Both Shared Services Centre (SSC) and India as a location for SSCs has been a point of discussion among business management circles, globally. It is one of the most discussed topic on improving operational efficiencies of corporate teams.
What is a Shared Service Center?
There is lot of material on internet defining or describing shared services centres. Typically, a shared service centre is a ‘business unit’ or ‘department’ of a geographically spread corporation or organization that provides various common back office services from a centralised location.
As an example one could take GE being services globally by its shared service center in Delhi-NCR.
What services does shared service center offer?
A shared services center could have multiple functional or cross functional services running a back office or support services e.g. Finance, HR, Legal, Facility, IT Services.
Large corporations have found it to be a very useful strategy to:
- reduce cost, use economies of scale
- bring in standardization (process and quality control) and
- increase efficiency through centralized services
There are innumerable use cases of what services can be provided by a SSC in each functional area. Only a few are listed below
- Finance and related – Book Keeping, Account Receivables, Forex management, Audit etc
- IT – Remote infrastructure management, Product Tech support, application maintenance etc
- HR – Payroll, Search, Employee benefit management
- Supply chain – Purchases and Inventory control, Distribution/channel management
- Others – Travel Desk, Legal drafting
What global location is most suitable for Shared services center?
India has been one of the most favoured destination for setting up a global SSC and be able to achieve above objectives. The affordable talent pool available across cities in India is mainly the attraction point.
Delhi NCR is the top destination for the relevant talent pool, followed by Bangalore, Pune as second best and Hyderabad and Chennai as third best.
Tire three cities of Jaipur, Chandigarh, Nagpur, Kochi, Trivandrum are also locations worth considering to get better feel of lower operational costs, low attrition and better quality of life.
Hundreds of global corporations and almost every international bank have established Shared services center in India. It may be worthwhile to note some names – GE, American Express, Bank of America, HSBC, Barclays, RBS, ANZ, Deloitte, Thomson Reuters, Siemens, Amazon, Ericson, Vodaphone, Dell, Steria, Ford etc. (the list is huge).
Is Shared Services good for Medium size organizations also?
One may ask if the shared services center a concept only applicable to large organization or mid-size corporations can also benefit. The short answer is yes.
A medium size company can adopt this strategy early on during their growth phase, unlike large corporate bodies that struggled to understand and learn from each other experience. The advantage Mid-size organizations have is that the concept and practices have been very well established. Mid-size businesses also have requirement affordable talent pool and recruited leadership to drive the back office operations, while the core business can be handled by their core leadership team.
It makes a perfect sense for mid-size Organization to both establish a SSC. India makes a perfect case as a location. We will recommend tire III cities also for them to be keep flying low and achieve higher efficiency and results.
Are there function specific Shared Services Centres?
Depending upon the scope of requirement and size of operation spread across the globe of a particular corporate business, it may be viable to setup function specific Shares services center. E.g. there are companies that have set-up shared services center for IT Services, providing IT Infrastructure management (with a NOC), tech support, product improvement, e-commerce site maintenance etc from one location to multiple locations spread around the globe. Similarly there are companies that have setup HR specific centres that handle global recruitment and HR processes.
It is dependent upon a business case how the Shared services center will be structured.