Posts Tagged ‘location’
I have just been speaking with a contact at Merck. When they set up their shared services centre six years ago, they looked at countries in Central Europe as possible candidates. But in the end they decided on Germany as their location of choice. The reason being they were intent on their SSC quickly developing from a transactional based operation to a value adding service provider. They wanted to ensure that the skills, expertise, business knowledge and languages provided would support these aims.
Other companies in Germany seem to be following this trend too: Boehringer Ingelheim has its HQ in Ingelheim. When they decided to set up their shared services centre, they chose to locate it close to the HQ. A chemicals company that has a shared services presence in Germany and Spain is clawing back some activities from the Spanish operation into the German one. And finally BASF set up its huge shared services centre in Berlin.
I asked my contact if there were tax incentives offered by the German government. The answer was no.
In his opinion the reason was that, as there is a trend for shared services to climb the value chain, so there seems to be more of a business case to keep or establish a shared services operation closer to the business. If much of the transactional piece is automated then there is almost no need to examine off shore countries as a location for your transactional piece.
The VP Global Head Financial Shared Services will be presenting on location choices and influencing factors at the European Summit for Leaders in Finances Shared Services and Outsourcing, London, March 2012.
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Matt Garrow-Fisher, our Head of Research, is attending Deloitte’s Annual Shared Services and Business Process Outsourcing. He has been sharing some valuable knowledge on twitter and we would like to do the same with our community via our Blog. Following are some highlights of what’s been said.
– Migration strategies: Most companies (51%) move to shared services Centre then standardise processes
– Many shared services centre are now looking at having 2 shared services Centre: 1 standardised, vanilla shared services Centre and 1 centre of excellence
– The tipping point for a final decision for site selection is down to the cooperation of the regional development agencies – this is key.
– Site selection: Corruption and operating environment need to be considered
– Access to location is key for shared services centre: employees need to commute, otherwise they may go to a better accessible competitor
On location selection
– 170 shared services centre location decisions were made over 2008-2011 in over 105 cities globally. Decisions based mainly around cities rather than countries.
– Top shared services centre destinations in 2008-11 were Dublin and Budapest.
– Top number of jobs created between 2008-2011 were from these countries: 1. India 2. US 3. The Philippines 4. Poland 5. China
– Ireland is known for being great at delivering on higher value activities.
– North America and West Europe are back in shared services Centre site popularity due to their capabilities to host CoEs and higher value-added activities
– Speaking in the right culture – ‘cultural speak’ and training on this is more important that having a good accent.
– H.R. skills / talent is the most important aspect of choosing a site if you want to move up the value chain
– Location is never fixed and usually shared services Centre move or expand every 5-7 years. This is due to scalability needs and sustainability
On change Management
– To enable change management: 1. Customer satisfaction 2. Ability to grow business through better buy-in and business engagement
– Deloitte global survey finds that 59% of shared services organisation have learnt that increased change management would have improved their shared services journey
– That will create, that will not forget” – people involved in the creation of your shared services organisation will take far more ownership of running it
– Site visits are the most effective way to connect with business units
– Governance: Performance metrics are the top part of a company’s governance structure (78%). “What gets measured gets done”
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