In the last two decades both Shared Service Centers (SSC) and outsourcing have emerged as an attractive solution for answering the increasing cost pressures and competitiveness on the market. Both options are recognized as enablers of cost reductions and increased efficiency. While the first one offer more control over function implementation and centralized control over staff growth and continuity, the second one is more convenient when business is under intense cost pressure and needs to deliver immediate results or simply when internal capabilities are missing to set up and run a captive SSC.

But why the big fuzz about choosing one or the other?

You do not have to see the two strategies as mutually exclusive, on the contrary. Technology is making major efforts to bring individuals and companies more closer together. Cloud technologies have made information and knowledge sharing across wide geographical regions fast, secure and easy. At the same time social media channels are strengthening brand identity and team cohesion of geographically dispersed teams.

“In a world of increasing collaboration we should always seek for ways to find complementary ways and areas for cooperation, leveraging the two models to reap the most benefits.“

However, some regions in Europe are still hesitant to involve external personal, particularly across borders. For example, in the Scandinavian market, except for IT outsourcing, other functions like Finance and Accounting (F&A) or Human Resources (HR) have tended to focus on captive SSC as the safest, most controllable option. In a recent SSON report, Carl-Henrik Hallström, Regional Head and GM Nordic Region for Wipro BPS, says:

“Nordic organisations simply cannot afford to fall behind their global peers when it comes to outsourcing,”

I can’t agree more. But things are finally taking a turn. Report from CBI Ministry of Foreign Affairs identified the Nordic region as having highest openness for international outsourcing. This reflects the potential of the region for outsourcing, but it takes time for the change in attitude to transfer in actual increased number of outsourced operations. The best alternative for these companies may be The Hybrid model which can be described as a company which has its own SSC, but simultaneously uses the services of external providers.
Typical example is a company having a captive SSC for Finance and Accounting (F&A) which uses the services of an outsourcing partner for transaction processing. In other words, companies using this approach are outsourcing the low risk/transactional tasks, while retaining shared services for high risk/analytical functions.The UCMS Group even sees SSC as a driver for outsourcing and vouches for the Hybrid model as the most effective in streamlining of processes, increasing efficiency and savings.

Are you in the process of reorganizing your business and global operations for higher efficiency? What do you see as the biggest challenge?

What do you think about the Hybrid model?

I encourage you to reach out and share your thoughts. Communication and collaboration are the root of each success story in today’s competitive world.