SHARED SERVICES MARKET ANALYSIS

Global Shared Services Market size was valued at US$ 41.37 Bn in 2023, exhibiting a compound annual growth rate (CAGR) of 23.1% from 2023 to 2030.

Shared services refer to a way of managing different parts of a company by sharing resources and information among them. It's like bringing together various business operations that are used by different parts of the same organization. This approach is cost-effective because it centralizes back-office tasks that are used by multiple divisions of the company, avoiding duplication of work. The shared service model focuses on specific business functions, centralizes services, and has a single place for delivering these services. It meets the needs of different business units within the company and is supported by technology and its services. The main goal of shared services is to allow each business division to focus its limited resources on activities that support its own business goals. These factors are expected to lead the growth of global shared services market during the forecast period.     

Global Shared Services Market- Regional Analysis North America held a dominant position in the Global Shared Services market in 2023, followed by the regions of Asia Pacific and Europe.

Figure 1. Global Shared Services Market Share (%), By Region, 2023

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North America held a dominant position in the Global Shared Services market in 2022, owing to factors like presence of numerous multinational corporations such as, Microsoft, Google LLC, Apple Inc., etc. These organizations utilize enormous resources in their operations which are instrumental in production of large quantities of output in terms of products and services as well as the organizational data. Hence, looking at the scale of operations of such organizations the use of shared services becomes vital to stay competitive in the market.  Moreover, these multinational corporations are highly inclined towards the use of innovative solutions in their functioning to obtain better efficiency. These factors are expected to lead the growth of shared services market in the region of North America.

Asia Pacific is another lucrative market for shared services. The region is witnessing significant economic growth and expansion of the information technology (IT) sector which is giving rise to the emergence of numerous organizations in different sectors of the economy. The market in the region is highly competitive due to huge number of market players both, domestic as well as international. This makes it increasingly important for the organizations to be cost effective in their functioning. These factors are resulting in the increasing demand for shared services in the region. As the industrial sector continues to expand the demand is expected to grow further and drive the growth of shared services market in the Asia Pacific region.

Global Shared Services Market- Drivers:

• Growing emphasis on cost reduction in overall operations: Organizations worldwide are continually seeking ways to optimize their operational efficiency and reduce expenses while maintaining or enhancing service quality. Shared services provide an effective solution to achieve these cost-saving objectives. Shared services enable companies to consolidate and centralize back-office operations, such as finance, human resources, IT, procurement, and customer service, among others. Moreover, many organizations have multiple business units or subsidiaries that perform similar functions independently. Implementing shared services allows these units to streamline their operations, eliminating duplicative processes, systems, and resources, resulting in cost savings. It is considered that implementation of shared services can reduce the operational cost in an organization by 25% to 50%. For instance, according to a report published on by PwC, a U.K based multinational company engaged in providing business services, the implementation of shared services can lead to savings of costs in different functional units like information systems (20%-30%) and human resources department (20%-50%). These increased cost savings would attract more users in the global shared services market and lead to its growth during the forecast period.
• Rising demand for innovative solutions to enhance customer service: In today's highly competitive business landscape, organizations are increasingly realizing the importance of delivering exceptional customer experiences to gain a competitive edge and foster customer loyalty. Shared services play a crucial role in meeting this demand by providing innovative solutions that improve customer service in various ways. By consolidating customer inquiries and feedback, shared service centers can respond more efficiently, ensuring quicker issue resolution and higher customer satisfaction. Moreover, shared customer service centers often operate on a 24/7 basis, providing round-the-clock customer support. This availability ensures that customers receive assistance and resolution at any time, regardless of their location or time zone, enhancing the overall responsiveness of the organization. For instance, in October 2022, Georgia Institute of technology, a public research university in the U.S., developed Administrative Services Center (ASC), a department focused on transforming human resources related activities. The ASC department is set to integrate the efforts of office of information technology (OIT), to streamline the redundant administrative activities. This shows the adoption of shared services among the organizations to deliver better value to the stakeholders like students, faculty members, etc. who are the end-users of these services.

Global Shared Services Market- Restraint

• Challenges regarding data security and threat of leakage of sensitive data: Shared service providers handle an organization's sensitive and private information, including complex data. They have strict rules and controls in place to limit access to this confidential data, ensuring only authorized personnel can view and manage it within the shared service system. However, despite these precautions, the confidential information is always at risk of being targeted by cybercriminals who attempt to carry out cyber-attacks to steal or compromise the data. Protecting such sensitive and personal data of the clients becomes increasingly important to drive the demand for the use of shared services among the companies. For instance, in October 2022, SBI (State Bank of India), an India based multinational public sector bank, reported that the data of 9 million card users of the bank was leaked due to unauthorized access. The financial data of the users is highly sensitive and leakage of this data might cause the users to refrain from availing the services from the organizations. This threat of data security might lead to the contraction of global shared services market during the forecast period.
• Emergence of alternative technologies like artificial intelligence (AI) and machine learning (ML): The primary objective of adopting shared services in an organization is to make the optimum utilisation of available resources to reduce overall cost and increase efficiency of different functional units within an organization. Technologies like AI and ML can prove to be an alternative for shared services. AI and ML backed programs can develop smart systems that automate various administrative activities and lead to significant cost reduction for the organizations. The adoption of such AI programs can improve the efficiency of businesses by up to 40% and lead to reduction in operational cost up to 30%. For instance, in July 2023, AT&T, a U.S. based multinational telecommunications company, announced that it would invest additional US$ 2,000 million to develop AI programs to transform various processes within the organization with a view to achieve the target of cost reduction up to US$ 8,000 million. If this trend continues the demand for shared services would decrease significantly as the organizations would be inclined to adopt AI alternatives instead leading to the contraction of the global shared services market during the forecast period.

Global Shared Services Market- Opportunity

Growing demand for shared services in the developing economies: Developing economies are experiencing rapid economic growth, industrialization, and technological advancements, creating a favorable environment for businesses and organizations to expand their operations. Several factors contribute to the increasing demand for shared services in these regions, making it an attractive opportunity for service providers. Developing economies often offer a cost-effective business environment, including lower labor costs and operational expenses. Shared services allow organizations to leverage these cost advantages by centralizing and streamlining their back-office operations, resulting in cost savings and improved operational efficiency. Many developing economies have a large and diverse pool of skilled professionals with expertise in various fields. Shared service centers can tap into this talent pool, providing access to a wide range of skills and capabilities at competitive rates. For instance, on June 30, 2023, EagleBurgmann, a German based sustainable solutions provider, announced the inauguration of a new shared service center in Chennai, India. The new shared service center would provide standardized transactional processes across the companies of EagleBurgmann Group situated in the western hemisphere.

Global Shared Services Market- Trends

Growing trend of process efficiency, process standardization, and centralization of data: Shared services are a means to look for ways to integrate functions across organizations. Process standardization, process efficiency, and data consolidation are some of these duties. A number of advantages are offered by shared service models, including the use of technology, supporting roles, and staff cross-training. As businesses transition from separate standards tied to business units, shared services and multi-function models are in line with a growing trend towards process standardization. Additionally, integrated administration across the organization gives the enterprise leadership more prominence. For instance, according to an article published in November 2020, by SSON (Shared Services Outsourcing Network), a global analytics firm in the field of shared services, suggests that shared services lead to the benefits accruing to cost benefits and IT systems improvement within the Enterprise Resource Planning software of an organization. This leads to increased efficiency in the processes carried on in the organization.

Global Shared Services Market- Segmentation

The Global Shared Services market is classified into following segments based on component, end-use, deployment and regions.

Based on End-use, the BFSI (Banking, Financial Services and Insurance) segment in the Global Shared Services market held the dominant position in the year 2023. The BFSI segment is characterized with the presence of several functional divisions like retail banking, investments, loan department, corporate financing, etc. All these functional divisions could share some common resources like the transaction activity of the customers, schedule of loan repayment, cash in-flows and out-flows, etc. Such data can be used when a customer wishes to avail services from different functional divisions within the banks. Hence, the wide scope of the BFSI segment in the global shared services market would ensure the increased demand for shared services among the market players in BFSI industry and would lead to the expansion of the market.

Figure 2. Global Shared Services Market Share (%) Analysis and Forecast, By End use, 2023

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Global Shared Services market was valued at US$ 41.37 Bn in 2023 and is expected to reach US$ 177.27 Million by 2030, exhibiting a CAGR of 23.1% between 2023 and 2030.

Global Shared Services Market- Key Competitors

Major players operating in the Global Shared Services market include Infosys Limited, SAP, HCL, EXL, Atos SE, Accenture, Genpact, IBM Corporation, Oracle Corporation, Cognizant, Capgemini SE, and Tata Consultancy Services Limited and Others.

Global Shared Services Market- Recent Developments

• On January 17, 2023, Tata Consultancy Services, an India based multinational IT outsourcing company, announced the launch of TCS Finance and Shared Services Transformation suite to allow businesses across the world to make use of shared services and improve efficiency.
• On May 24, 2023, Sharing Services Global Corporation, a multinational company engaged in providing emerging business technologies, announced the launch of Shared Services Platform which offers a variety of services to support companies in the direct selling industry.
• In December 2022, Freshfields, a global law firm which serves clients across the globe, announced the launch of its new shared business service center in Bratislava, Slovakia. This new shared service center would form the part of integrated infrastructure of the company.

Global Shared Services Market- Impact of COVID-19:

The worldwide market for shared services was significantly impacted by the COVID-19 epidemic. Organizations quickly adapted to the new normal as the world confronted unprecedented obstacles with lockdowns, travel restrictions, and remote work arrangements. In order to maintain business continuity, shared service centers, which frequently relied on close proximity and on-site operations, had to quickly switch to remote work models. The epidemic hastened the introduction of digital technologies and automation in shared services, facilitating smooth communication and efficient procedures.  

*Definition: A business concept known as "shared services" refers to the consolidation and centralization of a number of back-office tasks or support services, including finance, human resources, information technology, purchasing, and customer care. Typically, a centralized service center that provides support to numerous business units or divisions within the same firm provides these shared services.