by Shared services aim to consolidate common business functions across an organization. This allows duplicative costs to be reduced and enables economies of scale. Common services that are “shared” include finance and accounting, human resources, procurement, and information technology. Shared services models are widely adopted in industries like banking, insurance, retail, and manufacturing where consolidating support functions can help reduce operation costs and improve efficiencies.
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 8.3% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics
Increasing demand for cost optimization is a key driver propelling growth of the shared services market. Shared services help organizations lower operational expenses by eliminating redundancies and duplication of efforts across different business functions. This allows resources to be utilized more effectively. Growing complexities in business operations are also driving more companies to adopt shared services arrangements to streamline processes, integrate disparate systems, and improve competitiveness. Standardization of common processes through shared services facilitates better compliance management as well. The market is expected to further gain traction over the forecast period owing to growing need for enhanced productivity and focus on core business operations among enterprises.
SWOT Analysis
Strength: The shared services market offers significant cost savings benefits for organizations by streamlining business processes and consolidating resources. It allows companies to focus on core competencies by outsourcing non-core functions to specialized shared services providers. Offering standardized processes across business units improves process quality and compliance.
Weakness: Transitioning to a shared services model requires high upfront investments and restructuring of organizational processes. It can face resistance from internal stakeholders due to changes in reporting structures and potential job losses. Data security and privacy concerns also arise while outsourcing critical functions to third party shared services providers.
Opportunity: Growing adoption of cloud-based technologies provides an opportunity to implement automated shared services. This helps improve process efficiency, scalability and reduces costs further. Demand for outsourcing of finance & accounting, human resource management and procurement functions from SMEs presents a major opportunity.
Threats: Dependency on third party shared services providers increases risks related to disruption of services due to factors such as regulatory changes, mergers & acquisitions or provider bankruptcy. Rising costs of services can impact expected savings from shared services centers. Intense competition from global players exerts pricing pressures.
Key Takeaways
The Global Shared Services Market Size is expected to witness high growth driven by the need for cost optimization among organizations. The market size for 2024 is estimated at US$ 162.48 Mn registering a CAGR of 8.3% over the forecast period of 2023 to 2030.
Regional analysis: North America dominates the shared services market currently with a share of over 35% owing to early adoption among organizations in US and Canada. Asia Pacific is expected to witness fastest growth over the coming years led by China, India and other Southeast Asian countries providing outsourcing destinations to global companies. Key players operating in the region include Dell Inc., Zebra Technologies Corp. and Panasonic Corporation and are focused on expanding cloud-based offerings.
Key players: Key players operating in the shared services market are Dell Inc., Curtiss-Wright Corp., Getac Technology Corp., General Dynamics Corp., Zebra Technologies Corp., L3 Technologies Inc., Panasonic Corporation, Scio Teq, Sparton Corp., Crystal Group Inc., Kyocera Corp., and Beijer Electronics Group AB. They are focused on developing digitally-enabled solutions for finance & accounting, supply chain and human resource functions to drive efficiencies.
Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
