HR Shared Services

1. Team
Jaguars
Team
Jaguars
By
Karthika Menon
Ampotty Sam Varghese

2. Team
Jaguars
My Company is multi geography
consumer durables firm & we are
looking to set up a shared service
center for the HR function in
India.
I need an external consultant to
conduct a feasibility study &
provide the findings to me
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3. Team
Jaguars
We will be Focusing on the Below
Topics Today
3
Shared Services
1
HR Shared Services
2
Benefits of Having Shared Services
3
Pros & Cons of Shared Services
4
Assess Feasibility
5
Conclusion
6

4. Team
Jaguars 4

5. Team
Jaguars
Shared Services
Shared services allow organizations to optimize the
delivery of reliable, cost-effective, and flexible services to
internal and external clients.
• Elimination of redundancies in processes and
technologies through standardization
• Elimination of centralized or distributed
accountabilities by setting up shared responsibility
through two-way service level agreements.
• Elevation of service excellence through greater focus
on customer service
• Cost economies of scale and scope
5

6. Team
Jaguars
HR Shared Services
• Create capacity by streamlining and automating work.
• Build credibility through the execution of processes
• Improve customer experience with the enablement of
digital tools and exceptional service delivery.
6

7. Team
Jaguars
Did you Know?
• The top reasons organizations are moving to Shared
Services are to reduce cost, accommodate growth, and
improve service.
• HR continues to be the second most common function
to utilize a Shared Service Center (behind Finance).
• Shared Service organizations are currently investing in
technology to improve both productivity of operations
and interaction with customers.
• Shared Service organizations consider a focus on
continuous improvement as the top priority over the next
10 years.
7

8. Team
Jaguars
Why Consumer Durable Firm Choosing HR
Shared Services?
• It helps business units achieve ambitious expansion targets by
identifying what's required locally
• It helps turn around underperforming companies and galvanizes the
management team
• It serves as a powerful change engine within the organization
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9. Team
Jaguars
There Seem to be Three Principal Drivers to
the Introduction of HR Shared Service
Organizations feel that shared services can reduce
costs by three main means:
• By cutting staff numbers, through achieving economies of scale
• By reducing accommodation charges, through exiting some offices/using
cheaper accommodation
• By greater efficiency in what is done and how it is done, through
streamlining and simplifying services, and doing them to a consistent,
accurate standard. Combining purchasing decisions also offers savings
through economies of scale
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Cost
Organizational
Change
Quality

10. Team
Jaguars
Quality can, it is thought, be improved
through shared services, both in itself and by
HR being more customer focused. This is
achieved by:
• Being more professional
• Achieving greater consistency and accuracy
• Being more aware of internal and external best practice
• Using better processes to complete work
• Delivering on time and to budget.
• Becoming more accessible by operating user-friendly services
(longer opening hours or easier means of contact)
• Improving the supply of information to customers, both on process
and content
• Giving better quality support in line with customer needs
10

11. Team
Jaguars
There were Four Sorts of Organizational
Drivers to Setting up HR Shared Services:
• To be part of a wider business change introducing the concept of
‘professional’ or functional services
• To achieve a greater degree of structural flexibility to respond to
business change
• To improve organizational learning across organizational
boundaries
• To allow HR to reposition itself as more strategic; to reduce
involvement in administrative trivia.
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12. Team
Jaguars
Different Phases in Shared Services
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1. Assess
Feasibility
2. Design
3. Build and
Test
4. Implement
and Roll Out
5. Optimize
Manage the Process and Enable Change

13. Team
Jaguars
In this changing global
landscape, critical
questions arise when
evaluating how an
organization can best
deliver its services, what
we call as the
Service Delivery
Model.
Focus On:
• Improvement and
optimization efforts
to reduce cost
• Maintaining and
enhancing service
levels
13

14. Team
Jaguars
Service Delivery Model
Transforming your back office/middle office to be
more service focused.
We have seen below:
• Companies using captive SSC to deliver
“higher value activities” and outsourcers
to deliver more “transactional activities”
• Companies using outsourcers for “higher
value activities” with no shared services
• Companies using only shared services
or outsourcing
14

15. Team
Jaguars
Regardless of
Model the key
principle remains
the same:
Standardization
Consolidation
Reengineering
Automation
This achieves financial
cost savings and allows each of
the functions to concentrate on
delivering high-value services to
the business.
Main challenge is to choose
most appropriate delivery model
for our organization and our
objectives
15

16. Team
Jaguars
Centralization vs Decentralization
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Attributes Centralization De-Centralization
Define
Refers the concentration of
powers in high level only
Refers to the distribution of
powers at every level of
management
Authority
Top management retains
max authority. Middle and
bottom level are having low
authorities
Authority is systematically
divided at every level
Suitable Small sized organisation Large scale organisation
Communication Flow Vertical Open and Free
Decision Making Slow Comparatively Faster

17. Team
Jaguars
Structures have Benefits and Challenges
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•

18. Team
Jaguars
Challenges
• High Support function costs (IT, HR, finance)
• “Back office” mentality and poor service levels.
• Lack of standardized systems, restricting the implementation of technology solutions
• Poor access of relevant management information due to lack of adequate business
intelligence tools and information
• Desire to manage business growth without adding a proportionate number of finance
and administrative staffs.
• Lack of local “business partnering”, (consider the function for Finance then largely
transaction processing and firefighting)
• Need to comply at optimal cost, with legislations
• Company mergers and acquisition
• Globalization and increased competition
• Drive for increased shareholder value.
18

19. Team
Jaguars
Which type of Organization would benefit
Shared Services?
• Multiple, dispersed locations
• Unnecessary local administrative presence
• Non-standard process
• Duplication of work across sites
• Rising support costs
• Incompatible information systems between locations
• Sites that do not share best practices
• Development of local or temporary solutions at each site
• Limited access to enabling technology
• Sites that struggles with their service levels
19

20. Team
Jaguars
Companies with these above characteristics will find difficulty in the
below:
• Providing internal support services are not visible or under control
• Quality is not appropriately measured
• Internal customer expectations are neither known or met.
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21. Team
Jaguars
Benefits of SSC
Increased Efficiency
• Best Practice processed
• Economies of Scales
• Greater span of control
• Low labor costs
• Reengineering
• Integrated procurement
• Acquisition synergies
• Get the most from investment in technology
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22. Team
Jaguars
Benefits of SSC (Cont’d)
Increased Effectiveness
• Make the most of specialist skills
• Improved decision support
• Improved control environment
• Easier to do data warehousing
• Management freer to focus on business issues
• Enhance customer services focus forum
• Front office mindset
• Service Level Agreements (SLA’s) and Service costing
22

23. Team
Jaguars
What Process can be Shared or Outsourced?
Many companies transforming their service deliver model
have focused primarily on Finance processes with
payables, expense processing and general ledger
being the most common. Apart from this now a days,
HR services are also in common
Typical Service Delivery Project Phases:
• The process of implementing a service delivery project is different for every
company, however we uses a structured methodology for SSC and
Outsourcing
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24. Team
Jaguars
SSC Methodology
24
Assess
Feasibility
Design Build and Test
Implement and
Roll Out
Optimize
Value
Project Management
Process
Information Technology
Organization and HR
Site Selection and Facilities
Tax
Security and Control
Change Leadership
How will we create value for the organization?
How will we manage effort?
How must process change?
What applications and IT infrastructure changes must be made?
How must the structure of the organization change?
Where will we locate the SSCs?
How will we optimize our tax structure?
How will we ensure policy and procedures are followed?
How will we make change happen?

25. Team
Jaguars
Outsourcing Methodology
25
Assess
Feasibility
Prepare Evaluate Confirm OptimizeTransitionContract
Value
Project Management
Process
Information Technology
Organization and HR
Site Selection and Facilities
Tax
Security and Control
Change Leadership
How will we create value for the organization?
How will we manage effort?
How must process change?
What applications and IT infrastructure changes must be made?
How must the structure of the organization change?
Where will we locate the SSCs?
How will we optimize our tax structure?
How will we ensure policy and procedures are followed?
How will we make change happen?

26. Team
Jaguars
SSC Methodology
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Checklists
Before proceeding to Phase 1, ensure that
you have following:
• Understood the benefits of implementing shared services or
outsourcing
• Determined that your organization matches the profile of an
organization that would benefit from a service delivery model
transformation
• Considered whether your objectives align with the potential
benefits of a new service delivery model
• Considered other strategic initiatives being planned
• Ensured that senior management believes that the idea is
worth investigating

27. Team
Jaguars
Assess Feasibility
Most organizations start their feasibility study without a
clear vision of what they can achieve.
You should use this phase 1 to:
• Develop your vision
• Define how processes could be split between local business and SSC or
outsourcer
• Define technology to use
• Access possible locations
• Agree on the most appropriate solutions
• By the end of this phase your business case should set out financial and
non-financial benefits so that you can make an informed “go, no-go”
decision
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28. Team
Jaguars
Typical Activities of Feasibility Study:
1. Define baseline and Vision
• Create a shared vision
• Develop a baseline
2. Define service delivery model
• Define process splits
• Consider technology issues
• Define high level organizational structure
• Conduct high level site location analysis
• Review potential outsourcers
3. Finalise strategy and develop cost benefit analysis
• Assess ‘to be’ situation
• Develop a high level project road map
• Conduct cost/benefit analysis
• Identify implementation barriers
• Determine a communications strategy
• ‘Go, no-go’ decision
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29. Team
Jaguars
Define Baseline and Vision
Create a Shared Vision
• Discuss with executives and senior management team from the areas of
the business that directly affected by the implementation
• Vision can be developed of what delivery model will look like (what process
can be included, desired location, what IT system to be used, how many
centers required, etc.)
• Developing a shared vision allows these concerns to be addressed at the
very beginning of the project and increase senior stakeholder/executive
sponsorships
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1

30. Team
Jaguars
Develop a
Baseline
• To understand clearly the
cost and quality of your
current operations versus
your new estimated cost and
quality of model
• This will helps to understand
the factors that can be taken
to improve process
performance levels

31. Team
Jaguars
Define Service Delivery Model
Define Process Splits
• Determine which parts of the process must be performed by
business unit and which can be consolidated
• Provides boundaries between the SSC/Outsourcer and local
responsibilities
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2

32. Team
Jaguars
High Level HR Process Splits from
Survey Over 270 Companies
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40%
36%
33%
33%
32%
31%
31%
30%
26%
25%
22%
22%
21%
21%
19%
16%
13%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Payroll / Time Administration
Workforce / Employee Data Administration
HRIS Maintenance and Support
Health and Insurance Benefit Administration
Compensation Administration
HR Reporting and Workforce Analysis
Call Centre
New Hire / On-boarding support
Pension and Retirement benefit Administration
Recruitment Administration
Employee relations & Communications
Organization & Position Management
Training Design, Development & Delivery
Performance Management Administration
Expatriate Administration
Skills and Competency Administrations
Succession Planning Administration
HR

33. Team
Jaguars
Consider Technology Issues Checklists
• Consider technology issues Checklists
• What is the current or planned level of standard systems in process
across location?
• What level of standardization is required to enable new structure?
• What technology enablers beyond ERP (Imaging, workflow, help
desk etc) are required to enable new service model?
• What is the cost of establishing such technologies?
33

34. Team
Jaguars
Define High Level Organization Structure
• Helps to visualize what the SSC would look like?
• Helps to develop business case by determining headcount and
span of control.
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35. Team
Jaguars
Conduct High Level Site Location Analysis
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Americas
Europe, Middle
East, India,
Africa and CIS
Japan
Asia
Pacific
The location of SSC/Outsourcer will
have critical impact on both quality of
services delivered to the business units
and cost savings achieved

36. Team
Jaguars
Conduct High Level Site Location
Analysis
Factors that make outsourcing to India attractive
36
Mitigate the
Risks
Navigate for
Success
Choose
your
Location
Know the
Talent
Advantage
Amplify the
Benefits
Choose
your Model
• Lower Costs & Higher Productivity
• Low costs
• Diverse talent
• Proficiency in English
• Know what you are up against.
• Research and if possible visit
your destination country
• Hire people the way you would at
home
• Treat local employees as part of
your team
• Quality of life, climate and cost of
living make these locations
attractive.
• Pune and Hyderabad - preferred
shared service destinations
• Delhi, Kolkata and Chennai - Some
present climate, security,
infrastructure challenges
• Mumbai - Cost prohibitive
• Bangalore – Almost saturated
• Focus on: Critical Functions,
where greater control is
required and data security is an
issue.
• Choose a third party model
where flexibility of scale and low
costs is a priority.
• The ability to influence
and build trust with
overseas stakeholders
• Cross-cultural fluency
• Strategic thinking skills
• People Leadership
• Build a high degree of
trust with overseas
stakeholders
• Hire the right leadership
team
• Encourage engagement
with parent business
• Establish strategic
partnership with parent
business
• Move up the value chain
• Stay cost competitive
• Devote resources to
upskill/ train local staff
• Focus on staff retention
• Build domain expertise

37. Team
Jaguars
“The key is to keep costs down while
maintaining the quality of deliverables in a
sustainable manner. There is no point in setting
up high-quality operations that become unviable
in a few years due to high cost.”
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38. Team
Jaguars
Review Potential Outsourcers
• Consider the experiences of your competitors
• Which vendors/locations they have used to get an idea of
What is possible and What has been successful in the
past
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39. Team
Jaguars
Attributes for Check
• Ability to provide services appropriate to the size of the company
• Ability to transform process
• Vendor attributes including:
• Existing client base
• Specialized skill set
• Brand value to attract and retain talent
• Ability to provide additional services in other functional areas and
from additional locations
• Ability to support increase in scale
• Ability to manage and develop IT systems and applications.
39

40. Team
Jaguars
Finalize Strategy and Develop cost
Benefit Analysis
Assess ‘to be’ situation
• Information gathered on the current situation provides the basis of
assessing all improvements going forward.
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3

41. Team
Jaguars 41
Develop A
High Level Project
Road Map
• This Gives An Overall View Of
Major Phases Of The Project
Including Design, Build And
Test, Implementation And Roll-
out And Optimization
• Includes High Level
Information And Estimation
Project Timelines, Resources
Requirement And Costs

42. Team
Jaguars
Conduct Cost / Benefit Analysis
• Includes both financial and non-financial considerations.
• Helps to determine if the benefits outweigh the costs and how
quickly you will achieve a return on your investments.
42

43. Team
Jaguars
Identify Implementation Barriers
There are several barriers to implement that should be considered in
the feasibility study
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60%
44%
40%
36%
32%
30%
26%
20%
16%
0% 10% 20% 30% 40% 50% 60% 70%
Resistance to Change
Limitations of Existing Systems
Lack of Executive Commitment
Lack of Executive Champion
Unrealistic Expectations
Lack of Cross-Functional Team
Inadequate Team and User Skills
Technology Staff and Users Not Involved
Project Charter Too Narrow
Primary Obstacles to Successful Change

44. Team
Jaguars
Determine a Communications Strategy
• When you perform a feasibility study, people in the organization will
begin to hear about it and wants to know what is going on.
• You need to consider how much to tell to your employees, ie.
Whether you adopt an open cautious communication strategy.
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45. Team
Jaguars
‘Go, no-go’ Decision
• The high level business case, vision and project road map should
provide senior executives sufficient information to make an informed
decision on whether to proceed with transforming their service
deliver model
• The outcome of this decision will be considered as ‘go, no-go’
decision.
45

46. Team
Jaguars
Conclusion
Shared Service is a business strategy that can be if
implemented effectively can
• Promise the way to reduce cost and improve
operational efficiency.
• Enables the firm to concentrate of
core competencies
• Global applications of standards
• Economies of scales
• Increased flexibility
• Labor Arbitrage
46

47. Team
Jaguars
Thank You