Sales doesn't have to be the only method of generating income for a small business or corporation, shared services can save money, thus increasing your working capital. Though many different working departments can be shared between companies, the Human Resources department is especially useful in improving efficiency, revenue and streamlining day-to-day operations. Here are some shared services benefits.
Benefits of shared services
Cost Cost is the principal driver behind shared service centres. Through the reduction of the working staff and accommodations for that reduced staff alone, costs can be reduced significantly for a business implementing a shared services model. This can lead to smaller office space needed, which can, in turn, deflate costs if you are leasing a building. Change Change is another key factor. In HR shared services, changes in federal and state law equate to new business practices, which can be handled by the newly set-up shared service. Preventing a complete business remodel, the shared services can bridge gaps between the existing company policy and contemporary business developments. Outsourcing versus shared services Although similar in nature, shared services are often mistaken for outsourcing. While both achieve the same goal of reducing costs and improving the bottom line to company goals, outsourcing is typically done internationally, while shared services usually focuses on merging job functions as an organisation skill within the originating country. Moreover, outsourcing involves a third party company completely separate from the original business that undertakes the acquired positions or departments. With shared services, the group performing the outsourced work is typically a smaller group within the organisation. Shared services jobs usually perform cutbacks on positions to make more money.
The different types of shared services
Unitary structures There are both unitary and joint initiative commercial structures for shared services. Unitary structures consist of one organisation that consolidates and centres on a business service. A unitary structure can also be one lead department that creates a business service for other companies to share. This lead department unitary structure resembles an outsourcing company the most. The joint initiative structure The joint initiative structure is comprised of an agreement between two (or more) organisations that build a shared business service for workforce improvement. Although typically formed within the originating country, shared services can be located on-shore or off-shore, further striking close similarities to outsourcing. On-shore tasks originate within the country, while off-shore means an international organisation is involved.