The decision making process of where to locate your Shared Service Centre is not straightforward. The optimum answer is very much dependent on your business and should not be made on the basis of wage arbitrage or tax incentives alone. This paper outlines the approach that Chazey Partners take in order to come to a robust decision on selecting a location and provides additional insight from recent case studies.

1. he decision making process of where to locate your
Shared Service Centre is not straightforward. e
optimum answer is very much dependent on your
business and should not be made on the basis of wage
arbitrage or tax incentives alone. is paper outlines the
approach that Chazey Partners take in order to come to a
robust decision on selecting a location and provides
additional insight from recent case studies.
In gaining buy in a commitment to a location for a shared
service center, an organization can face conflicting
internal objectives and differing priorities.
Chazey Partners experience suggests that to make the
right location decision, an organization needs to follow a
robust evaluation based on a set of criteria tailored to the
specific circumstances of the organization and the market
that the organization operates within.
A robust approach facilitates internal buy in and ensures
that the organization makes the right decision that
delivers the best long term solution with the right level of
risk.
Figure 1 below illustrates the four core options available in
terms of location and the table below provides some of
the high level pros and cons for each one.
e Chazey Partners approach considers location across a
number of dimensions. Within each dimension, we
develop a set of requirements specific to organization and
its business context. is provides a framework for a
comprehensive location analysis. By allocating relevant
weighting to these requirements within the dimensions, it
is possible to then make a decision on an optimal solution
without the emotional element.
Location, Location, Location
e four dimensions we typically consider are: Human
Resource, Business, Infrastructure and Political
Environment.
Option Description Pros Cons
On Site SSC is based
within an existing
office of the parent
organization
• Business
engagement
• Infrastructure
• Language
• Resistant to
change
• Limited cost
benefits
Onshore SSC is based in a
new office in the
same country as
the parent
organization
• Business
engagement
• Language
• Limited cost
benefits
Near
shore
SSC is based in a
new office in a
country near to
the organization
• Business
engagement
• Language
• Cultural
affinity
• Wage
arbitrage
• Infrastructure
• Accessibility
Offshore SSC is based in a
new office in a
country far away
from the
organization
• Wage
arbitrage
• Alternative
service
delivery
• Language
• Culture
• Business
engagement
• Infrastructure
1. The Human Resources Dimension
It is people that deliver the services from the Shared Service
Centre. As such there are a number of human resource
considerations in the high level requirements and an
assessment needs to answer the following questions.
• Does the location have resources with the necessary
skills available to deliver the services and any future
anticipated services?
• What is the cost of resources and how will the costs
change in the near term?
• What is the availability of the resources with the right
skills in the market place and how challenging will it be
to retain the right resources or expand if necessary?
• What are the language skills of the location and are they
relevant to the types of service being provided?
• What is the culture of the people in the location and is
that aligned to the delivery of the service?
T
Figure 1: Options for Shared Service Centre location (US company)
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2. 2. The Business Dimension
Businesses have specific ways of working, and cultures in
place, that any SSC would need to complement. e
business dimension considers these requirements and
looks to assess the case for the following.
• Does the location make sense for delivering the
services and engaging with the customer?
• How aligned is the culture of the proposed SSC likely
to be to the existing culture of the business and does it
make a viable fit?
• Is the location a viable place for managing the
implementation project and an ongoing service
improvement program?
3. The Infrastructure Dimension
e infrastructure of a location needs to be in place and
sufficiently robust to ensure that the service meets the
expected quality. e infrastructure dimension considers
the requirements for an SSC location and should consider
the following:
• Is there the right real estate to support the desired
operation and scale to support any anticipated
changes?
• Is supporting infrastructure such as transport and
hotels readily available at the right price?
• Is the telecoms infrastructure readily available and
robust enough to deliver the right level of service?
• What are the costs of the infrastructure and how is
that forecast to change?
4. The Political and Economic Dimension
e political and economic elements of the country of the
location can play a pivotal role in the selection. ere may
be government incentives to set up SSC and these need to
be considered along with the general political
environment.
• Is the risk profile of the country acceptable for
establishing an SSC?
• Is the country stable enough to host an operation?
• Is the regulatory environment acceptable for the
operation that is planned?
• What are the tax implications and benefits of
establishing an operation in a location?
Selecting the optimal location for setting up or expanding
an SSC is a challenging process. Chazey Partners believe it
is important to take a structured approach to this process
using rigorous analysis based on HR, business context,
infrastructure and political dimensions. Any evaluation is
then able to balance the trade-offs presented by the
selection criteria and requirements.
In running through this process, there is also the
opportunity to gain buy in for any decision and also ensure
that there is a clear and robust business case that has
support of senior leadership within the organization.
is result of this approach will be a well-supported project
which aligns leadership of an organization and minimizes
the potential risk of the implementation. is in turn leads
to an SSC that will be able to operate effectively and
provide the expected service to the organization and
deliver the long term benefits.
Location Selection in Practice
In Chazey, we have delivered successful solutions over the
past 10 years in companies such as 3COM, Reuters, Oracle
and Travelport. Indeed, the operating models established in
these organizations have been instrumental in setting the
benchmark and template of leading practice not only
within a shared services environment but also with the
professional outsourcers such as E&Y, KPMG, BDO, etc.,
firms who are actively involved in providing third party
services in Statutory and Tax Compliance.
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3. e example table shows the results of a typical decision
making process. Each of the set criteria within the
dimensions has been assessed and rated in a range of 1 to
5 where 5 is best. By then applying the agreed weightings
to the scores, it has been possible to rank the locations in
order of preference.
In order to have a robust selection process, it is necessary
to identify the right weightings for an organization’s
business and to develop an assessment mechanism for
each criteria that allows the assessment team to
effectively evaluate the options in an objective manner.
For example factors to consider in skills would
incorporate an assessment of the countries education
system and a countries regulatory environment would
consider the corruption perception index.
e following two examples summarize how Chazey
Partners helped two companies to decide on the location
for their SSC based on how the weightings were decided
and the output of the assessment.
European
FMCG
Company Automo2ve
Parts
Company
The
company
was
looking
to
choose
a
site
for
its
European
Shared
Service
Centre.
The
company
was
looking
to
choose
a
site
for
its
South
American
Shared
Service
Centre
Human
The
majority
of
the
assessment
was
based
on
the
availability
of
resources
in
terms
of
necessary
skills
at
the
right
price.
The
human
element
was
just
under
50%
of
the
considera2on
Business
The
opera2on
was
to
be
stand-­‐alone
and
be
allowed
to
develop.
It
was
also
not
going
to
be
too
distant,
so
this
dimension
was
not
a
major
considera2on.
The
organiza2on
wanted
good
access
to
the
SSC
to
develop
the
center
and
2e
it
in
with
the
main
business
opera2on.
Infrastructure
The
key
considera2on
is
infrastructure
were
cost
and
availability.
Infrastructure
was
considered
as
equal
of
importance
as
the
business
engagement
with
specific
cost
being
the
key.
Poli2cal
The
right
regulatory
and
economic
environment
was
seen
as
the
second
most
important
factor.
This
is
so
there
is
a
stable
currency
and
regulatory
environment
for
the
opera2on
and
there
would
be
no
shocks
an2cipated.
The
Poli2cal
and
economic
dimension
was
the
second
most
important
factor
to
ensure
a
stable
opera2ng
environment
Result Op2on
2,
a
Near
shoring
approach
was
followed
where
the
SSC
is
located
within
the
same
region
as
the
head
quarter
organiza2on.
The
loca2on
was
primarily
selected
on
resource
availability
in
the
right
economic
environment
with
ready
access
to
the
right
infrastructure.
Op2on
2,
a
Near
shoring
approach
was
followed
where
the
SSC
was
located
within
the
same
region
as
the
head
quarter
organiza2on.
The
loca2on
was
primarily
selected
on
resource
availability
in
the
right
economic
environment
with
ready
access
to
the
right
infrastructure.
What does this mean for YOU?
Selecting a location for a Shared Service Centre is not
straightforward and the expense of having to recover from
the wrong location once the SSC is in operation may be
prohibitive.
By identifying locations effectively in the first place and
then evaluating them against clearly articulated
requirements categorized into the core dimensions of
human resources, business engagement, infrastructure
and political environment, you can ensure that you are
evaluating the right things and selecting the result
location for the right reasons.
At Chazey Partners, we have the experience and a rigorous
approach to help you make sure that you are able to make
the right decision on where to locate your SSC as well as
manage the decision making process and senior
management engagement in your organization.
For more information, please visit our website
www.ChazeyPartners.com
Grant Farrell
Managing Director United States
Chazey Partners
+1 408 767 1285
grantfarrell@chazeypartners.com
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4. ABOUT THE AUTHOR
Grant Farrell
Managing Director United States
Chazey Partners
Grant has over 20 years of experience in Finance, Shared Services and Technology implementations. He has managed change
programs on the back of Shared Service implementations significantly reducing the cost base, enhancing controls and service
levels. Prior to his recent assignments he was the Shared Service Controller for Interpublic.
Prior to Interpublic Grant was the European Operations Director for McGraw-Hill where he was responsible for the set-up
and subsequent running of the European Shared Service Centre.
He is well suited to strategic planning and set up but is equally at home focusing on daily operational issues, managing staff at
all levels and ensuring a high level of customer service.
Grant is a Chartered Accountant and has a BSc Honours Degree in Engineering from the University of Nottingham.
ABOUT CHAZEY PARTNERS
Chazey Partners is a professional management consultancy business that is committed to adding significant value to our
clients through a partnership approach. We bring together a unique wealth of expertise and real life experience in Business
Transformation, Shared Services & Outsourcing and Technology Enablement. We pride ourselves in having built, operated
and turned around some of the world's most highly commended and ground breaking Shared Services Organisations, and for
implementing many highly successful multi-sourced (shared services and outsourced) delivery solutions. Over the last 20
years, we have delivered numerous programmes globally, in the US, Canada, UK, Continental Europe, Bulgaria, Ireland, India,
Czech Republic, Hungary, South America, Singapore, Australia and China. Our experience covers both Private and Public
Sector, providing expertise in a wide spectrum of business functions, including Finance, HR, IT and Procurement.
Visit
www.ChazeyPartners.com
for
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informa2on.
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