Keywords: shared services, finance shared services, outsourcing, offshoring, BPO, shared services centre, SSC

Shared service growth overtakes traditional outsourcing

Ivan Ujvari | News | 3 May 2012

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Growth of shared services, both domestic and overseas, has outpaced that of traditional outsourcing, according to a new report.

KPMG's Sourcing Advisory Pulse Survey reveals that shared services is now the strongest area of growth within the global business services (GBS) portfolio for more than half (52%) of service providers.

Analysing GBS data during the first quarter of 2012, the findings reflect a trend that has been emerging over the past 24 months, KPMG reported.

Traditional business process outsourcing (BPO) has in turn declined over the quarter, although it remains a main component of business services.

According to Stan Lepeak, Global Director of Research for KPMG Shared Services and Outsourcing Advisory, there has been less demand for "traditional, generic, transaction-oriented outsourcing arrangements" within finance and accounting, while businesses have turned towards more specialised BPO.

"This trend in focusing on more specialised outsourcing is an outgrowth of the expanding number of quality global sourcing locations with highly skilled resources, the ability of Indian services providers to diversify delivery capabilities beyond their home markets, and the growing sophistication of skill sets becoming available," Mr Lepeak explained.

Further highlighting the globalisation of service delivery models, 68% of the service providers surveyed by KPMG reported pipeline growth over the first quarter of the year, a 7% rise on the previous quarter.

KMPG suggested that while many businesses are re-examining their models and considering shared services, the use of near and offshore shared services has grown.

It is not just India that has become an attractive location for shared services centres. Last week, experts from the global shared services industry highlighted Central and Eastern Europe as some of the most attractive destinations in which to establish a facility.

Locations such as Lithuania, they said, meet the key criteria of relocating services; namely people, price and proximity.