The service provider’s shared service centres

Quite naturally, most service providers see great benefits in setting up their own shared service centres (SSCs) where, for example, the business processes or IT functions of a number of clients can be handled under one roof. Clearly in this way the provider can maximize the economies of scale.

At first sight this concept has a lot going for it. A service provider setting up an SSC, for, say, finance would be able to keep adding to the list of organizations it was servicing from one location. In theory, therefore, this growth alone would go a long way to ensuring that the systems were being updated on a regular basis and that the latest technology was being used. It would also mean that design and implementation errors from the last project could be corrected more quickly than in the normal single function site.

Major providers like Accenture have in the past announced that they were setting up large SSCs in some central location from where they hoped to ’house’ the services for new and unspecified clients.

Some providers have achieved a significant measure of success in promoting SSCs of this type, but for the most part clients are initially wary of such arrangements. The smaller client will start off by assuming that the larger clients will get an unfair share of the service. Against that the larger client imagines that if his or her service accounts for 50 per cent of the total, but there are five other clients – then they will get less service than they deserve and need.

Competing providers sometimes put an outsourcing service provider who wants to take the service away to another part of the country or to a different country, at a considerable disadvantage. This happens most often when providers who do not have their own SSC decide to stress the importance of the new outsourced facility being within walking distance of existing facilities.

The provider-owned SSC is likely to play a growing part in outsourcing in the years ahead. Major clients will often want to stipulate the exact location where the service will be delivered, but in most instances the provider will still be free to extend the business done in the SSCs by taking the work of smaller clients into the premises. For many of the BPO deals in existence the outsourcing only makes sense (at least from the service provider’s point of view) if multiple arrangements can be brought together under one roof.