xp_cmdshell is used for to running DOS-level commands from SQL Server. For instance:
EXEC xp_cmdshell 'DIR C:\'
Whether there will be any impact depends on the applications running on the instance. It is quite popular among developers to export data from SQL Server by spawning BCP through xp_cmdshell.
You can run this query in all user databases to see if there are any stored procedures or similar to see if xp_cmdshell is being used:
SELECT s.name + '.' + o.name
FROM sys.sql_modules sm
JOIN sys.objects o ON sm.object_id = o.object_id
JOIN sys.schemas s ON s.schema_id = o.schema_id
WHERE sm.definition LIKE '%xp_cmdshell%'
Note that this query only gives an indication. The code you find may be dead, and thus there would be an issue to disable xp_cmdshell. On the other hand, there could be client that submits batches with xp_cmdshell in. Ultimately, you would need to talk with the application teams.