Shared services involve the ‘sharing’ of services within organizations so as to run the concerned organizations in a more cost effective and efficient manner. The roles of the shared services centre can vary within the company and can be adjusted to suit the company’s preference. These services are different from outsourcing, in which an external third part, totally independent from the company, is paid to provide a particular service that was being handled previously by the department itself.
The Value of Shared Services
The main advantages of shared services are as follows:
· Cost effectiveness by reducing the number of staff.
· Improvement of the quality of services.
· By sharing services, companies can release staff and engage them to provide better customer service.
· Eliminating redundancy in services.
· Companies will be able to offer more services that were not available earlier.
· More up-date shared services can be availed
· Gain advantage over competitors.
Areas of Shared Services
The most common and popular areas of shared services include the financial sector such as tax and accounting, human resources, marketing, and information technology (IT). Both the private and public sectors have been opting for shared services since the early ‘80s and ‘90s respectively. Companies like BBC, Ford and Pfizer have reported cost cutting of nearly 46%, and the United States and Australian governments have also incorporated these practices as a way to reap the benefits of the intra and inter departmental collaborations.
As these services have to be shared, companies may face certain obstacles such as boundary issues, communication hurdles with the HR team, objections to the service available, or complaints from customers. To resolve these obstacles, companies must make sure the shared services are well defined right from the beginning. One of the key points to consider when opting for shared services is to determine how it fits with your other departments such as HR and Customer Service. The nature and role of the shared services should not overlap or clash with the other departments.
Apart from the boundary issues, shared services can come with an additional price tag, especially if it is not provided at the same location as the company. Also, setting up and implementing the process can take a few years.
Shared Services Center Requirements
Companies need to establish a well-defined plan and discuss it with senior board members before implementing the same into their infrastructure. The range and scope of activities incorporated in shared services should be sorted out at the initial stages to avoid duplication of function. Effective communication between the internal and external divisions is necessary to manage these services well. Most importantly, these services have to be aligned with the overall aims and objectives of the company, and offer the same commitment.
The location of the shared services can be in the same country as the company (on-shore), in a nearby location (near-shore) or in different geographical locations (off-shore). Depending on the companies’ need, the coverage of the range of activities can be chosen.