Three to five years in, and the step change in performance has been achieved by consolidating back-office operations in Shared Services Centers (SSC). Aggregation of processes either regionally or globally has yielded the benefits of scale and scope. Best practices detected in each sub process have been deciphered and promulgated across end-to-end processes, resulting in standardized delivery across both business lines and geographies. Organizations have been re-engineered, resulting in flat management structures peppered with the right number of critical subject-matter experts. Business-unit customers have adapted to new, non-vertical ways of working. And the paraphernalia of business management — dashboards, service levels, performance indicators — have been put in place, supported by governance routines.
Yet, the C-suite is reading the increasing flood of services globalization news, demanding more out of the shared-services organization. And unlike just a few years ago when outsourcing was a dirty word in many corporations, all delivery options are now on the table for consideration as reaching the next stage of performance is mandated. Perhaps corporate strategy will allow a spin off of the one or more of the centers, “commercializing” the captive. Or the time may be right to implement a “fix and drop” approach, embracing outsourcing as a next logical step.
There is another, less radical, option to evolve the provision of shared services — onsourcing could be the right answer for many global organizations.
Thoughtfully and deliberately moving select processes out of existing SSC operations to a more cost-effective provider may provide the best solution. In this scenario, the SSC management identify the processes that can be either “lifted and dropped” or “further improved” to benefit from the advantages of labor arbitrage and/or consolidation, and the advancement of tech solutions. The SSC leadership retains firm control of delivery, managing a portfolio of services provided to the business end user, some made and some bought from third parties.
Why “onsource” rather than transfer operations to a third party? The onsourcing value proposition provides a low-risk approach to outsourcing that may give comfort to those organizations for which full-scale outsourcing is still anathema from a cultural, process complexity, or regulatory standpoint. In this context, process delivery is still under the control of the company’s trusted services organization; the purchase of services is then “retailed” to the end user.
The implications of cultural understanding are often underestimated when a company implements an outsourcing strategy. Often the effort to better cope with cultural differences occurs solely on the provider side of the equation, while the client invests little in developing new ways of working. Onsourcing limits the number of corporate parties affected by the inevitable cultural change, allowing the organization to focus its investment in helping work across cultures.
One of the challenges of outsourcing is knowledge retention, especially the intangible of customer intimacy. Determining the size and composition of the retained team is often a hit or miss exercise. Outsourcing a specific scope is not a difficult proposition; breakpoints come from the point at which the outsourced workflow connects to both upstream and downstream client processes. Onsourcing preserves that knowledge because a client layer is still firmly embedded in the SSC, ensuring that the knowledge of corporate processes is retained, and delivery remains end-to-end.
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Why Onsource?
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- Keeps process delivery under the control of the company's trusted service organization
- Limits the number of corporate parties affected by cultural changes
- Prevents institutional knowledge loss
- Alleviates unwanted, high investments in low-cost locations to retain delivery economics
- Acts as buffer to the inevitable politics that often surround the decision of outsourcing
- Requires a task-order framework for execution that can be developed and implemented quickly
- Keeps the Shared Service Centers competitive
- Offsets rate card increases
- Reduces inevitable, noisy issues that come from annual agreements and transfer pricing exercise.
Provides low-risk approach that can be adjusted at any time |
