Shared services enable organizations to consolidate common back-office functions into centralized teams to achieve economies of scale and cost savings. It involves consolidating common business functions and sharing services across an organization rather than maintaining business units or departments. Shared services are responsible for functions including finance and accounting, human resources, procurement, customer service, and information technology. By adopting a shared services model, organizations can eliminate redundant processes and systems, leverage expertise, and optimize costs.

The global shared services market is estimated to be valued at US$ 162.48 Mn in 2023 and is expected to exhibit a CAGR of 14% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:
One of the key drivers for the growth of the shared services market is the increasing demand from organizations to outsource non-core business functions to specialized third-party service providers. This allows organizations to focus on their core competencies while leveraging external expertise and economies of scale to optimize support functions. Shared services providers help improve process standardization, compliance, reduce costs, enhance data security, and deliver analytical insights. They also enable scalability to support business growth. However, data security continues to be a challenge and retaining control and oversight of outsourced functions is an important consideration for organizations.

SWOT Analysis

Strength: The shared services market enables organizations to reduce operating costs and rationalize non-core functions. By consolidating common business operations and services such as finance, HR, procurement etc., companies can gain efficiencies of scale. Shared services centers located in low-cost locations allow for saving on infrastructure and labor costs. Standardizing processes across divisions and departments can eliminate redundancies and improve controls.

Weakness: Transitioning to a shared services model requires significant upfront investment to setup the shared services infrastructure and consolidate operations. Employee resistance to changes in work culture, processes and location of work can hamper efficient adoption of shared services. Lack of domain expertise in handling specialized processes of some business units poses challenges.

Opportunity: Growing outsourcing of non-core operations by organizations presents an opportunity to expand shared services offerings. Emerging technologies such as RPA, AI can help automate repetitive tasks and improve productivity of shared services centers. Increasing focus on cost optimization will drive demand for third party shared services providers. Shared services can also help companies enter new markets by standardizing processes globally.

Threats: Intense competition from other shared services providers and captive centers of large organizations poses pricing pressure. Dependence on third party service providers for critical operations introduces risks from lack of control and security issues. Regulatory restrictions in some countries limit offshoring and outsourcing of certain processes.

Key Takeaways

The Global Shared Services Market Analysis is expected to witness high growth over the forecast period driven by the need for cost optimization and focus on core operations among enterprises. The global shared services market is estimated to be valued at US$ 162.48 Mn in 2023 and is expected to exhibit a CAGR of 14% over the forecast period 2023 to 2030.

The Asia Pacific region currently dominates the market and is expected to grow at fastest pace owing to availability of low-cost skilled labor, tax incentives for shared services centers by governments of countries like India and Phillipines.

Key players operating in the shared services market are INOVIQ, Bio-Rad Laboratories, Inc., Abbott, Becton, Dickinson and Company, Merck KgaA, QIAGEN, Thermo Fisher Scientific Inc., CENTOGENE N.V., PerkinElmer Inc., and Siemens Healthcare Private Limited. The market is fragmented in nature with top players focusing on expanding service offerings through inorganic growth strategies like acquisitions. For example, Thermo Fisher Scientific acquired clinically focused company ONEOMERA in 2021 to expand its end-to-end solutions offerings.

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