2007

Companies say the shared services gold rush is over - 23 April 2007

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

Ends

For more information please contact:

Jackie Howell at PA Consulting Group
Tel:  +44 20 7333 5406  E-mail: jackie.howell@paconsulting.com

Jonathan Oates and Dan Guthrie at Luther Pendragon
Tel:  +44 20 7618 9100

Alternatively please contact: 

Carol Briggs PA Consulting Group 123 Buckingham Palace Road London SW1W 9SR United Kingdom Tel: +44 207 333 6144 Fax: +44 20 73335452 E-mail: carol.briggs@paconsulting.com

Notes to editors

1. About the survey

Our research was carried out in late 2006 by an independent research consultancy. All survey respondents were offered full anonymity and were qualified by the researchers as to appropriate positions and responsibilities. Respondents are all senior finance and HR executives from companies employing on average 39,000 people each. There were 141 respondents from across a variety of industry sectors.

This is the second study PA Consulting Group has conducted, with a previous one carried out in 2001, meaning our researchers were able to track changes over time. It is a comprehensive analysis covering HR and Finance SSCs. The research was carried out using a combination of telephone and internet methodologies.

Press copies of the survey can be obtained from Jackie Howell at PA.

2.  About Shared services

Shared services mean organisations can seize economies of scale and deliver great services efficiently by standardising and consolidating bundles of services and processes.

The types of services which you would find within a shared service centre range from the transactional – payroll, recruitment administration and payment processing to more knowledge-based tasks such as compensation, benefits and management accounting.   

3. About PA Consulting Group

At PA Consulting Group, we transform the performance of organisations.

We put together teams from many disciplines and backgrounds to tackle the most complex problems facing our clients, working with leaders and their staff to turn around organisations in the private and public sectors. Clients call on us when they want:

an innovative solution: counter-intuitive thinking and groundbreaking solutions

a highly responsive approach: we listen, and then we act decisively and quickly

delivery of hard results: we get the job done, often trouble-shooting where previous initiatives have failed.

We are an independent, employee-owned, global firm of 3,000 talented individuals, operating from offices across the world, in Europe, North America, Latin America, Asia, and Oceania. We have won numerous awards for delivering complex and highly innovative assignments, run one of the most successful venture programmes in our industry, have technology development capability that few firms can match, deep expertise across key industries and government, and a unique breadth of skills from strategy to IT to HR to applied technology.

• defence • energy • financial services • government and public services • international development • life sciences and healthcare • manufacturing • postal services • retail • telecommunications • transportation

 • strategic management • innovation and technology • IT • operational improvement • human resources • complex programme delivery

Delivering business transformation

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