Shared Services, Outsourcing, PA Consulting, Survey

Companies say the shared services gold rush is over

But average cost savings for business still worth tens of millions of pounds

HR and Finance Directors across Europe are keeping Shared Service Centres (SSCs) in their home country and focusing on quality of service delivery over and above cutting costs and selecting offshore locations, a survey from PA Consulting Group (PA) has revealed. SSCs occur when companies consolidate one or more services into a single unit as opposed to having multiple teams across an organisation.

Companies also highlighted how over the last five years they have increased the ways in which they utilise SSCs for HR and Finance functions to generate an average cost saving of 12% but have reduced their expectations for head count and cost reduction by half. 92% of respondents said that their SSCs have either met or surpassed expectations and stated that the average planned payback period has extended to 3.6 years.

75% of businesses located their SSCs in their organisation’s home country as opposed to low-cost regions such as Eastern Europe or India, and cited that their preference for selecting mature economies such as the UK and the Scandinavian countries was in order to benefit from their expertise and quality of the available resource pool.

An increasing number of companies also indicated in the survey that they are at a critical juncture with their shared services and so as to sustain current successes are exploring a hybrid mixture of in-house SSCs and outsourcing. When discussing trends for the future, 50% nominated a hybrid mix, compared to 35% mentioning in-house solutions.

Jonathan Hogg, a member of PA’s Management Group, said:

“Big business has found that the huge cost savings available five or six years ago are harder to achieve. Companies have to be much bolder and creative in finding ways to make incremental cost savings.

“The shift in sentiment towards a desire for greater service satisfaction above cost reduction has come about through the increased sophistication of the SSC offering. SSCs are now being utilised to assist in higher skilled processes such as talent development, management accounting and the training of staff.

“For the majority of companies there is still a long way to go in reforming their operations so they not only get the most out of them but achieve what is best for their business.”

The most popular benefits cited were greater efficiency and an ability to handle peaks in demand more effectively. Typically, processes that were paper-intensive were the most common to be undertaken by SSCs.

Over half of the respondents also indicated that their SSCs employed more than 50 people with a handful (7%) employing 500 people or more.

A summary of results is available by contacting:  sharedservices@paconsulting.com

For more information please contact:
Jonathan Oates and Dan Guthrie, Luther Pendragon  +44 207 618 9100
Jackie Howell, PA Consulting Group   +4 207 333 5406