From Buyers Manual
Shared Services refers to the method of increasing efficiency of key functions within an organisation or group such as finance, human resources, IT or procurement departments. A particular service may have previously been in place in more than one part of an organisation or group but then decide to merge together to create one internal service provider.
By sharing services institutions can collaborate and share knowledge and expertise. This can streamline functions and enables economies of scale. This process can be done to reduce costs but also creates a significant improvement in the productivity and quality of the department. A survey of more than 250 companies by the Shared Services & Outsourcing Network and the Hackett Group found that companies were able to achieve a cost saving of 20% when using shared services and were significantly more successful in achieving quality of service.
Activities can be centralised in one location using this method which enables these services to be run more like a business at a cost and quality that can be very competitive to other methods.
Outsourcing is different to shared services in that a company does not use a third party organisation to carry out tasks that were previously internal, it just uses existing separate departments and merges them together.
Some disadvantages of this method are that it may disrupt the flow of service as the departments are moved to a central location, it may cause some duplication of work and could create problems in doing something quickly or correct for a customer.
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