Globalization brings a new way of how to #optimize and #improve business processes on a global scale. Shared Service Centers or business process outsourcing is the answer. It brings process optimization, #standardization, #automation, and #service #quality improvement. Central and Eastern Europe are currently experiencing a boom in Shared Service Centers (SSCs).
However, SSCs are not a new phenomenon. The first SSCs began in the early 1980s and are constantly evolving. Multinational companies initially created centers focused on transaction processes such as #finance and #accounting. Later, centers expanded into other business functions such as customer service, call centers, purchasing, marketing, logistics operations, legal, human resources, IT, and other support functions.
Organizations generally describe SSCs depending on their location, such as: "On-shore," "Near-shore" (near Europe, for example), or "Off-shore" (anywhere in the world, but outside the home country, or, e.g., outside Europe). Attractive offshore locations include India, the Philippines, China, Costa Rica, Brazil, Mexico, etc.
The most attractive locations for the shared service centers in #Europe include #Ireland, #Poland, the #Czech Republic, #Romania, #Hungary, and #Slovakia. Organizations confirm several factors that influence their choice of country for their new shared service center. The most frequent include a sufficient number of skilled workforce, an excellent knowledge of languages, optimal labor costs, an attractive business environment, political stability, infrastructure, and more.
SSCs usually provide business services to the founding organization and other business units across Europe, the Middle East, Africa, Asia-Pacific, North and South America.
Centers in the CEE region often provide a wide range of business processing services. Transactional type of services and high added value service that requires a highly skilled workforce. Transaction services usually include #financial #services such as accounting AR, AP, assets, travel expenses, GL, taxes, planning, reporting, analyses, etc.
Other frequent business functions within CEE SSCs are #purchasing, #customer services, and call centers supporting primary European customers in multiple languages. Few centers provide #HR services such as talent acquisition, training and development, and HR operations, including payroll processing.
High value-added services
Improving services, optimizing costs
Process #optimization, service #standardization, continuous #service level #improvement, and #cost #reduction are considered the most significant SSC advantages. Most Shared Service Centers apply a service level agreement for their customers, which guarantees service delivery in the required quality, scope, time, and costs. Continuous Improvement is a standard norm that helps centers optimize their processes, costs, quality, time, and other parameters.
Most of the SSCs provide services only for the organization and its subsidiaries. They do not serve external customers. A minority of the centers, but this number is growing, offers their services to external customers and generates profit. This model creates high pressure on service quality, delivery, customer service, and cost optimization.
Impact on the labor market
The growing trend of new SSCs in CEE is becoming more pronounced and has a significant impact on the workforce. Organizations that intend to roll out their SSCs are looking for regions with a sufficient amount of available #quality #workforce that will adequately perform the business functions. On the other hand, some companies transfer their center to more cost-effective locations. This fact may adversely affect employment rates and job stability in the region.
Hiring, developing, engaging, and retaining people at reasonable costs is one of the critical elements to lead a sustainable SSC successfully.
Most SSCs have developed proactive tools to attract potential employees. For example, they #cooperate with local high #schools and #universities, support talented students, #promote #employer brand, organize #job #fairs share their stories on #social #networks, #support #communities. All these activities significantly improve their way how to attract potential employees. Succession planning is also a critical talent management tool widely utilized within SSCs. Most of the SSCs population in the CEE region are the Millennials generation and Gen X.
What might the future bring to the SSC industry?
New #emerging #technologies and #intelligent #applications will significantly impact the SSC industry. More process #automation, #robotization, and increased service quality will result from the deployment of new technologies. Automation will high likely shift the transactional jobs from people to machines. Automated systems will substitute Low-skilled jobs. People currently holding these jobs will need to develop new skills to adapt to these changes. This technological shift will also create pressure on the education system to teach students new skills.
Organizations confirmed they are willing to transfer more high-value jobs and business functions to the CEE region. Countries with an excellent educational system that produces a highly-skilled workforce will be on the top of the list.