Survey Shows Emerging Markets Are Increasingly Attractive Locations for Shared Service Centers

Organizations are increasingly expanding their shared service centers in emerging markets, regardless of skills shortages, time zone differences and language barriers, according to Deloitte’s latest survey.

SSCs are increasing in number and size in emerging countries, while their number is decreasing in advanced economies. “Expansion across the globe indicates that virtually every country is now a source for talent and in turn a potential SSC location,” the report said.

Deloitte surveyed 300 companies that run 1,000 SSCs across the globe and found that, of these, the number with SSCs in Latin America has grown from 15% in 2013 to 16% in 2015. The Asia Pacific region has also become a hotspot where 17% of those polled have SSCs, up from just 12% two years ago.

The number of companies with SSCs has fallen in developed markets such as Western Europe (27% in 2015, down from 32% in 2013) and  the United States and Canada (19% in 2015, down from 23% in 2013). Meanwhile, Eastern Europe (10%, up from 8%) and India (8%, up from 7%) showed modest increases in the number of SSCs.

“Language difficulties, skills shortages, time zone differences, and regulatory requirements no longer keep companies from finding talent in developing countries, including new markets in Africa and the Middle East,” said the consulting firm.

SSCs are not only spreading around the globe; they are also trying to handle a greater variety of back-office functions. According to the report, the number of shared service centers with more than three functions has risen by more than 40% since 2013.

“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,” the report noted.