Nearshore Americas

Downsizing the Sequel: New Terminology But Same Ultimate Aim

By Eric Hochstein

Fernando Rocha, the CEO of Grupo Posadas Shared Services, described (here at the SSON Show Orlando) how his company has taken a group of shared services functions that were cost centers for his company and have turned them into a profitable strategic business unit servicing Posada’s 115 hotels in Latin America, and diverse commercial clients including auto manufacturer Volkswagen, financial services giant ING, satellite television marketer Dish network, and a large Latin American restaurant chain.

About five years ago, Rocha said, his unit accounted for only 2% of revenue. But as it expanded from a single back office supporting the hotel’s SAP implementation, adding a call center (which grew from 25 seats in Mexico City in 2005 to more than 2000 FTEs now), and strategic sourcing and procurement functions, the unit has focused on serving the parent company’s internal strategic needs, while also meeting requirements of external clients.

Rocha’s goals are to continue to generate new revenues by providing economies of scale to his internal clients while commercializing the capabilities his unit develops as a result. He tries to manage his operations to align with the strategies of his growing company, which manages $900 million of real estate, 115 hotel operations (with 50 more expected in the near future), and a timeshare division which is 10 years old and generates 25% of the parent company’s EBITDA.

Rocha spoke on a panel designed to illustrate how shared services could do more than just provide cost savings and productivity improvements to corporations and become elements of strategic transformation. I must say, it sounded vaguely familiar.

While the Grupo Posada’s story of shared services strategic success is still a rarity in the global corporate environment, if reminded me of how, more than 30 years ago, I was trying to tell the same story, using different terms and without today’s technology enablers. The more things change, alas, the more they stay the same.

Just after I graduated from business school, I joined the staff of Arthur D. Little, Inc. One of my first assignments as the most junior member of the staff in the Washington office was to gather information for a seminar series that Bob Tomsako, an organizational design and behavior consultant, was preparing to deliver to high level executives on Downsizing the Corporation.

He asked me to find corporate cost centers that were being turned into profit centers and prepare to present my findings at the seminars around the country. I found a few, documented their successes, Bob gave me a few minutes at each program to talk about what “we” had discovered in this “new” business trend.  It was the beginning of my career in consulting, outsourcing, public speaking and writing.

Well the seminar series that we did in 1985 turned into Bob’s first book, called Downsizing:Reshaping the Corporation for the Future. I got a brief acknowledgment in the foreword and no royalties, but the book was one of the first to address both downsizing and the impact of what has come to be called shared services on the corporation.

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Eric Hochstein is Managing Director of Highstone Associates, Inc., a Barrington, IL-based business and economic development consulting firm, focused on strategy and business development, site selection, and marketing for public and private sector organizations involved in technology and knowledge-based commerce. Between 2003-2010, Highstone Associates represented the province of Ontario for investment attraction in the US in the business services and financial services sectors, including outsourcing.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

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