Shared Services

A centralized operational model where common business functions like HR, finance, IT, and procurement are consolidated into a single unit that delivers standardized services to multiple departments or business units across the organization.

What Are Shared Services?

Key Takeaways

  • ✓Shared services is an operating model that consolidates common, transactional business functions into a single dedicated unit that serves the entire organization, replacing duplicated functions across departments or business units.
  • ✓The most commonly shared functions are finance and accounting (87%), HR (72%), IT (68%), and procurement (54%) (Deloitte, 2023).
  • ✓80% of Fortune 500 companies run at least one shared services center, and most large organizations operate multiple centers across different geographies.
  • ✓Shared services typically reduce costs by 25-40% within the first 3 years through standardization, scale, and process automation.
  • ✓The model works best for high-volume, transactional, and rules-based processes. Strategic and advisory work should remain close to the business units.

Shared services takes work that every department or business unit does separately and puts it in one place. Instead of 6 business units each running their own payroll, processing their own invoices, and managing their own IT helpdesk, a shared services center handles all of it for everyone. The logic is simple. When each department runs its own payroll process, you've got 6 different teams doing the same work 6 different ways. Different systems, different processes, different quality standards. Nobody has enough volume to justify automation. Nobody has enough scale to negotiate good vendor rates. Consolidating into shared services creates a single team that processes payroll for the entire company using one standardized process, one system, and one set of quality controls. Volume goes up. Cost per transaction goes down. Consistency goes up. But shared services isn't just cost cutting. Done well, it improves service quality because the team becomes deeply specialized. A shared services payroll team that processes 10,000 pay runs per month develops expertise that a department-level payroll person handling 200 pay runs never will.

80%Of Fortune 500 companies operate at least one shared services center (Deloitte Global Shared Services Survey, 2023)
25-40%Typical cost reduction achieved in the first 3 years after implementing shared services (SSON, 2023)
3.2 yrsAverage time to reach full maturity and planned cost savings for a new shared services center (Hackett Group, 2023)
76%Of shared services organizations now include at least one automation or AI capability (Deloitte, 2023)

Which Functions Are Typically Shared?

Not every function belongs in shared services. The best candidates share three characteristics: high volume, repeatable processes, and rules-based execution.

FunctionCommonly Shared ProcessesTypically Retained by Business Units% of Companies Sharing This Function
Finance & AccountingAccounts payable, accounts receivable, general ledger, expense reporting, travel bookingFP&A, treasury, investor relations, strategic planning87%
HRPayroll, benefits administration, employee data management, onboarding paperwork, leave trackingHRBP advisory, talent strategy, executive compensation design72%
ITHelpdesk, device provisioning, account management, standard software supportEnterprise architecture, cybersecurity strategy, product engineering68%
ProcurementPurchase order processing, vendor onboarding, invoice matching, catalog managementStrategic sourcing, contract negotiation, vendor relationship management54%
LegalContract review (standard templates), NDA processing, regulatory filingLitigation, M&A, intellectual property, strategic legal counsel31%

Shared Services Delivery Models

How shared services are structured and delivered varies significantly based on company size, geography, and strategic priorities.

Single-location model

All shared services operate from one physical location, often in a lower-cost city or country. This is the simplest model to manage and provides maximum cost efficiency. Mid-size companies with operations primarily in one country often start here. The risk is concentration: one location means one point of failure for a natural disaster, political instability, or labor market disruption.

Multi-location model

Shared services are split across 2-4 locations, usually aligned with time zones. A company might run Americas shared services from Costa Rica, EMEA from Poland, and APAC from the Philippines. This provides time zone coverage, risk diversification, and access to different labor pools. It also adds coordination complexity. Most large multinationals use this model.

Hybrid model (shared + outsourced)

Some processes are handled by an internal shared services team, while others are outsourced to external providers. Payroll might be outsourced to ADP while accounts payable stays in-house. This lets companies keep strategic or sensitive processes internal while leveraging external providers for highly commoditized work. The challenge is managing the handoffs between internal and external teams.

Global Business Services (GBS)

The most mature model. GBS integrates all shared functions (finance, HR, IT, procurement) under a single governance structure with unified technology, processes, and performance metrics. Instead of separate shared services centers for each function, GBS creates one organization that delivers all support services. About 40% of Fortune 500 companies have moved from traditional shared services to GBS (Hackett Group, 2023).

Benefits and Challenges of Shared Services

Shared services delivers real value, but the implementation challenges are significant and frequently underestimated.

Primary benefits

Cost reduction through scale: Consolidating creates larger volumes, which justifies automation and enables better vendor negotiations. Quality improvement through standardization: One process done one way means fewer errors and more consistent output. Talent development: Shared services creates clear career paths for operational specialists that don't exist when the same work is scattered across departments. Data quality: Centralized processing produces cleaner, more consistent data for reporting and analytics. Compliance: Standardized processes are easier to audit and regulate than fragmented ones.

Common challenges

Resistance from business units: Department leaders don't want to give up control of "their" teams, even when consolidation makes objective sense. Service quality during transition: The move to shared services always involves a temporary service dip while the new team gets up to speed. Loss of local knowledge: A centralized team in Manila may not understand the specific compliance requirements of a small office in Germany. Talent retention: Consolidation often means relocating or eliminating jobs, which creates morale problems even for employees who keep their roles. Over-standardization: Not every process should be one-size-fits-all. Shared services that can't accommodate legitimate local variations frustrate business units.

How to Implement Shared Services

Shared services implementation is a multi-year journey that typically follows a predictable sequence.

  • Phase 1: Assessment (2-3 months): Map all processes currently performed across departments. Identify which ones are high-volume, transactional, and suitable for consolidation. Calculate current cost per transaction for each process.
  • Phase 2: Design (3-4 months): Define the target operating model including location, scope, governance, technology, and service level agreements (SLAs). Design the organizational structure for the shared services team.
  • Phase 3: Build (6-12 months): Set up the physical or virtual center, hire and train the team, implement technology, and create detailed process documentation. Develop the service catalog and SLA framework.
  • Phase 4: Migrate (6-18 months): Transfer processes from business units to shared services in waves. Don't migrate everything at once. Start with the simplest, highest-volume processes and build credibility before tackling complex ones.
  • Phase 5: Optimize (ongoing): Continuously improve processes through automation, analytics, and feedback. Track cost per transaction, service quality, and customer satisfaction. Mature shared services organizations reduce cost by an additional 3-5% per year through continuous improvement.

Service Level Agreements and Performance Metrics

Shared services operates like an internal business. SLAs and metrics are how it proves its value and maintains accountability.

Designing effective SLAs

Every shared service needs a defined SLA: what's delivered, to what standard, in what timeframe. Payroll: 99.5% accuracy, delivered 3 business days before pay date. IT helpdesk: first response within 4 hours, resolution within 24 hours for standard requests. Accounts payable: invoices processed within 5 business days of receipt. SLAs should be negotiated with business unit stakeholders, not imposed by shared services. And they should include consequences: what happens when the SLA is missed, and what credits or escalations are triggered.

Key performance indicators

Track three categories: efficiency (cost per transaction, processing time, transactions per FTE), quality (error rate, SLA compliance, first-contact resolution), and satisfaction (internal customer satisfaction scores, NPS from business unit stakeholders). Publish a monthly scorecard visible to all stakeholders. Transparency builds trust. Hiding poor metrics destroys it.

25-40%
Typical cost reduction within the first 3 years of shared services implementationSSON, 2023
95%+
Target SLA compliance rate for mature shared services organizationsHackett Group, 2023
76%
Of shared services now include at least one AI or automation capabilityDeloitte, 2023
15-20%
Additional cost reduction achievable through RPA and AI layered onto mature shared servicesGartner, 2023

Automation and the Future of Shared Services

Shared services centers are the primary testing ground for RPA, AI, and intelligent automation in most enterprises.

Current automation adoption

76% of shared services organizations have implemented at least one automation technology. Robotic Process Automation (RPA) handles rules-based, repetitive tasks like invoice data entry, employee data updates, and report generation. Intelligent Document Processing (IDP) extracts data from unstructured documents like contracts and receipts. Chatbots handle tier-1 employee inquiries ("what's my PTO balance?", "how do I submit an expense report?"). These technologies don't replace the shared services team. They shift the team's work from data entry to exception handling, quality assurance, and process improvement.

Impact of generative AI

Generative AI is creating the next wave of shared services evolution. AI assistants can draft policy responses, summarize contract terms, generate first drafts of financial reports, and answer complex employee questions by synthesizing information from multiple knowledge bases. Gartner predicts that by 2028, 60% of shared services transactions will be fully automated, up from 25% today. The shared services team of 2028 will look very different from today: fewer processors, more analysts, technologists, and exception managers.

Shared Services vs Outsourcing: When to Choose Each

Organizations often debate whether to build internal shared services or outsource to a third-party provider. The right choice depends on volume, strategic importance, and organizational capability.

When shared services wins

Choose internal shared services when the processes are strategically important (you don't want a third party controlling employee data or financial transactions), when volume justifies the investment in building an internal capability, when you want to retain institutional knowledge and process improvement capability, or when data sensitivity or regulatory requirements make outsourcing risky.

When outsourcing wins

Choose outsourcing when your company is too small to achieve scale (under 1,000 employees for most functions), when you need rapid deployment without multi-year build time, when the function isn't strategically differentiating (standard payroll processing, for instance), or when the outsourcing provider brings technology or expertise you can't cost-effectively build in-house.

Frequently Asked Questions

How long does it take to implement shared services?

Typically 18-36 months from initial assessment to full migration. The timeline depends on scope (how many functions), complexity (how many locations and systems), and organizational readiness (how much resistance exists). Most companies see a temporary service quality dip during the first 6-12 months as processes transfer. Full cost savings usually take 2-3 years to materialize. Organizations that try to compress the timeline below 12 months almost always sacrifice quality.

Will shared services eliminate jobs?

It consolidates and reduces the total number of roles performing a given function, but it doesn't eliminate all jobs. Some employees transition into the shared services center. Others move into higher-value advisory or analytical roles within their business units. Some roles are genuinely eliminated. The honest answer is that shared services typically reduces total FTE for affected functions by 20-30%. Being transparent about this from the start is better than pretending it won't happen.

What's the minimum company size for shared services?

Most consultants recommend at least 1,000-2,000 employees before building internal shared services for a single function, and 5,000+ for multi-function shared services. Below these thresholds, the fixed costs of setting up a shared services operation (management, technology, facilities) eat up the savings from consolidation. Smaller companies typically get better results from outsourcing or from simply standardizing processes across departments without creating a separate organizational entity.

How do you maintain service quality in shared services?

Three mechanisms are essential. First, formal SLAs with measurable targets and regular reporting. Second, dedicated relationship managers who serve as the liaison between the shared services center and each business unit. Third, regular satisfaction surveys and feedback loops that catch quality issues before they become crises. The organizations that struggle most with shared services quality are the ones that "set it and forget it" after migration. Continuous improvement requires ongoing investment in people, process, and technology.

Can shared services work for small, specialized functions?

It depends on the function. If the work is transactional and repeatable (contract review using standard templates, for example), shared services can work even for small functions. If the work requires deep domain expertise and judgment (strategic tax planning, executive compensation design), keeping it close to the business makes more sense. The litmus test: can you write a detailed process document for how the work should be done? If yes, it's a candidate for shared services. If the answer is "it depends on the situation every time," keep it with the specialists.

How does shared services differ from a Center of Excellence?

Shared services handles transactional, high-volume, repeatable work. Centers of Excellence (CoEs) house deep specialists who develop strategy, design programs, and provide expert advisory. A shared services HR team processes payroll and benefits enrollment. An HR CoE designs the compensation philosophy, builds the performance management framework, and creates the leadership development curriculum. In many organizations, shared services and CoEs work together: the CoE designs the process, and shared services executes it at scale.
Adithyan RKWritten by Adithyan RK
Surya N
Fact-checked by Surya N
Published on: 25 Mar 2026Last updated:
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