Public sector bodies could reduce certain costs by up to 40 per cent through the introduction of shared services, according to a new report from Deloitte. Shared services is the consolidation and sharing of services by different units within an organisation. Such services are very often back office support activities such as finance and human resources, but can also include customer contact and related functions.

Shane Mohan, Consulting Partner in Deloitte, said there have already been a number of instances of shared services implementation in the public sector in Ireland, but there is significant scope for further adoption throughout central and local government, education and other elements of public administration.

"There are hundreds of public sector bodies in Ireland. Most have their own support services, not just finance and HR, but also legal, customer service and so on. There is an opportunity to do this type of work differently, with one group of people providing shared services to multiple users – thereby doing them faster, better and cheaper.

"The concepts are well proven and Deloitte’s analysis of the use of shared services in the private sector shows that European companies can achieve savings of 25 to 40 per cent, with improved customer service levels. This could be mirrored in the public sector and similar savings are also achievable. There are many differing estimates of the savings possible, but there is broad consensus that these are likely to be very significant," said Mohan.

According to the Deloitte report, the slow take-up of shared services in the public sector internationally is a result of a lack of understanding and perhaps some scepticism by many organisations. Common perceived barriers include:

• Risk-averse decision-making;
• Concern over loss of autonomy;
• Consensus driven governance;
• Lack of a central mandate.

"None of these issues are insurmountable, and many are common to those encountered in the private sector, where head offices are enthusiastic about shared services, while business units are unsure how to turn the concept into a workable idea," remarked Mohan.

He added that there were many case studies from the private sector and a growing number of foreign public sector organisations that demonstrate how shared services can deliver cost reductions. One such example is the Western Australian Government, which is moving from 100 providers of finance, HR and procurement to just one, with estimated savings of EUR30million per year.

"It is time for a detailed look into shared services, to determine which services might be appropriate to share and who to share them with. This is not a small task – shared services projects demand vision and commitment. However, they are capable of delivering substantial benefits, and perhaps most importantly, savings, which can be channelled into front line service delivery," commented Mohan.