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Shared Services A Quiet Revolution

If the move towards shared services had a higher profile then the unions would protest, the media would criticise and the academics would find flaws. The sea of change around the way large organisations are now structuring themselves and outsourcing key services such as HR, IT, procurement and finance is happening very discreetly. Part of the reason why the change has been fairly gradual is because it's taken big organisations a long time to wake up to the advantages.

 

Shared Services a Cost Saving Solution

There are no shortages of organisations which have outsourced their services to private companies, local councils, the BBC and the banks, to name but a few. In the public sector, taking on a private contractor to manage HR sparked big protests because of the fear that it would hit jobs, but in the banking world hearing an Indian voice on the phone engaging in a spot of telemarketing has become the norm. Typically, a company would take its chosen service to a cheaper part of the country or abroad. While this has attracted some criticism, it is proving a cost-effective solution.
 

The Benefits of Shared Services Have Been Understated

There is an obvious cost benefit but there is also a benefit of objectivity. The contractor running a company's HR department, for example, may have different or improved practices which will lead to the recruitment of better staff  Their processes may be more robust, perhaps because they exercise a degree of independence and objectivity which the host company doesn't have.
 

A Common Perception is that Shared Services are Bad 

Despite this research has found little wrong with the shared services because it combines market principles with in-house control. Service providers can act in a dynamic and entrepreneurial way but are still accountable to the host organisation in the knowledge that if they get it wrong, they could lose the contract.

Shared-service agreements have generally been set up over time and their effect has also been gradual. However, they are changing the way companies operate, improving processes and enabling more communication between different areas of the business to ensure the organisation is far more joined up. It also enables companies to concentrate on their core business.

 

The Government is Encouraging Outsourcing to the Private Sector

Such is the effect of shared services that the government is now urging public bodies to go down this route by outsourcing to the private sector. It is encouraging hospitals, police forces and schools to set up shared-service arrangements. Whether they too can manage to outsource their recruitment or finance departments quite so quietly is another question.

Written by Victoria Campbell of Circle Square - Finance Jobs London / Accountancy Jobs London

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