While the benefits of off-shoring Shared Services processes are well documented, the transition can be challenging as companies deal with a wide variety of issues and obstacles, including those related to varying cultures, diverse regulatory environments, rapidly changing levels of labor arbitrage, and wide variances in the maturity of infrastructure. The bottom line – transitioning Shared Services to an overseas location is challenging at best, and can often be overwhelming if not approached properly.
During a recent Peeriosity PeercastTM, the featured company shared its experiences in carrying out the migration of existing processes to a service center located in Eastern Europe. These processes were previously performed in other Shared Services operations in the United States, Europe, and China. The following is a timeline of the evolution of the Shared Services organization at this company:
- End 1990s: Started to consolidate simple back-office tasks on a regional level
- 2000-2005: Consolidation and standardization of regional AP tasks
- 2005-2007: AR, AP, Basic Accounting consolidated (Europe/Asia)
- 2007 – 2011: Smaller transitions to SSC (Treasury, less complex reporting)
- 2011 – 2013: Back-Office tasks moved from America & Europe region to Poland
- 2014: Global Finance back-office by performed by SSCs (China consolidated into Poland/Malaysia)
- 2015: 330+ Finance employees located in SSC (50% of Finance headcount)
The processes performed by this newly consolidated Shared Services osssrganization include Accounts Payable, Credit & Collections, Financial Planning, General Accounting, Payroll, and Treasury. In addition, the languages supported by this center include English, German, Spanish, French, Russian, Hebrew, Portuguese, Chinese, and Mandarin.
As the company evaluated carrying out this type of migration, and then later reflected on its results, some advantages and challenges became readily apparent. They include:
- Overseas locations able to cover multiple time zones (leverage)
- Tap into talent pools of emerging countries (better skilled, i.e. languages)
- Access to grants and other support
- Talent retention, attrition, and the company has to adapt to new ways of doing business
- Collaboration with stakeholders while working in different time zones
- Accept faster growth in compensation levels, but on a much lower base
Along with providing specific details about the leadership of this initiative and their “Lift-Shift-Drop” approach to moving processes to the new location, the featured company shared what they felt were some critical steps that ensured the success of the entire migration effort. These include:
Before – Have a Business Plan and Vision
- A clear understanding of impacts on financial results, company culture, and people
During – Keep Stakeholders Closely Informed
- Stakeholder buy-in (prepared for push-backs and lower quality for short time)
After – Do Not Stop at Labor Arbitration
- Use a centralized team to drive improvements and delegate authority
- Create a vision/mission statement to drive collaboration of SSC within the company
As they closed their presentation, the presenter emphasized the higher chance of success of this type of initiative when it is driven top-down, has a clear strategy and close stakeholder management, and that the Shared Services operation is then empowered to make the necessary improvements to the processes once they have been relocated.
What are your company’s plans regarding further process consolidation? Is your Shared Services design one that is best suited to meet the future needs of the company or is it time to take another look?
Who are your peers and how are you collaborating with them?
“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion. Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content. Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member. Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
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