Key Findings from the State of the Shared Services Market Report – Europe 2020
Produced as a result of SSON’s annual survey, the recently published European edition of the State of the Shared Service Market Report highlights the current status and strategies of European-based shared service delivery centres. Here, with commentary from Barbara Hodge, SSON’s Principal Analyst and Global Editor, we highlight some of the most noteworthy statistics gathered to help you benchmark your shared service organisation alongside industry peers.
Four out of 10 European centres have adopted the Global Business Services (GBS) model – with another 21% planning to move to do so in the next five years.
These numbers show the continuation of a trend already identified in last year’s survey. GBS centres are fairly mature in Europe, with nearly half describing themselves as “scaling value-adding services” or moving to “digitized” GBS (enabled by digital technology). Key benefits the model delivers include the ability to leverage automation and smart technology for greater efficiency; enable scope expansion (additional functions and services); and drive service agility.
The demand for skilled talent continues, with automation, process excellence and data analytics at the top of the list of gaps to fill.
In comparison to North America and Asia, “innovation” ranks much lower as a skill gap in Europe: 23% cite it as a skills gap compared to 39% in Asia and 35% in North America. This could either be because the skill is already present; or its absence is not considered a ‘missing’ gap). However, more than a third of respondents concede their efforts to prepare for the future workforce are “preliminary” and only a minute segment is leading the charge by already having updated hiring plans and job descriptions to address any skills gaps.
The growth trajectory remains strong as 75% of European centres plan to expand services.
Shared Services plan to expand both services and reach in future. Nearly 40 percent of European respondents confirm their plans to add more service offerings in the year ahead, many of which leverage automation; a similar segment plans to expand its geographic reach (significantly more than North America). As a result, despite professed concerns around job replacement as a result of increased automation, nearly 30% of respondents indicate they plan to add more – not less – Shared Services Centres in the year ahead and take on additional staff to fill the new value-adding work coming their way.
Knowledge-based work continues to be a growing focal point for European shared service centres.
A clear and continuing trend is the shift towards knowledge-based work. More than a third of respondents indicate that at least half of the work being done in their Shared Services today is knowledge based. And while outsourcing continues to be a valuable strategy, customers’ objectives are changing: Critical concerns today – apart from cost – are the ability to tap into data analytics and new automation technology through BPO, where the skills and solutions are otherwise not available. This changing nature of work is also reflected in outsourcing contracts that tie output-based measures and workflow optimisation into formal agreements.
For the first time we see IA and data analytics emerging at the top of the list of services provided.
Roughly half of the European survey respondents confirm that they now offer IA and data analytics as a service to business customers. Many organisations are leveraging COEs to deliver these bespoke and specialist services most effectively. However, More than half of European Shared Services indicate they are only at the “basic” stage of data analytics – primarily descriptive, based on historic data, and limited to traditional business intelligence tools. The vast majority are still struggling to overcome silos and standardise data. Cracking this nut will prove a game-changer. The clear awareness of the gap faced, while worrying, is also encouraging.