Shared Services in Canada: Significant Growth in In-Country Work
As the USA’s main trading partner, Canada is an interesting proposition for nearshore shared services for US-headquartered companies. Indeed, in 2014 the Canadian shared services markets saw huge growth compared to previous years, led by healthcare, government, and banking and financial services. This growth is not driven by US-customers, however, but mainly by Canada-for-Canada services, similar to the trend we are also witnessing in India and China.
What is also surprising about Canadian SSCs, according to the latest visual data report from SSON’s data analytics center, is that despite the global trend towards multifunctional shared services, 65% of Canadian SSCs are still single- or silo-function. The prevalence of siloed SSCs is particularly notable within banking, financial service, and insurance; healthcare; and utilities. On the other hand, multifunctional SSCs show a slim but nevertheless significant margin in government, mining, and construction industries.
In contrast to many other countries or regions, Canadian shared services do not show a marked preference for Finance & Accounting centers. In fact, HR and Finance are equally represented. When we drill down into the data, we find that banking, financial services and insurance has the most HR SSCs. Healthcare is also notable for its focus on supply chain services.
Where we analyze emerging services is also where it gets interesting: marketing, customer service, and operations are all showing significant popularity as new services. Banking, financial services and insurance, as well as healthcare are the industries with the most interest in these new emerging support services.
Comparing Canadian SSCs to other regions across the world, there's a notable opportunity cost in terms of shifting to higher value add processes: More than 60% of today's centers are still focusing predominantly on transactional processes. There is a strong correlation with maturity here: in new centers (under three years old), nearly 3/4 are focusing on transactional processes. When we switch to mature centers (more than 10 years old), however, the proportion switches, with 67% focusing on higher value processes. So the trend to launch a traditional model persists.
Overall, Canadian shared services show a tendency towards insularity, with more than three-quarters from Canadian HQ or enterprise companies, and only a small percentage from US-based organizations. The focus is very much on servicing domestic customers, with less than 20% servicing North America business customers. Only a very small fraction provides global services, predominantly to the UK, Finland, and Switzerland.
For more data on Canada’s shared services landscape, view Dart Institute’s full visual data report.