What are Shared Services and Why Do They Matter?
In many large organizations, transactional processes and crucial support functions are scattered across multiple locations, each operating with its own unique methods. This fragmentation often intensifies with growth through mergers and acquisitions. The concept of shared services emerges as a powerful solution to this challenge.
By consolidating lower-value, common transactional processes from disparate sites into a centralized hub—whether through a dedicated shared service center (SSC), outsourcing, or a hybrid model—organizations can unlock significant tangible and intangible benefits. Shared services involve centralizing business operations that utilize the same core processes across multiple locations or geographies. This consolidation entails standardizing these processes, relocating dedicated personnel and technology to designated sites, and re-engineering workflows to achieve best-in-class standards.
The cost-efficiency of shared services stems from centralizing back-office operations used by various divisions or processes within a company, thereby eliminating redundancy. Some organizations implement chargeback systems, billing divisions based on usage (per-use, per-quarter, or per-year), while others absorb these costs as part of ongoing business operations. Today, shared services models are widely adopted for critical functions like Finance and Accounting (F&A), Human Resources Management (HRM), and Information Technology (IT).
The ultimate aim of a shared services delivery model is to empower each business division to concentrate its limited resources on core activities that directly support its strategic business goals. Historically, technology has been a significant driver for adopting shared services. Consider the early 20th century: the cost of a single typewriter and the specialized training required for typists made centralized typing pools a cost-effective solution. This precursor to today’s shared service centers highlights the enduring principle of leveraging centralized resources for efficiency.
Who Can Benefit from Shared Services?
Organizations exhibiting the following characteristics are prime candidates for implementing a shared services strategy:
- Multiple, geographically dispersed operational sites.
- Duplication of administrative functions across various locations.
- Lack of standardized operational processes.
- Redundant work performed at different sites.
- Manual workflows, including approval processes.
- Incompatible information systems across locations.
- Limited access to advanced technological solutions.
- Sites that fail to share or adopt best practices.
- Development of siloed, localized, or temporary solutions.
- Escalating operational support costs.
- Sites consistently struggling to meet service level expectations.
Companies facing these challenges often find that the true costs of internal support services are obscured or unmanaged, service quality is not adequately measured, and internal customer expectations are neither understood nor met.
How Shared Services Drive Organizational Success
- Enhanced Efficiency:
- Best Practice Processes: Leveraging industry benchmarks and proven methodologies optimizes operations.
- Economies of Scale: Centralization leads to reduced service costs through increased volumes.
- Greater Span of Control: Consolidation of functions improves oversight and management.
- Optimized Technology Investment: High-volume transactional processes benefit significantly from technological advancements for cost optimization.
- Standardization & Process Reengineering: Centralized, standardized processes eliminate non-value-added tasks and drive continuous improvement.
- Increased Effectiveness:
- Service Level Agreements (SLAs) & Cost Management: Key Performance Indicators (KPIs) and SLAs ensure desired business outcomes while managing service costs.
- Sharpened Customer Focus: Continuous assessment of service levels by both internal and external stakeholders drives service enhancements.
- Leveraging Specialist Skills: Centralization allows for the concentration of subject matter expertise and the documentation of process knowledge.
- Empowering Core Business Focus: By managing transactional processes, shared services free up management to concentrate on strategic initiatives.
- Improved Decision Support: Well-defined operating procedures for exception handling provide clear guidance for prompt action.
- Strengthened Control Environment: Automation through technology and rigorous supervision enhance process integrity and compliance.
The Evolution and Impact of F&A Shared Services
Finance and Accounting shared services have transformed significantly since gaining traction in the 1990s. Initially viewed as a method to achieve economies of scale for large corporations, SSCs enabled the centralization of fundamental accounting processes such as accounts payable, accounts receivable, and general accounting. Over the subsequent decades, SSCs have demonstrated their value, particularly for global enterprises seeking to consolidate services and standardize transactional accounting practices.
Today, a significant majority of large enterprises have adopted some form of shared services model. However, the maturity of these centers varies greatly, with many underperforming SSCs failing to deliver the expected efficiency gains. Leading shared services organizations, particularly in finance and accounting, often achieve substantially lower operational costs compared to their average-performing counterparts, as highlighted by industry reports.
The strategic advantages of robust financial shared services are compelling. They facilitate process consolidation and standardization, offering greater agility for business expansion and market entry. Crucially, they allow core F&A teams to pivot from transactional tasks to higher-value activities like strategic financial analysis and planning, thereby contributing more meaningfully to overall business objectives. The adoption of advanced technologies, including AI and automation, continues to redefine the capabilities and impact of F&A shared services.
Insights for 2025 and Beyond
As organizations navigate an increasingly dynamic business landscape in 2025, the strategic importance of shared services is amplified. The ongoing digital transformation, coupled with the demand for enhanced data analytics and proactive risk management, positions shared services as a critical enabler of business resilience and competitive advantage. Embracing advanced automation, intelligent process automation (IPA), and AI-driven insights within shared services functions can further unlock efficiencies, improve decision-making, and create more agile operational frameworks. This evolution means shared services are no longer just about cost reduction, but about driving strategic value and enabling innovation across the enterprise.
Furthermore, the rise of remote and hybrid work models presents new opportunities and considerations for shared services. Effective management of distributed teams, secure data handling across various locations, and maintaining a strong service culture become paramount. Organizations that successfully adapt their shared services strategies to these evolving work environments will be better positioned to attract and retain talent, ensure seamless operations, and deliver superior service to their internal and external customers.
The integration of ESG (Environmental, Social, and Governance) principles into shared services operations is also gaining momentum. This includes optimizing resource consumption, ensuring ethical labor practices within service delivery, and enhancing transparency in reporting. Shared services can play a pivotal role in embedding sustainability and responsible business practices throughout an organization’s value chain.
About MYND Integrated Solutions
MYND Integrated Solutions stands as a leading global Business Process Management (BPM) services provider, specializing in key verticals: Finance and Accounting Outsourcing (FAO), Human Resource Outsourcing (HRO), Customer and Document Management Services, and Consultancy. Established in 1997 with a small team in Delhi, MYND has grown exponentially, evolving into a comprehensive BPM partner with a presence across India and international offices in Singapore and Dubai, serving the APAC and Middle Eastern regions.
Responding to corporate needs for robust back-end services in Finance and HR, MYND has become a specialist in technology-enabled Finance & Accounting and HR operations, delivering customized solutions for a global business environment. Our services are designed to optimize operational efficiency and strategic focus for our clients.
MYND operates on a technology-agnostic, SaaS-enabled service delivery model, minimizing operational expenditure (OPEX) and eliminating capital expenditure (CAPEX) for clients. Our commitment to process excellence and quality is underscored by certifications such as ISO 27001:2013 and SSAE 16/ISAE 3402 controls, ensuring reliability and security. Our vision is centered on achieving leadership in business value creation, customer satisfaction, and people development.
