How to Build a Future-Ready Shared Service Centre
What is a Shared Service Center (SSC)?
A Shared Service Center (SSC) is a centralized department or unit within an organization that provides a range of support services to multiple business units or divisions. The global business services provided by an SSC can include finance, human resources, procurement, and IT, among others. The goal of an SSC is to improve efficiency, reduce costs, and standardize processes across the organization.
What Services Does an SSC provide?
A Shared Service Center typically provides a range of support services to multiple business units or divisions within an organization, including:
- Finance: Accounts payable, accounts receivable, general ledger, financial reporting, tax and compliance
- Human Resources: Recruitment, benefits administration, payroll, employee relations, training and development
- Procurement: Purchasing, supplier management, contract administration
- Information Technology: Help desk, network and system administration, software support, data management
- Customer Service: Order fulfillment, billing, call center, customer service
- Supply Chain Management: Inventory management, logistics, transportation
- Legal and Compliance: Contract management, risk management, regulatory compliance
These global business services may vary depending on the specific needs and objectives of the organization. The goal of a Shared Service Center is to improve efficiency, reduce costs, and standardize processes across the organization.
Characteristics of the Best Shared Services Centers
Many companies initially adopt the shared-services model within their domestic market, before expanding the concept globally. This often leads to each region operating as its own entity, striving to increase efficiency and cut expenses independently.
Continuously Evolving the Scope
Innovative companies broaden both their geographic reach and the range of global business services they provide. These companies offer no exceptions for their business units, with the Shared Service Centers serving all locations, employees, and units. Progressive firms also extend their scope to include specialized functions, rather than restricting their criteria to solely whether the SSC generates cost savings comparable to high-volume transaction processing.
As SSCs aim to enhance the value they offer to their business-unit clients, successful organizations view employee training as an investment, not as a discretionary expense. Our research indicates that problem-solving abilities are crucial in delivering improved service to internal customers, surpassing other competencies such as resolving issues and effective communication. Problem-solving is also found to be four times more impactful than any form of functional expertise.
Standardization via End-to-End Process Owners
There is an opportunity to increase cost savings and productivity within an individual process (e.g. accounts payable), as well as within any process within the shared services organization.
The most advanced companies have exceeded these boundaries by designating Global Process Owners who oversee end-to-end processes such as order-to-cash or purchase-to-pay on a global scale.
Benefits of a Shared Service Center
|Increased Efficiency||Increased Effectiveness|
|Economy of Scale||Specialization/Skill leverage|
|Technology leverage||Free up management to focus on business issues|
|Standardization/coordination||sharing information and resources across businesses|
|Greater Spans of Control|
How to Set Up a Shared Services Center
The following five steps could be taken as guidelines for organizations looking to set up any type of shared service center:
Clearly Define the Strategy
Securing senior-level sponsorship is crucial for the success of any SSC. Executive support focuses attention and elevates the project's importance within the organization. The SSC should be treated as a standalone business and a comprehensive business plan should be created. The plan should address system integration and the harmonization of business processes across regions and divisions. Decisions on the SSC's responsibilities and processes to be retained in-country must be made. The strategy should also address cultural, organizational, and political barriers to the adoption of shared services.
Architect the Operating Model
The company must determine whether the Shared Service Centre (SSC) will operate as a captive center (in-house) or be outsourced to a third-party provider. Clients opt for captive centers to preserve confidentiality for critical functions, build their own finance teams, and maintain control over accounting. Smaller organizations, however, see accounting as a non-core function and prefer to outsource it to experts so their leadership can focus on business. Another consideration is the location of the SSC. In Asia, three main options have emerged: India (Bengaluru, Hyderabad, and Gurgaon), Philippines (Manila), and Malaysia. The project team must evaluate various criteria, many of which are non-financial, to make a decision on the location.
A change of this magnitude requires a strong focus on driving and managing change throughout the organization. The entire finance function must be evaluated, including decisions about transitioning employees to the new SSC, retaining employees for business-partnering roles, and exiting employees. This should be done objectively, possibly with the help of external consultants, to ensure the right people are in the right roles. Organizations often neglect to engage external stakeholders in communication, such as customers, suppliers, bankers, auditors, and consultants. Engaging these groups is crucial for obtaining their buy-in, as they will be impacted by the transformation. Regular communication across functions is essential, providing progress updates, addressing bottlenecks, celebrating quick wins, etc.
Adopt a phased approach
Organizations can be overly optimistic with their timelines and take on too much too quickly. A phased approach is recommended, starting with transitioning the Employee Expense report process. This allows the project team to handle one process at a time, minimize disruptions, and achieve a steady state before moving on to the next process.
Make it a Center of Excellence (CoE)
Digitization can bring valuable capabilities to shared-service organizations, enabling them to contribute to the parent company's digital strategy. They can develop new online products and services, use analytics for business planning, enhance customer responsiveness through social media, guide online purchases with "next-best-action" roadmaps, and streamline operations through automation. Shared-service organizations can play a crucial role in improving front-end customer interactions, internal productivity, and supporting the parent company's digital goals.
India's Changing Shared Service Center Landscape
According to ‘2021 Global Services Centre and Outsourcing Survey Report by Deloitte’, India still remains the most attractive Outsourcing Destination for most Industries. By 2025, 500 MNCs are expected to open their Shared Service Centers in India which would raise the overall exports from SSCs to USD 58 – 81 Billion employing upto 2 Million people.
CXOs worldwide are adjusting their priorities, and Shared Service Centers must keep pace. Businesses are now relying on SSCs to drive innovation throughout their product value chain. There's a growing need for expertise in cutting-edge technologies like AI, Machine Learning, Cloud Computing, and Data Science. This demand is driven by a shift from establishing call centers to establishing Global Innovation and Research Centers in India, as seen with companies like Lowe's, Mercedes-Benz, Walmart, etc. India is poised to benefit from this change in priorities, offering a unique combination of high-skilled, technology-savvy, and visionary leadership talent, along with a thriving startup ecosystem.
Why Partner with ANSR to Set Up Your Shared Service Center
As India's leading firm in setting up Global Capability Centers (GCC), ANSR has helped more than 100 customers transform business shared services to improve value, increase agility, and create sustainable performance. We bring 15 years' expertise and a global team of professionals, who blend insights and skills to help our customers design, build and manage multi-functional business processes.