Firms Turn To Shared Service Centres To Achieve Savings

Prague, 21 October 2009 — When seeking savings during a recession, large firms are more inclined to use shared service centres, which are usually a more efficient means of providing corporate administration and accounting services. This conclusion was drawn by participants of the recent Real Profit in Real Time conference organised by Deloitte. During the two-day conference, representatives of major international companies assessed the current situation and future outlook of shared service centres and outsourcing in Europe.

“Currently, firms aren’t left with many options apart from finding ways to cut costs. As a result, more and more companies are looking to outsource their support processes to a Shared Service Centre. The Czech Republic, especially, has been one of the most suitable locations for establishing such centres since the 1990s,” said Dorthe Keilberg, Senior Manager in the Consulting function of Deloitte.

“Currently, firms aren’t left with many options apart from finding ways to cut costs. As a result, more and more companies are looking to outsource their support processes to a Shared Service Centre. The Czech Republic, especially, has been one of the most suitable locations for establishing such centres since the 1990s,”

—Dorthe Keilberg,
Senior Manager in the Consulting function of Deloitte

A Shared Service Centre (SSC) is a separate legal entity that provides support services to its founder and other business units within a company. A SSC performs its role based on the market principle, charging fees for provided services pursuant to agreements and contractual arrangements.

“It’s a paradox,” says Peter Moller, European Shared Services and BPO Advisory Lead , Deloitte, “in spite of all the negative aspects arising from the crisis, SSCs have benefited well from the recession.” In addition to Mr Moller, those participating in the conference held at the Prague Hilton on 14 and 15 October included senior managers from T-Mobile, Lexmark, Rolls-Royce, Johnson & Johnson, Carlsberg, Daily Mail and General Trust.

Established by global companies in the second half of the 1980s, the first SSCs were created to lower costs. Companies were able to achieve such savings by splitting off transaction activities and moving them to a location with cheaper labour. At present, the SSC concept has been developed on a wider framework. By enabling executive units to dedicate more of their time to issues of strategic importance, moving support processes to a single location now also allows an entire organisation to be optimised.

Initially, SSCs only focussed on providing financial and accounting processes related to transactions. Recently, however, there has been a trend to expand SSC activities to include additional, more complex areas, such as procurement, IT, HR or customer services. Transaction activities are gradually being moved to locations with lower staff costs, such as Cluj, Romania and Slovakia in Europe, or India and the Philippines in Asia.

“The main advantage of having an SSC in the Czech Republic is the availability of a highly qualified labour force that speaks multiple global languages, which is always one of the key criteria in making a decision on where a SSC should be located,” said Keilberg. In addition, the Czech Republic benefits from its reputation as an attractive place to live, which is crucial especially if SSC operations should be supported by professionals from western countries in the long term. “It comes as no surprise that Prague is the number one location for those SSCs,” added Keilberg.

The introduction of an SSC results in a number of other advantages whose impact is clearly visible in the short term, such as process standardisation and optimisation, greater control over and quality of processes, or the establishment of a suitable platform for potential outsourcing decisions.

For more information on SSCs and the Deloitte conference, please visit
www.deloitte.com/cz/sharedservices2009.

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© 2009 Deloitte Czech Republic.