- Cost reduction
- Better quality
- Better manageability
- Business scalability
- Establishment of profit center
Shared Service Centers: World trends for 20175 June, 2017
It has proved to be so effective that it is rapidly developing on all continents.
SSON, the largest community of global shared services and outsourcing professionals, has surveyed over 500 companies with SSC and found that 22% of SSCs are located in North America, 15% in Southeast Asia, 13% in Australia and New Zealand, 10% in India, 10% in the UK, 10% in Western Europe, 8% in Central and Eastern Europe, 5% in Africa, 4% in Latin America and 4% in China. Most of these centers (39%) have been successfully operating for more than 10 years.
58% of SSCs perform all functions on their own, 12% collaborate with outsourcing providers and 30% use a hybrid model.
We set up our first Shared Service Center in 2008, and today our SSC serves over 800 clients. We have noted over the years that most companies in Russia and the CIS still prefer the outsourcing model, which entails transferring some of their business processes to an external SSC, but they are getting more and more interested in setting up their own SSC.
Models of cooperation with Intercomp
Processes transferred to SSCMost studies agree that the functions most commonly transferred to SSCs are, as listed by SSON, financial functions (27%), HR (15%) and IT (5%). E&Y and Deloitte, the world’s largest auditors, have confirmed that 36% of SSCs worldwide are multifunctional centers supporting various business processes.
Processes within core functions most commonly transferred to SSCs:
SSC advantagesSSCs traditionally offer the following main advantages:
One of the important aspects of achieving organizational goals is the ability to unite and coordinate the various parties involved as a fragmented command of process helps no one. Being able to continuously improve, raise performance and upgrade standardization are the key advantages for any organization that has centralized its accounting and administrative functions. As a result, regional offices know more and more about the activities performed by their colleagues, while headquarters promptly receive feedback from the regions. In addition, when a Group Policy Object is in place, the ability to cooperate is greatly increased.
Change driversThe key drivers for SSC development are as follows:
Driver No. 1: PeopleThe original SSC model depended on the centralization and automation of many services, and as a result, some operations over time were either outsourced or ended, while the remaining work required a more client-oriented knowledge-based approach. As SCCs develop, we see that soft skills, such as problem solving and leadership, are increasingly in demand.
The development of centers of excellence (COE) and staff development became main priorities in 2017 as it is necessary and possible to teach additional skills to existing staff.
Driver No. 2: Data analyticsData analytics have become the real star of the year with only 10% of companies with SSC which do not use data analytics to the full. Although this figure is much better than last year, data analytics are still used primarily to control costs rather than generate revenues.
Driver No. 3: Automation and introduction of modern technologiesThe digital market has taken over the world, and what was at first called technological has now become automated. Technology is the future, and people, processes and technologies are the main drivers of productivity.
Driver No.4: Revision of the concept of “value”Many companies have revised their understanding of “SSC value”. Traditionally, the main value and purpose for setting up SSCs used to be cost reduction and performance improvement.
But, given the new opportunities for collecting analytics, many companies have begun recognizing that the role of SSCs in supporting the development of ancillary services upon entry in new markets is no less important that processing essential analytics. The concept of “value” has thus shifted from “ruble” to a broader and more intangible notion of “service”.
Driver No. 5: New SSC model – Integrated Business Service (IBS)SSC models are inexorably changing. The previous models were implemented to achieve two purposes, namely centralization and standardization. But given today’s rapid changes and technology developments, SSC models are changing.
The new SSC model is more technological and client-oriented. It focuses on knowledge and methodology as well as on final results. This year, almost a quarter of respondents described their SCC model as an integrated business service (IBS). IBS ensures a high level of customer satisfaction, as well as allows offering new services and creates added value for businesses. IBS is also characterized by a clear division between expert and transactional operations.
Russian companies mainly set up multifunctional service centers combining functions such as accounting, treasury, HR management, IT and purchasing, while the SSCs of international companies in Russia are also mainly represented as multifunctional centers.