Offshore or Onshore? Why Global Organizations Are Taking a Closer Look at Having Cost-Saving Shared Service Centers Close to Home
The term “Shared Services Center” (SSC) has many meanings. For business organizations, they look to shared service centers to help streamline offerings and drive value through standardization and simplification. But for decision makers, this often poses challenges globally as they struggle to provide year over year tangible results, which require investment, while constantly demonstrating additional productivity and efficiency improvements. Today, SSCs have reached an inflection point— they have expanded from conducting transactional functions to now performing more complex tasks all while working to take advantage of technological advancements. This broadens their scope and shows their true capabilities.
According to the most recent Deloitte Global Shared Services Survey, there are four main reasons why executives ultimately choose to opt-in to having a SSC: lower costs; expertise; higher quality; and flexibility in staffing.
Bringing the Services Home
For years, shared services decision makers have struggled with the question of where to set up their centers – and the debate ranges from economic to political to technological factors. The Deloitte survey findings reveal that proximity to existing operations or headquarters has resurfaced as an important criterion with respect to choosing a service center location.
Rather than looking to countries like India, Poland and Mexico, some decision makers have renewed their interest in the U.S. as a home for their SSC. The survey found that interest in the U.S. has more than doubled (from 5% to 14%) in the past two years. Some reasons for this include the current economic environment as well as the fact that the processes being considered for an SSC have grown in complexity and now involve additional customer interaction as well as increased language skills.
From Saving to Monetizing Shared Service Centers
Shared services centers are known for the ability to deliver cost savings benefits for organizations. That said, a small number of organizations have found alternative ways of leveraging their shared services assets by monetizing their SSCs, which is particularly effective if they are not in a position to maintain sole operation of their SSCs. Survey findings reveal that organizations who find themselves in this situation either provide their SSC’s services to other organizations (13%) or sell the asset to an outsourcing service provider (8%).
Talent Wars Rage On
One increasing challenge experienced by SSCs is in finding and retaining talent. With SSCs experiencing turnover rates of 20% or more, many are further considering alternative talent models such as part-time, virtual and contracting options, and even crowdsourcing in an effort to mitigate the impacts.
At the same time, technological advancements such as digital labor and Robotic Process Automation (RPA) are allowing for the automation of a number of the more transactional tasks associated with back office. This is changing the labor skill and capability requirements of a high functioning SSC. These technologies are fundamentally changing the strategic decisions some make with respect to on-shore versus off-shore services as well as whether one retains their center or leverages a third-party outsourcer (e.g., the build vs. buy decision). Expectations are high for RPA, with many in the survey believing that RPA will deliver savings of 20% or more.
What’s Next for Shared Services Centers?
Over the next three to five years, SSCs are expected to revolutionize their delivery capabilities and the scope of services they deliver to the enterprise. If organizations have support from the C-suite, show a hunger to leverage emerging technologies to innovate and continue emphasizing the need to evolve their talent agenda, SSCs can continue being a core and defining component of some of the most successful companies in the world.
Noemie Tilghman specializes in leading multi-functional, global business service strategy and operating model design programs which drive large-scale cost reduction, process efficiency and effectiveness improvements. She is also the global Deloitte leader for a number of Global Business Services initiatives including the 2015 and 2017 Global Shared Services/GBS Survey as well as the go-to-market champion for Deloitte’s proprietary and highly innovative service delivery transformation analytics tool – Visual Decision Xccelerator™ (VDX™). Noemie is also a frequent speaker at industry conferences; recent appearances include SSON, Shared Services Link, and Deloitte’s SSOEF. Noemie lives in Deerfield, IL with her husband, 2 daughters, and black lab. She enjoys traveling, theater, sports as well as supporting countless hours of her daughters’ extracurricular activities!