Unlocking new value: in global business services.

• Position: Outsourcing - Company overview

Is this experience familiar? The company has consolidated functions in shared services, outsourced ---others to India and has the best pricing available with excellent service providers. But costs are still going up. What's next?

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As labor arbitrage flattens out and value stagnates, savvy chief financial officers are taking their global business services to the next level. Looking beyond transactional work, they're considering the opportunity to improve productivity not only within a function, but breaking down silos and integrating processes across functions and within the business units as well.

They're pursuing advanced operating models and integrating internal service centers, third-party resources, cloud technologies and highly skilled services into a cross-functional portfolio of services that not only reduces cost but simplifies access, improves agility and drives new value.

Instead of addressing each function at a time, today's innovative companies are taking a holistic view of the entire enterprise, aligning all services to the business strategy. These CFOs are recognizing that business services functions don't just support the business, they can also advance it.

This "extended global enterprise" (EGE) model reflects a new level of maturity in global business services. The model integrates various capabilities--whether retained, outsourced, shared or distributed around the world--into seamless, end-to-end services that drive specific business outcomes. The EGE model scales up to help companies evaluate across the selling, general and administrative (SG&A) functions and scales down to support an integrated viewpoint to test for optimization within a specific business process or function.

In such a global, multifunctional model, companies will likely continue to realize cost savings through harmonized services and reduced duplication. But those savings are just the table stakes. The new goals are about achieving a competitive advantage through simplification, better flexibility and agility, accessing new capabilities, tapping an additional 15 percent to 20 percent in savings from productivity gains and, most importantly, achieving outcomes that support the overall business strategy.

Beyond Transactional Services

The sobering reality is that wages are climbing some 14 percent a year in India, according to human resources consultants Aon Hewitt, with similar increases in other emerging markets, so transactional processing simply isn't generating the same level of cost savings as in the past. That's paving the way for a new call to action: instead of just focusing on how much a process costs, top CFOs are focusing on how it creates value.

In a traditional sourcing model, for example, companies might offshore some processes or centralize others in shared services, but they're still focusing mostly on simple transactions like...