Shared Services: A Consolidation of Benefits
Shared Services: Definition
“Shared Services” is a term defining what occurs when “non-core” services used by multiple parts of the same organisation are merged and provided by one department or organisation in an effort to streamline operations. Thus, a service previously delivered within several different organisations is consolidated and provided unitarily by one organisation from a centralised location, or a joint venture, provided by two or more organisations. Shared Services centres can be set up at different locations. Service centres within the same country are considered to be on-shore service centres. However, if the Shared Services is provided in another country but is in relatively close proximity, it is labelled as near-shore. The term off-shore is used if the Shared Services centre is not set up in an on-shore or near-shore location.
Benefits of Shared Services
The development of Shared Services centres in the Caribbean has created tremendous benefits for both citizens and businesses in several economies. In 2013, Scotia Bank’s Shared Services hub facilitated an initial staff of 300 which increased in 2018 to over 750, while Evolve Mortgage Services now has a staff of 29 after setting up in Trinidad and Tobago in 2018. This trend for increasing employment levels in the Shared Services sector is also evident in Barbados and Jamaica. When Gildan set up their services in Barbados they started with a staff of six employees in 1999 and has since increased their employee base to over 250. Whereas KPMG Shared Service operations in Jamaica initially employed 175 professionals in 2018 with plans to increase employment in 2019 and to have an overall staff of 425 by 2022.
In addition to allowing for increased growth in job opportunities, Shared Services can generate high-paying jobs with better health and pension benefits. It can also offer improved working conditions and is transforming how we conceptualise where work must be done, as work from home arrangements are a normal part of the workings of some Shared Services centres. Deloitte’s 2019 Global Shared Services survey found that several companies achieved up to 15% annual productivity savings. The larger numbers of concentrated staffing and the reduction in the need for centralised locations in high rental areas can lead to benefits from economies of scale, which can contribute to lower cost and increase business value. Shared Services also eliminates repetitive tasks and improves efficiency as competitive pressures promote responsive service.
The Caribbean region has also benefited considerably from increases in Foreign Direct Investment as a result of the development of the Shared Services sector and the introduction of several centres. Scotiabank, for instance, injected US $15.5 million in the Trinidad and Tobago economy in 2013 when they set up OSSCL, while Gildan and KPMG have increased investments in the infrastructure of Barbados and Jamaica respectively as both companies plan to invest in new facilities.
Shared Services Development: The Case of Trinidad and Tobago
The economy of Trinidad and Tobago and the citizens can benefit from the further development of the Shared Services sector as it will aid with long term development diversification and improve long term stability and forex earnings. Trinidad and Tobago is an attractive location that offers the very advantages Shared Services providers seek. The country has a stable economy, low infrastructure cost and a well-educated, English-speaking workforce that is competitively compensated when compared to workers in North and Latin America. The Trinidad and Tobago International Financial Centre (T&T IFC) promotes Shared Services as a means to further enhance business development within the realm of internal and external opportunities. The T&T IFC is a ‘resourceful ally’ and continues to be instrumental in facilitating the setup and startup of firms by hosting inward missions, providing real estate and recruitment assistance, and even offers an 80-seat, rent-free, plug and play incubation facility.