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Shared Services vs BPO – Why make the choice?

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By Mark Atterby

shared-servicesBPO and Shared services are often viewed as competing choices. In fact they are complementary tools that can be used together depending on the situation.

Business Process Outsourcing (BPO) involves contracting to an outside provider, who can provide skills and resources more effectively than can be provided in house. Shared Services is the creation of a single business from separate parts of an organisation to provide services that were supplied independently.

In many cases, moving to a shared services model can be viewed as a stepping stone towards BPO. A number of Major companies first established internal shared services and then partnered with a BPO provider to access cheaper locations .

The move to shared services model first, also allows the organisation to map and consolidate its processes and internal service functions, providing better insight into what processes and activities can be outsourced and how.

The move to shared services model first, also allows the organisation to map and consolidate its processes and internal service functions, providing better insight into what processes and activities can be outsourced and how.

The idea behind BPO is to generate greater productivity since superior systems, processes, and technologies in many cases allow the outside vendor to complete the work more efficiently and to a higher standard.

Shafiq Rahman from Premier BPO highlights in his article Outsourcing versus Shared Services: Which is Better?, “A mixed approach towards outsourcing and shared services strategy is optimal. Many companies are motivated to externalise their support services to third parties, while at the same time others prefer to focus on their shared services model”.

The most appropriate combination of Shared Services or BPO depends on the organisation’s culture, objectives and leadership. Considering the typical size and complexity of the organisations involved, the actual journey for one corporation is likely to be very different to another

The aims of shared services and outsourcing are very similar: improving processes and making more cost-efficient the operation. For a long term these two models had been competitors of each other because companies had to choose between them . Nowadays there are a number of sourcing models that allow combining the benefits of outsourcing and shared services.

http://www.jobstreet.com.my/learning/ot46.htm

http://www.premierbpo.com/news-and-views/item/outsourcing-versus-shared-services-which-is-better.html

http://www.researchgate.net/publication/236270163_Hybrid_Models_as_a_Mix_of_Shared_Services_and_Outsourcing_or_Could_Hybrid_Model_be_the_New_Management_Buzz_in_the_Following_Times
July 7, 2015
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