Shared services have been evolving. Starting out mainly as transactional, cost saving centers, they are becoming more mature and more advanced. Shared services are taking on more functions and higher value functions from the business. They are getting better at measuring and monitoring their performance with Key Performance Indicators (KPIs) designed specifically for shared services. Shared services are getting more ambitious and running more like a business in their own right.
Shared services often charge for their services to demonstrate their value, and some are so efficient that they are able to operate as profit centers.
So if shared services are operating like businesses, should they be bought and sold like businesses?
It’s not unheard of. The big deal that springs to mind is the 2007 Philips-Infosys deal in which the BPO Infosys entered a multi-year contract to provide Finance & Accounting (F&A) services and the processing of purchasing orders. Infosys acquired three shared service centers in India, Poland and Thailand from Philips.
Why would one sell off their shared services? Not only could it be a huge injection of liquidity into the business, but commercializing is also a way to potentially improve service quality. As Gerard Ruizendaal, Chief Strategy Officer and Group Controller for Royal Philips Electronics said back in 2007 "Infosys clearly demonstrated a willingness to invest in people with a strong HR process, better solution quality, ability to leverage end-to-end process improvements and a robust risk mitigation and transition plan."
Shared services may be an attractive purchase for BPOs as they can take on the outsourcing work and also often have the skills and experience to run shared services efficiently.
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