Introduction
Shared service centres (SSCs) have evolved from being a cost-saving measure to 'strategic enablers' of organisational efficiency, customer-centricity, and innovation. First conceived in the late 1980s, SSCs revolutionised business operations by centralising and optimising routine processes. Over time, the model expanded globally, adopting advanced technologies to enhance operational excellence and drive business outcomes.
This article explores the historical evolution of SSCs, their role in driving strategic goals, and the methodologies that organisations can adopt to maximise their potential and leverage digital emerging technologies to redefine SSC operations.
Shared service centres at a glance
The concept of shared services emerged in response to organisations' increasing need for operational efficiency. By clustering similar resources in centralised locations, companies could achieve greater productivity and higher service levels.
Early development
In the late 1980s, SSCs primarily focused on back-office functions such as accounting, payroll, and human resources. These processes were centralised, analysed, and optimised by reducing staff and eliminating non-critical activities. This approach enabled organisations to improve efficiency while cutting costs.
Global expansion
As the benefits of shared services became evident, organisations extended the model globally to capitalise on cost efficiencies. Geographies with a skilled but lower-cost workforce became hubs for SSCs. This shift not only reduced costs but also increased the scalability and operational scope of SSCs.
Current challenges
Modern SSCs face challenges such as:
Increasing consumer demands for sophisticated, personalised service.
Heightened competition and lower barriers to market entry.
The need to adopt advanced technologies while maintaining profitability.
SSCs must now move beyond traditional efficiency-driven roles to become strategic partners that foster innovation and customer-centricity.
Key success factors shaping SSCs
To thrive in today’s business environment, SSCs must embrace emerging trends that redefine operational priorities and enable them to address evolving organisational needs.
Customer-centricity
Historically, businesses prioritised internal efficiencies over customer needs. Today, digital platforms have empowered consumers, providing instant feedback and influencing organisational reputations. SSCs must adapt by aligning operations with customer expectations, ensuring that processes and outputs reflect market demands.
Process standardisation
Efficient and consistent processes are crucial for customer satisfaction. Standardisation reduces variability and enhances operational predictability. SSCs need to assess which processes are suitable for centralisation and implement frameworks that ensure uniformity without compromising flexibility.
Technology adoption
Emerging technologies such as AI, IoT, and cloud computing have transformed SSC operations. Leaders must critically evaluate these technologies’ benefits and risks, integrating them in ways that enhance efficiency and create competitive advantages.
The evolution of SSC maturity
SSCs have progressed from basic centralisation to becoming integrated business hubs. However, their maturity varies across organisations.
Levels of SSC maturity
Basic centralisation: Centralised back-office operations focusing on cost reduction.
Integrated business services: Comprehensive SSCs offering multiple functions across geographies, with centres of competence.
Assessment of SSC maturity requires analysing factors such as process complexity, talent availability, and technological capabilities. Identifying gaps and prioritising improvements can help organisations achieve greater efficiency.
Four key levers for maximising SSC potential
To unlock the full potential of SSCs, organisations must focus on four critical areas:
1. Service classification and location analysis
Organisations must classify services into three categories:
Strategic services: Require local expertise and are not ideal for SSC centralisation.
Cognitive services: Blend operational execution with strategic decision-making and offer the greatest potential for customer-centric innovation.
Operational services: Involve repetitive tasks with high standardisation potential, making them ideal for automation and relocation to cost-efficient geographies.
Selecting SSC locations requires evaluating factors such as talent availability, cost advantages, and infrastructure. Cognitive services prioritise skilled talent, while operational services benefit most from low-cost environments.
2. Leveraging technology
Technologies such as robotic process automation (RPA) are transforming SSCs. RPA operates across three levels:
Single-process automation: Automates repetitive tasks, such as payroll handling.
End-to-end automation: Integrates multiple processes, monitored by employees.
Cognitive automation: Uses AI for decision-making and predictive analytics, enhancing capabilities such as customer profiling and service optimisation.
3. Establishing targets and milestones
Defining clear objectives ensures smooth transitions to SSC models. Key considerations include:
Efficiency gains: Quantifying cost savings and service improvements.
Reliability: Building trust in SSC outputs through consistent quality.
Risk management: Mitigating potential challenges during and after migration.
Talent retention: Ensuring a steady supply of skilled employees for SSC operations.
4. Governance models
Effective governance structures are critical to SSC success. This includes:
Centralised service administration.
Planning and measuring units for demand management and SLA monitoring.
Operational excellence teams to drive continuous improvement and automation.
SSCs as a business differentiator
Modern SSCs are more than cost centres. They are vital business enablers that foster innovation, customer satisfaction, and operational resilience.
Strategic impact
SSCs enable organisations to:
Enhance customer experiences through tailored services.
Drive innovation by integrating emerging technologies.
Strengthen market positioning by delivering superior operational outcomes.
Industry-specific priorities
SSC strategies vary across industries. For instance:
Financial services: Emphasise risk management and regulatory compliance.
Retail: Focus on customer interaction and supply chain efficiencies.
Measuring SSC performance
Defining and monitoring key performance indicators (KPIs) ensures SSCs meet organisational goals. Examples of KPIs include:
Efficiency metrics: Cost savings and process throughput.
Service quality: Customer satisfaction scores.
Talent management: Retention rates and skill development.
Balanced KPIs ensure organisations achieve operational excellence while maintaining flexibility and scalability.
Recruitment and talent management
SSCs’ success depends on attracting, retaining, and developing talent. Key strategies include:
Offering competitive career pathways.
Planning for manageable turnover rates.
Building teams with technical and cultural alignment.
Taxation and location strategy
Choosing SSC locations involves balancing cost savings with strategic benefits. While tax incentives can offset costs, organisations must navigate regulatory complexities and ensure compliance with international standards.
Conclusion
Shared service centres have come a long way since their inception, transitioning from cost-saving mechanisms to strategic business hubs. In the face of digital transformation and rising customer expectations, SSCs must embrace innovation, standardisation, and customer-centricity.
By leveraging key technologies and establishing robust governance frameworks, organisations can transform SSCs into powerful drivers of growth and competitiveness. As industries continue to evolve, SSCs will remain integral to achieving sustainable business success.
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