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Shared Service Centers (SSCs) reduce costs by consolidating one or more back-office operations used by multiple divisions of the same company—such as finance, information technology, customer service and human resources—into a shared operation. By creating a stand-alone or semi-autonomous Shared Service Center, companies can eliminate redundant activities and improve efficiency, services and customer satisfaction. Because of the need of every corporate department for finance and human services, these functions offer a common opportunity for an SSC model. Many of the savings come from standardizing technology and processes on a national and regional basis, making it easier to provide support for multiple business units, reduce personnel and improve the speed and quality of service. Despite the success of Shared Service Centers, some SSC pioneers are moving to variations on the model: outsourcing back-office operations to a third-party provider, and consolidating and moving SSCs to countries with lower labor costs.
A successful move to a Shared Service Center model requires a carefully planned and managed transition. The transition should:
- Standardize processes before the shift;
- Consolidate processes and people without losing key employees and disrupting services;
- Reengineer systems: The first cost savings usually come from reduced headcounts and redesigned processes;
- Communicate clear vision and early successes by top management;
- Win buy-in from departments that will use SSC.
Shared Service Centers are used not only to improve cost savings; they also help companies respond to the marketplace and pursue rapid growth strategies by:
- Delivering higher quality service and improved customer satisfaction;
- Capturing economies of scale;
- Increasing standardization and use of leadingedge technologies;
- Freeing up employees to spend more time and resources on their core jobs;
- Providing flexibility to quickly add new business units and expand geographically;
- Enabling rapid integration of new acquisitions.
Related Bain capabilities
Bangemann, Tom Olavi. Shared Services In Finance and Accounting. Gower Publishing Limited, 2005.
Bergeron, Bryan. Essentials of Shared Services. John Wiley & Sons, 2003.
Kennedy, Robert E., and Ajay Sharma. The Services Shift: Seizing the Ultimate Offshore Opportunity. FT Press, 2009.
Kris, Andrew, and Martin Fahy. Shared Service Centres: Delivering Value From Effective Finance and Business Processes. Financial Times Management, 2003.
Melchior, Daniel C., Jr. Shared Services: A Manager's Journey. John Wiley & Sons, 2008.
Quinn, Barbara, Robert Cooke, and Andrew Kris. Shared Services: Mining for Corporate Gold. Financial Times Prentice Hall, 2000.
Reilly, Peter A., and Tony Williams. How to Get Best Value from HR: The Shared Services Option. Gower Publishing Limited, 2003.
Schulman, Donniel S., Martin J. Harmer, John R. Dunleavy, and James S. Lusk. Shared Services: Adding Value to the Business Units. John Wiley & Sons, 1999.
Tham, Irene. "Shared services: Getting it right." MIS Magazine, February 2005, http://www.misweb.com.