Shared Services Centers (SSCs) are increasingly expanding in the emerging market, with a vast majority of outsourcing buyers finding ways to address concerns such as language skills, time zone coverage, and regulatory requirements, according to Deloitte’s Global Survey of SSC operators.
Expansion across the globe indicates that virtually every country is now a source for talent and in turn a potential SSC location. In the survey, 16 percent of respondents said they have an SSC in Latin America, while a few disclosed running SSCs even in Greece, Africa and the Middle East.
Cost saving has, however, remained the key reason driving companies to adopt SSCs. Respondents reported a 15 percent reduction in headcount during the first 12 months of operation, building on the 13 percent drop reported in the 2013 survey.
Furthermore, SSCs have helped organizations to boost productivity by 8 percent.
Beyond Shared Services, organizations are also accelerating their journey by increasingly adopting Global Business Services (GBS) models, leveraging the lessons from single-function SSCs and, in some cases, skipping over the single-function SSC’s journey completely.
Today, according to the report, there are only a few SSCs handling single functions. Shared Services Centers with more than three functions have increased by more than 40 percent over the last two years.
The benefits of moving straight to a GBS model include shared methods and tools, lower costs through optimized labor pools, a shared governance structure and improved controls. The survey results show that organizations most commonly define GBS models as multi-function, multi-region and multi-business led by a single GBS leader.
“While some organizations are able to serve all of their business units or segments with traditional back-office functions, they are still working toward a cross business unit or segment-wide strategy for functions from middle and front office functions,” the report added.
The consulting firm describes language barriers, time zone coverage and regulatory requirements as ‘previous challenges’ and confirms that SSCs are moving from developed to emerging markets.
Nonetheless, it says organizations will need to implement chargeback methodologies and leverage transfer pricing to effectively address tax implications and regulatory requirements.