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Shared services centers, the best solution?

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Shared Service Center

Shared Service Center

Many international companies are using shared service centers for a range of services. Most of the time, these shared service centers are located in regions where the salaries are lower than in other countries. I experienced few times this way of process in the financial and accounting area. Is this an advantage for companies to operate in such way ?

 As every system, shared services centers present advantages and disadvantages. In a multinational company, common processes are set up and used by every location. It means that there is a standardization of the processes, and if you are able to perform tasks or activities for a location, you could do it for every location. This seems to be an advantage. Nevertheless, there are also specific requirements for every location, for legal purposes. I experienced recently such case, in which some intercompany transactions needed to be supported by an invoice. These documents went never raised, which could cause some issue on a legal point of view.

By noticing such problem, my questioning was the following: are these process set up correctly by involving all the people playing a role in these process? Are the requirements for each location correctly analyzed? Are the people performing these processes well trained? By asking these two questions, I want to talk about the following. In order to perform correctly some tasks, you need to know and understand the purpose and the implications of the tasks you are performing. In order to have things under control, a good training needs to be provided to the operators. This is the difference between to delegate a task and a process. A process is a range of tasks, and by delegating a process, the people acquire more control on this process, understand better the purposes of the process, and it brings more added value in terms of competences and knowledge, and indirectly more value for the company.

If I am talking about knowledge and competences, it is because sometimes, I have the feeling that people working in shared service center, in India or other locations with lower salaries, are a little bit the slaves of the companies, performing basic tasks for a competitive price. I have the feeling they are considered as enough stupid to do such job. If it is the case, it is for me a mistake. I noticed an important people turnover in such organization, because people want to move to other function, to more interesting jobs. As you know, when people move to another function, there is always a loss of knowledge after the handover. This loss of knowledge has a negative impact on the service quality, and the time spent to solve some problems issued by such situation represents a cost for the company. Once again, we are coming back to the disadvantage of short term views.

Does it mean that shared service centers does not represent added value except for financial advantages? I will not be so categorical, but there is some requirements needed. First, we have to integrate the dimension of personal development. We are not the only one in the western countries who wants to progress in our professional career. The evidence is that in countries like India, or in South America, there are also very talented IT engineers, financial people… It means that the training aspects are very important in order to provide high quality services, and to contribute to the professional development of the employees and the interest of their job. The implemented technologies are also important in order to improve such operating structure. In certain cases, I noticed that the shared service center structure brought about more work for the beneficiary location, in term of transmission of documents and information. And last but not least, an efficient organization is necessary to ensure a smooth running of a shared service center….and for the all company too!




Written by Eric Saint-Guillain

October 19, 2009 at 21:40

Posted in Business

Tagged with , , ,

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