There has long been an argument between Shared Services and Business Process Outsourcing (BPO) – is one better than the other? There are many factors to take into account including the business objectives, the budget available and the speed that is required for the project.
BPO is the process of engaging a third-party vendor with the right skills and resources, to carry out work on your behalf.
Shared Services relates to the creation of an autonomous business unit, based on-site, which carries out these processes for multiple functions within an organisation (HR, Finance, procurement).
The services that BPO and Shared Services provide is generally to remove manual, operational and often repetitive tasks from your everyday work.
Business Process Outsourcing
BPO is often thought to be more efficient, due to it having better systems and processes. It is frequently based offshore, so labour costs and overheads can be significantly lower than having this service in-house.
Outsourcing can often be implemented quickly and more effectively, due to the experience of the resource within these companies. The transition to an outsourced model may not offset the savings you make and the increase in the quality of the work you receive.
Feedback is often that ‘BPO can be seen as ‘faceless’ or lacking the human approach’ that people sometimes want from these services and in a world where employee engagement and experience is paramount, this can cause real issues.
Shared services can be a better solution if your needs are bespoke. BPO can often be one size fits all, and if you have requirements that are specific and processes that aren’t bog standard, then a shared services model may be the best choice.
However, the implementation of a shared services function within a business can be slow and painful. More often than not this is due to lack of experience internally to deliver this and if systems, processes and data are not clean and efficient, the service will fail.
If the service fails, it can be hugely damaging to employee engagement and if people aren’t engaged to use the service, then they will revert to old habits, rendering the service useless.
Is there a place for both?
General consensus seems to be that in the long term, only one will survive. I think there is a place for both: if you have a high volume of standard processes which need carrying out without the knowledge of internal factors or processes, then BPO is probably for you. However, if you have unique processes and you have the time, money and resources to do this properly, then shared services is the best option.
Before you decide whether to implement a BPO or Shared Services model, it’s a good idea to do a thorough diagnostic of your business and ask yourself the following questions:
- What is the end goal is for your organisation in changing to a new service delivery model?
- Do you have management engagement and support?
- Are your systems, processes and data fit for purpose?
Once you have the answers to all of these questions, you should be able to make an informed decision.
If you would like to find out more about re:find and how we can support you and your business then please get in touch.