sharedservices

Shared services is an organizational model in which routine business-support functions are consolidated into a single or a small number of centers to serve multiple business units within a corporation. The aim is to standardize processes, improve service quality, reduce costs through economies of scale, and provide clearer cost accounting and accountability.

A shared services center (SSC) typically handles functions such as human resources, information technology, finance and accounting, procurement, payroll, and facilities management. Services are delivered under a formal operating model, often a service catalog with defined service levels (SLAs) and chargebacks or cost allocations to consuming units. Processes are standardized and often automated, using common enterprise platforms and data models.

Variants include captive SSCs owned by the company, nearshore or offshore delivery locations, and arrangements with third-party BPO providers. Hybrid models combine internal SSCs with external partners. The model is closely linked to the concept of centers of excellence (CoE) that develop standardized, best-practice processes and controls.

Benefits include lower unit costs, improved process consistency, faster cycle times, enhanced compliance and control, and greater visibility into service performance. Risks include implementation and transition costs, change management challenges, potential loss of specialized domain knowledge, data security concerns, and dependency on the SSC’s performance.

Implementation typically proceeds through assessment of activities, design of a target operating model, migration of processes, and ongoing governance. Performance is measured with metrics such as cost per transaction, SLA adherence, processing times, and customer satisfaction.