How to Safely Navigate the Transition from Outsourcing to Establishing a Shared Service Centre (SSC)

Transitioning from outsourcing to establishing a Shared Service Centre (SSC) has been a transformative strategy for many organizations, offering them greater control, efficiency, and cost savings. However, the move also comes with its own set of risks that need to be managed carefully. Companies such as Procter & Gamble (P&G), Unilever, and HSBC have successfully navigated this shift, providing valuable lessons for others considering the same path.

One of the key risks during this transition is operational disruption. For instance, when P&G began setting up its SSC, the company faced initial challenges related to integrating various global functions under one roof. To mitigate this, they employed a phased transition strategy, breaking the process into manageable steps. This approach ensured that business operations continued with minimal disruption while allowing for flexibility to adjust if needed. Businesses can follow this example by having a clear migration plan with defined timelines, responsibilities, and contingency measures in place. A phased approach, rather than an immediate switch, allows companies to adapt as challenges arise, reducing the risk of operational hiccups.

Another critical risk is related to talent acquisition and retention. HSBC, for instance, recognized early on that moving to an in-house SSC meant building a skilled workforce capable of handling global operations. The bank focused on creating a strong employee value proposition by offering competitive compensation, growth opportunities, and robust training programs. They also prioritized cultural integration to ensure that the SSC operated seamlessly within the broader organizational framework. Ensuring proper knowledge transfer is equally important—HSBC maintained overlapping periods between external vendors and internal teams to capture vital institutional knowledge, ensuring continuity.

The financial risks of such a transition can also be significant. Setting up an SSC involves upfront costs that can strain budgets if not managed carefully. When Unilever transitioned its financial and HR services to an in-house model, they emphasized the need for long-term financial planning. The company accounted for initial capital expenditures while forecasting the long-term savings that would come from consolidating services. Regular financial reviews and a robust budget buffer helped manage unforeseen expenses. This is a critical lesson for other companies: planning for both short-term financial strain and long-term savings is essential for a successful transition.

Ultimately, companies like P&G, HSBC, and Unilever have shown that the risks of transitioning from outsourcing to an in-house Shared Service Centre can be managed effectively with the right strategies. From careful operational planning to talent retention and financial management, their experiences provide a roadmap for organizations looking to make the leap while minimizing risks and maximizing the benefits of their own SSCs.