A shared services center (SSC) is an internal unit that provides common support functions, such as finance and accounting, HR administration, IT support or procurement, to several business units of the same organization. Instead of each division running its own back office, the work is consolidated in one place, with standard processes and agreed service levels. The center is owned and staffed by the organization, which is what separates it from outsourcing.
At a glance
- An SSC centralizes support work that several parts of an organization would otherwise do separately.
- It is owned and run by the organization itself; outsourcing hands similar work to an outside provider.
- Finance, HR, IT support and procurement are common functions, especially transactional, rules-based work.
- Business units typically pay through internal charges and receive agreed service levels.
- Centers can sit at headquarters, in a lower-cost region or offshore, and some later outsource parts of their work.
What problem it solves
As organizations grow by adding divisions, regions or acquisitions, support functions tend to multiply. Each unit ends up with its own finance team, HR administration and IT support, using different processes and systems to do largely the same work. Costs tend to rise with each new unit, quality varies, and leadership struggles to get consistent data.
A shared services center consolidates that work. Standardizing processes and systems across the organization can reduce duplication, improve consistency and make costs easier to see. It also builds specialist skills in one place and creates a single team that can absorb growth or new acquisitions without rebuilding the back office each time.
How it works
Scope. The organization chooses which functions and processes move to the center, often starting with high-volume, standardized work such as invoice processing, payroll or first-line IT support.
Standardization. Processes are redesigned to work largely the same way across business units, usually on common systems. This step often takes more effort than moving the people.
Location and staffing. The center can be at headquarters, in a regional hub or in a lower-cost location. Staff may transfer from business units or be hired new.
Service management. The center publishes what it offers, takes requests through a portal or help desk, and commits to service levels, often written as internal service level agreements (SLAs). Tools and practices from enterprise service management (ESM) are commonly used here.
Funding. Costs are recovered from business units through internal charging, using methods similar to IT chargeback and showback.
Continuous improvement. Mature centers automate routine work, broaden into more specialized services and sometimes outsource parts of their scope to a provider.
When it matters for buyers
- After mergers or acquisitions. Combining duplicated back offices is a common driver.
- When growing across regions. A center can support new locations without building a full support team in each.
- When comparing sourcing options. Leaders often weigh an internal center against business process outsourcing (BPO), IT outsourcing (ITO) or a managed service provider (MSP).
- When choosing service management and finance platforms. A shared services model depends on common systems, portals and reporting.
If you are weighing an internal center against an outside provider for back-office work, see our business process outsourcing solutions overview.
Questions to ask vendors
- If you offer outsourcing, which functions could you take over from our shared services center, and which should we keep?
- Can you work within our existing processes and systems, or do you require your own?
- How would service levels and reporting compare with what our center provides today?
- How do you handle knowledge transfer in and, if we bring work back, out?
- If you provide platforms, how do you support multiple business units with different charging and approval rules?
- What does a hybrid model, partly in-house and partly outsourced, look like in practice with your other clients?
How it differs from outsourcing and a global capability center
With outsourcing, such as BPO or ITO, an outside provider does the work under contract, with its own staff and management. With a shared services center, the organization keeps ownership of the people, processes and decisions. A global capability center (GCC) is also owned by the organization, but is usually located offshore or nearshore, and the term is now often used for centers that do higher-value technology, engineering and analytics work as well as back-office support. Many GCCs began as shared services centers; an SSC can be located anywhere and centers on common support functions.