routine tasks.
• Scalable and Flexible Operations: By leveraging third-party services and advanced technology, GBS global business services can scale effortlessly to meet evolving demands.
• Strategic Leadership and Governance: With 46% having board-level leadership, GBS aligns more closely with enterprise strategy and innovation.

Challenges of GBS

• Complex Organizational Setup: GBS requires an integrated hybrid model, combining offshore recruitment services, outsourcing, and captive centers—an intricate transition for many organizations.
• Cultural Transformation: Shifting from a cost-center to a service-oriented culture takes time and leadership commitment.
• Technology Investment: Delivering digital transformation through GBS requires significant investment in AI, automation, and analytics platforms.

What is Outsourcing?

• Outsourcing involves contracting third-party service providers to handle specific business processes or functions that an organization either lacks expertise in or seeks to run more cost-effectively. Unlike Shared Services and GBS—which often manage functions internally—outsourcing relies on external partnerships to deliver results.
• For example, instead of building an in-house customer service team, a company might outsource this function to a specialized provider in another country, leveraging lower costs and domain expertise.

Benefits of Outsourcing

• Cost Reduction: Outsourcing can lower operating costs by up to 30%, particularly when offshoring to cost-effective regions (source: KPMG).
• Access to Global Talent & Expertise: 80% of organizations outsource to gain access to skilled talent unavailable locally (source: Statista 2024).
• Scalability and Flexibility: Outsourcing allows businesses to scale operations quickly, adjusting to market demand without heavy investment.
• Focus on Core Business: 65% of companies say outsourcing allows them to focus more on core competencies and strategic priorities.
• Access to Latest Technology: 57% of businesses outsource to leverage innovative technologies without capital expense.

Limitations of Outsourcing

• Quality Control Issues: Potential risk of inconsistent service quality if not managed properly.
• Loss of Control: Less direct oversight on outsourced processes.
• Data Security Risks: Increased risk of breaches if partners don’t follow strict protocols.
• Cultural & Communication Barriers: Different time zones, languages, or business practices can affect collaboration.

Key Differences Between Shared Services, GBS, and Outsourcing

Which Model Should You Choose?

It depends on where your organization is in its operational journey:

• Shared Services Model: This is ideal if you’re centralizing operations for the first time and want to improve efficiency and control.
• Global Business Services (GBS): The next step if you’re ready for global scalability, integrated service delivery, and digital transformation.
• Outsourcing: Best for non-core functions where cost reduction, expertise access, and scalability are priorities without the complexity of internal management.

Many high-performing organizations use a combination of GBS and Outsourcing. GBS can act as the orchestrator of services, while outsourcing partners provide niche expertise and scalability.

IMS GBS: Your Global Business Solutions Partner

At IMS GBS, we are experts in guiding organizations through our outsourcing solutions. Whether you want to optimize your Shared Service Model or transition to GBS, we provide tailored solutions designed to unlock value, reduce costs, and deliver exceptional service.

Our outsourcing services include:

1. Recruitment (IMS People Possible): Access global talent quickly and efficiently with our comprehensive recruitment solutions.

• In 2024, we placed 6,798 candidates—that’s one new job every 77 minutes, meaning by the time you finish watching a movie, someone just got hired!

2. Accounting (IMS Decimal): Streamline your financial processes with our expert accounting solutions that deliver accuracy, compliance, and strategic insights.

• We processed over 200,000 timesheets per quarter for 100,000+ candidates with 99.75% accuracy in payroll operations.

3. Managed IT Solutions (IMS Nucleii): Enhance operational efficiency and secure your digital infrastructure with our comprehensive IT services, including support, maintenance, and cybersecurity.
4. Business Process Management (IMS Datawise): Improve workflows and increase productivity with our end-to-end business process optimization services.

• 1 in every 10 used cars sold in the U.S. has been reviewed by the experts at us.

5. Marketing (IMS nHance): Expand your reach and strengthen your brand presence with our results-driven offshore marketing strategies, from content creation to digital campaigns.

With over 19 years of industry experience, IMS GBS empowers businesses to reduce costs, enhance service delivery, and implement global business solutions that support sustainable growth.

Ready to Transform Your Business Processes with Our Outsourcing Solutions?