The evolution of SSCs over the years has seen many phases. The advisory and research teams of the Big 4 consulting firms have defined maturity levels for SSCs based on the age, scale, and value delivered by the SSC. The progress and growth are tracked per capability maturity levels. In the first phase, the direct transition of business processes to new in-house support centers is realized; minimizing the outsourcing burden.
In the second phase, consolidation of key processes and deliverable are achieved and the focus remains on economies of scale.
While the third phase includes implementation of defined Global Process Ownership and standardization around people, process & technology pillars.
The fourth maturity phase involves an end-to-end solutions delivery operating as a GBS model and implementing an outcome-based governance model with a strategic objective of adding positive bottom lines to the parent company’s business.
Transformation to GBS Models
There is a recent observation for global organizations with SSC; that almost 1/3rd of the global FTEs are part of their Shared Services units and it is remarkable considering the median age of the SSCs somewhere between 7-8 years.
As shared services centers operate mostly as cost centers, there remains a strong focus on FTE count, operational costs, and location benefits. With a range of services portfolio and new-age capabilities, SSCs have become key business enablers for parent companies. As we know, the SSC industry started on the basis of cost arbitrage and as a provider of back-office functions but it is imperative now to revisit the original objectives of setting up the SSC and its relevance in the changing business environment.
With ever-increasing pressure to reduce costs, SSCs are trying to find ways to create sustainable business models. Few of the companies have tried to turn their SSC into a Profit center delivering services to external customers. The approach hasn’t yet delivered much success and a majority of the SSCs still operate as a Cost center entity.