Shared services centres (SSCs) in China and Asia Pacific are increasingly mature and important multinational businesses. SSCs help companies cut costs by facilitating innovation, streamlining processes and improving both governance and compliance.
As costs rise, particularly with regard to labour and governance, companies are looking for ways to streamline processes and improve compliance. A joint report by ACCA and Deloitte, Future challenges facing the shared services centres in China and greater Asia Pacific, makes it clear that SSCs in the region are increasingly mature and sophisticated. Many are developing more effective strategies to retain talent while developing automated processes that work both regionally and globally.
The report suggests that the maturity of SSCs varies significantly. Talent management, market and technology solutions are key for SSCs to overcome the challenges they face in Asia. And the biggest issue might concern talent.
‘The human resource issues that we currently see are proving that the location strategy for SSCs cannot just be made from a pure cost perspective,’ says Patrick Roberts, a director specialising in shared services at Deloitte in Hong Kong.
‘Companies realise that SSCs have to provide a quality of service, and companies are seeking the ideal combination of cost and talent quality, and not quantity.’
The report was based on a series of interviews across mainland China, Hong Kong, India, Malaysia and Singapore. This was strengthened with information from the 311 companies from 35 countries that participated in the 2015 Deloitte Global Shared Services Survey and provided data for more than 1,000 SSCs.
SSCs are an important part of the growth of modern multinational businesses, making it possible to take a globalised approach to many processes. They facilitate the introduction of process improvements and innovations that can drive change within organisations – change that translates into higher quality of offerings and lower delivery costs. Automation and machine-based decisions are at the heart of this push.
Three factors are key to this globalised approach, says Yuki Qian, ACCA China’s head of policy.
‘Firstly, to what extent are you sharing across different functions within shared services now?’ she asks. ‘Secondly, are your processes standardised enough, co-locating physically the activities in one or more shared service centres? And, thirdly, do you have a single governance structure?’ In the latter, the methods, protocols, measurement and oversight are managed across standardised processes for the entire business, Qian explains.
‘In addition, many finance SSCs are exploring new, high-value service delivery including big data and analytics solutions to provide increasingly forward looking and predictive insight to the business,’ notes the report.
‘People are the backbone’
Automated solutions, says Roberts, facilitate increases in production. ‘Automated solutions are an enabler to increase production but people are the backbone to organisations,’ he says. Keeping hold of and providing careers for people is the only way for SSCs to succeed.’
Qian says that automation processes should be considered according to the maturity level of each organisation. SSCs typically work to make complicated things simple, standardise simple things and automate standard processes, she says.
Automating more processes is key to getting the most financial benefit out of SSCs. ‘Cost is a major factor but also the fact that available new technologies are able to handle much higher volumes without human interaction,’ says Roberts. ‘Global businesses process vast volumes of work and this globalisation of business has also supported innovation.’
With automated processes playing a key role in SSCs, organisations are at the forefront of an irreversible trend, says Eunice Chu, head of policy at ACCA Hong Kong. ‘Utilising more technology in driving business and improving operations is an irreversible trend, no matter if it is in SSC or in other business environments,’ she says. ‘With the globalisation of business, utilising technology is a natural solution.’
‘As locations mature with varying skill sets, we will see specific functions being delivered from different locations,’ says Roberts. ‘The opportunities for SSC locations is now a vast and complex exercise. Organisations will be able to pick and choose which location has the best skill set to match to a specific function.’
Even with the right location and the right processes, people remain key to success. The difficulties in attracting and retaining quality staff have grown into one of the most significant challenges. This is coupled with the multiple human resource issues companies with SSCs have to regularly deal with in China and other places in Asia Pacific, according to the ACCA-Deloitte report.
‘When setting up an SSC, a company needs to consider both the cost and the supply of good quality talent,’ says Chu.
One approach to overcoming human resources challenges might be to help the best talent succeed in their chosen career paths. The more mature and sophisticated career paths tend to have better talent management processes.
‘One of the key factors in SSC staff retention is providing a clear and transparent career path,’ says Roberts. ‘Staff feel motivated to stay once they feel that the organisation can provide them with the career path they want.
‘When we see locations maturing we should also see this maturity with regard to retention and career paths. People can always earn more money by moving from company to company. The way to retain talent is to provide them with opportunities to improve,’ he says. ‘Keeping hold of and providing careers for people is the only way for SSCs to succeed.’
SSCs across Asia are also providing new avenues to pursue careers in finance. ‘Finance career paths are becoming less of a straight line,’ Qian says. ‘The skills that finance professionals need to bring to their role are changing, not only in traditional finance and accounting knowledge but also in globalisation, regulation, technology. All are impacting the role of finance in the business and placing new demands on capabilities within the finance function.’
While talent acquisition and retention are a major concern for SSCs in China and Asia Pacific, financial necessities create pressure to cut costs, innovate and look for a more globalised approach to processes and more efficient allocation of resources.
‘As these SSCs mature and as pressure grows on finance functions to reduce their operating cost further, there is an increasing focus on taking a global approach to process delivery and standardisation,’ the report notes. ‘Global processes ownership is being adopted by many organisations to drive the industrialisation of process delivery.’
There are, however, concerns regarding the impact of globalising processes and the possibility that SSCs become too big or too global to be efficient.
‘My personal opinion is that there is always the opportunity to standardise as much as possible, but being pragmatic in the approach towards localisation is key,’ says Roberts. ‘With less mature businesses or countries, it sometimes does not make sense to force global processing.’
The report points out that it takes several years and millions in investment to achieve high levels of system standardisation. It make more sense to take a regional approach.
‘From my personal experience and practical operation point of view, it would be logical to organise the SSC by region,’ says Chu. ‘One SSC would serve several business units in different countries in the same region. This would ensure better use of resources, quicker turnaround time and higher efficiency.’
Alfred Romann, journalist
This article was first published in the October 2015 China edition of Accounting and Business magazine