GBS – a strategic solution for Western competitiveness in the face of Asian cost pressure
In today’s global market context, Western companies are facing a difficult reality: Asian products at extremely competitive prices, supported by lower production costs, less burdensome regulations, and a flexible local infrastructure.
The result? Pressure on margins and on corporations’ P&L, where costs with technology, consulting, and workforce are becoming harder to sustain. Most European companies have responded to this pressure by increasing investments in technology and innovation. However, this model adds even more complexity and additional costs in the P&L. While Asia simplifies and scales, the West tends to add extra layers of cost and administration.
To better understand the competitive gap, a direct analysis of the P&L (COGS and Opex) for two similar operators in automotive is useful. This highlights a critical point for Western companies: the costs associated with technology and consulting.
📊 Cost Breakdown per Vehicle (€) – China vs. Europe
| Cost Element | China (per car) | Europe (per car) | Observations / Main Drivers | Optimization Potential in Europe |
| Labor (assembly) | €1,500 | €4,500 | Wage differences and social contributions; higher labor standards in Europe | Limited – wage cuts would affect quality and retention |
| R&D amortization | €500 | €2,000 | Europe invests massively in innovation, safety, EV; China scales by adapting existing technologies | High – optimization via centers of excellence and shared investments |
| SG&A / Overhead | €800 | €2,500 | High costs with ERP, consulting, administration, facilities | Very high – reduction via GBS, elimination of external consulting, integrated ERP/AI |
| Compliance & regulation | €200 | €1,000 | EU has strict standards (emissions, safety, ESG); China – more relaxed | Limited – regulations remain, but processes can be digitalized and simplified |
| Materials & components | €7,000 | €7,500 | Similar costs; marginal advantage in local sourcing in China | Moderate – optimization through global supply chain management and centralized procurement |
| Technology & features | €1,000 | €2,500 | Europe integrates premium technology standards (safety, connectivity, infotainment); China delivers simpler versions | High – optimization via AI integration and modular tech, avoiding fragmented and costly solutions |
| Total cost per vehicle | €11,000 | €20,000 | The difference is structural, not conjunctural | Optimization possible by 15–20% without affecting wages or quality |
🔑 Interpretation
- Critical area to optimize: OPEX – SG&A and R&D. Europe loses competitiveness mainly due to high administrative costs, external consulting, and dispersed R&D investments. This is where the greatest potential for optimization lies, without affecting quality or wages.
- No-margin area: wages and compliance. Cost differences in labor and regulatory compliance are structural and must not be compromised.
- Immediate OPEX impact: technology and overhead. Costs with ERP licenses, digital platforms, AI, facilities, and management can be significantly reduced through a modern GBS, integrated with technology and optimized processes, without impacting operational activity.
The model known today as Global Business Services (GBS) has been implemented and developed for over four decades under various names – Shared Services, Business Process Outsourcing, Global Competency Centers, Centers of Excellence – reflecting the evolution from mere cost reduction and standardization to digitalization, integration, and strategic value creation. By centralizing and standardizing support processes – finance, HR, procurement, IT, customer service – companies have managed to reduce operational costs and achieve clear improvements in KPIs:
• reduction in processing time,
• cash-flow optimization,
• increased customer and employee satisfaction.
However, in the face of this challenge, traditional GBS is no longer sufficient. Many organizations have transferred their operations into GBS, but remain burdened by:
• costly ERP licenses,
• external implementation projects and consulting,
• fragmented digitalization programs that add complexity and additional costs.
Thus, instead of becoming more competitive, companies end up merely shifting part of the problem into another structure, without truly reducing the pressure on the P&L.
📌 Solution: A paradigm shift – GBS as an integrated AI & Tech solutions provider, transforming administrative costs from the P&L into a direct competitive advantage.
The new winning strategy is no longer only about centralization, but about integration. The COZIA model brings this adjustment:
- Internalized provider of centralized services – reducing operational costs through labor arbitrage and elimination of redundancies.
- Internal consulting partner – integrated strategic and process expertise, without extra costs of external consulting.
- Provider of technological solutions – integrated, AI-driven ERP platforms, reducing dependence on external suppliers and optimizing operational data.
In other words, the organization no longer pays separately for ERP, external consulting, and digitalization, but has a unified ecosystem, delivered internally, adapted to the company’s reality.
Clear benefits of the new GBS model:
• Reduction of total costs – eliminating dependency on consultants and multiple technology providers.
• Agility and speed – solutions are implemented and adjusted directly internally, without long acquisition and integration cycles.
• Scalability – the same GBS can support multiple entities or countries, without major cost increases.
• Focus on real competitiveness – companies are no longer pressured by the burden of innovation and payroll, but focus on product, customer, and market.
📌 Conclusion:
In the global competition, where Asia plays the low-cost card, the West needs a new type of strategy: GBS 2.0 – not just a shared services center, but a digital transformation engine, AI-driven, integrated directly into company operations. This is the key by which Western organizations can remain competitive without overloading their P&L with additional technology and consulting costs.
The answer does not lie in more technology, but in simplicity. But simplicity requires a deep understanding of complexity. Western companies cannot compete with Asia through low wages or by relaxing quality and safety standards. But they can become competitive through simplification, centralization, and intelligent integration of technology.