Keywords: shared services, financial shared services, businesses adopting shared services, rise in shared services, shared service centres, business process outsourcing, BPO

Number of 'quality locations' leads to rise in shared services

Susie West | News | 13 June 2012

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The expanding number of quality global sourcing locations has been identified as the key reason for substantial growth in businesses adopting shared services.

Data from the latest global survey from KPMG reveals that growth in businesses using shared service centres has outpaced the number of firms using traditional outsourcing over one quarter.

More than half (52%) of businesses across the UK, Asia and Europe cited the use of shared services, for some or all of their admin functions, as the strongest area of growth in the first quarter of 2012.

This compares to 37% of firms that said they have seen a growth in demand for traditional IT outsourcing and, perhaps surprisingly, only 27% have witnessed growth for business process outsourcing (BPO).

Explaining the reasons why shared services has become so popular among global businesses, Shamus Rae, Partner in KPMG's Shared Services and Outsourcing Advisory team, said: "It appears that the trend towards focusing on more specialised outsourcing is a consequence 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."

Indeed, the survey also showed that demand for near and offshore shared services continues to grow more than the use of domestic outsourcing. In addition, India is no longer the only offshore location for such services, with more firms agreeing that buyers are looking to other promising nations.

Mr Rae added that the relatively weak expectations of BPO growth reflect a lesser demand for traditional, generic, transaction-oriented outsourcing arrangements. He suggested firms are more likely to seek out specialised BPO over traditional finance and accounting outsourcing.

However, traditional outsourcing does still remain a valuable part of efforts to cut costs, the survey found, although its use has slowed.

Looking ahead to the next quarter, 68% of the businesses surveyed were optimistic about growth, which is largely expected to come from customer demand for IT services.