Differences between Outsourcing and Shared Services Solution
Outsourcing or better known as business process outsourcing (‘BPO’) is method of subcontracting various business-related operations to third party vendors, and process outsourced are usually less complex and mainly include back-office function or front office function.
Shared services centre is often a spinoff of the corporate services to separate certain operational task from the corporate headquarters and is more cost-sensitive, with processes designed to increase productivity while reducing cost. The relationship between the shared service centre and its corporate headquarters or parent entity is governed by Service Level Agreement (SLA) that covers all aspect such as quality, responsibilities, and performance.
Although business process outsourcing market has registered strong growth every year, many global multinational firms, are progressively switching towards adopting a global shared service delivery model, where centres are established to perform higher value adding services as compared to the common services provided by the traditional BPO firms which are more accustomed to performing basic processes which are less complex.
How Technology has help shift the trend towards Shared Service Model
Digitalisation of business process and the availability of much more advanced network systems such as cloud computing has provided the right foundation for many firms to established shared service centres in countries with lower labor cost to perform and execute multiple set of processes and activities that would otherwise not be considered in parent entity due to high labor cost requirement.
The outsourcing strategy would have been the right solution in prior years, where most processes were standardized, and a great amount of manual intervention was required in a given activity. This trend however is expected to change, and more firms will likely pursue wide scale adoption of more efficient transportation management back-office system which will likely demand a more analytical approach towards completing and managing daily back-office functions.
Assigned personnel would be expected to process higher volume of invoices with higher level of accuracy and apply analytical tools to generate meaningful analysis for management.
This would require greater investment in training on use of software specific to that entity’s operation, and the approach of having an external firm perform this may not be viable since, the shipper’s obejctive of achieving higher efficiency with a given set of labor hours may not be perfectly aligned with outsourcing firm’s long term strategy and objective which maybe to offer more labor hours even if it may be deemed less efficient in the long term.
What we offer
Here at Freight Analytics, we firmly believe that upon achieving the milestones of performing a set of given activities successfully with a group of personnel that are already accustomed to the shipper or carriers’ business process, it is critically important for the shipper or carrier to own the shared service and remain focus on using technology to drive process innovation and yield higher efficiency. We would like to see our customers, benefit economically from both labor arbitrage and still benefit from continuous process improvement and innovation through application of best-in-class technology systems and platform.
