Creating outsourced shared services arrangements: Lessons from the public sector

SummaryShared services arrangements have been viewed as a strategy for achieving efficiencies and improved service in back-office functions such as finance and accounting, human resource, and procurement. Organisations have been increasingly turning to vendors to implement and manage outsourced shared services arrangements. Analysing the experiences of a public sector organisation, this paper provides a detailed understanding of the issues involved in creating outsourced shared services arrangements. The findings have the highlighted the importance of strong governance to drive standardisation and performance improvement, and relationship building both internally with the staff affected by the changes and externally with vendors. Failure to implement a standardised approach will hinder an organisation from fully leveraging the specialist capabilities of external vendors.

► This study highlights the issues involved in creating outsourced shared services. ► The challenges and potential strategies for overcoming these challenges are outlined. ► Strong governance is important for driving standardisation and performance improvement. ► Standardisation will be more difficult where the function affected has a high level of autonomy. ► Building strong relationships with vendors is necessary for obtaining the benefits of outsourced shared services.