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Saving big through
shared services...
There are few words in today's business lexicon more emotionally charged than outsourcing. Whether it’s right for a given company—and if so, how to go about it—are burning questions many executives face.
Add in the need for a nuanced understanding of business practices, regulations, and cultures in a foreign land, and the stage is set for sweeping organizational change. A central question many companies face is whether to pursue a shared services center (SSC) model, outsourcing, offshoring, or some combination of the three.
For a U.S.-based multinational distributor of office products, a back-office transformation began with multiple build-or-buy decisions.
The search for alternatives started when the company realized that the cost of its back-office operations—including accounts payable, accounts receivable, travel & expenses, and general accounting—were rising faster on a percentage basis than the company was growing, largely because of labor expense and a model of having multiple regional back-office operations.
Consolidation was the obvious course. Two fundamental questions remained: Whether to outsource or keep the function in house, and where to locate.
When an external analysis could not justify the outsourcing option, the company decided to pursue the SSC model, opting to begin with a single SSC for its European finance and accounting operations.
Due in large part to PwC’s presence across and deep understanding of doing business in Europe, our firm was selected to assist with site selection and implementation of the SSC. Goals included reducing costs, adopting a common technology platform and business processes, and increasing visibility to improve management control.
Romania was ultimately selected as the location for the company’s European SSC, in part because of the extraordinary workforce to be found there. The ability to speak multiple languages, including excellent English, is quite common among the talent pool in Romania, affirmed Charles Aird, a managing director for PwC’s Advisory practice. Aird, who has spent much of his career traveling the globe and studying business practices both at home and abroad, believes that high levels of education in Romania coupled with lower employment costs and a stable political environment make that country an attractive location for both shared-service and outsourcing solutions.
For the office products company, a new shared-services facility would be built from the ground up, with PwC providing a wide spectrum of assistance that included:
The impact of the switch to shared services has been felt—the company’s Central European SSC is delivering the expected 35-40% in cost savings. Moreover, company management will gain greater visibility into finance and accounting functions across Europe.
But PwC's involvement did not end there. Even as the European SSC was being developed, the company had decided to launch a separate outsourcing effort—electing to offshore its US-based accounts receivable operation until a new North American SSC could absorb the work.
That effort had not gone well, and PwC was asked to come in to help right the situation. Troubles had arisen, Aird observed, because business processes had been inadequately documented. The selected offshore outsourcing company had tried to improvise a solution, Aird said, but had lacked the in-house knowledge. PwC was able to identify gaps and recommend new processes and controls for the client to consider. We later helped execute the plan, including documenting business processes, preparing scripts for customer service personnel, and implementing the controls management had decided upon. Subsequently, instead of having to withdraw from the contract, the client will now be able to see it through until the North American SSC is operating.
PwC's ability to help clients unravel complex problems goes beyond its multidisciplinary team of professionals. Understanding the dynamics of global operations and having people on the ground with knowledge of local laws and regulations, tax implications, and labor issues is fundamental to PwC’s advisory practice.
"We’re finding," said Aird, "that the better organizations are constantly in movement. They’re looking for the next place, or the next, next place. That’s where we can help, because we’re always out there in the local environment."
shared services...
An office supplier finds the answer to back-office transformation in Central Europe
There are few words in today's business lexicon more emotionally charged than outsourcing. Whether it’s right for a given company—and if so, how to go about it—are burning questions many executives face.
Add in the need for a nuanced understanding of business practices, regulations, and cultures in a foreign land, and the stage is set for sweeping organizational change. A central question many companies face is whether to pursue a shared services center (SSC) model, outsourcing, offshoring, or some combination of the three.
For a U.S.-based multinational distributor of office products, a back-office transformation began with multiple build-or-buy decisions.
The search for alternatives started when the company realized that the cost of its back-office operations—including accounts payable, accounts receivable, travel & expenses, and general accounting—were rising faster on a percentage basis than the company was growing, largely because of labor expense and a model of having multiple regional back-office operations.
Consolidation was the obvious course. Two fundamental questions remained: Whether to outsource or keep the function in house, and where to locate.
When an external analysis could not justify the outsourcing option, the company decided to pursue the SSC model, opting to begin with a single SSC for its European finance and accounting operations.
Due in large part to PwC’s presence across and deep understanding of doing business in Europe, our firm was selected to assist with site selection and implementation of the SSC. Goals included reducing costs, adopting a common technology platform and business processes, and increasing visibility to improve management control.
Romania was ultimately selected as the location for the company’s European SSC, in part because of the extraordinary workforce to be found there. The ability to speak multiple languages, including excellent English, is quite common among the talent pool in Romania, affirmed Charles Aird, a managing director for PwC’s Advisory practice. Aird, who has spent much of his career traveling the globe and studying business practices both at home and abroad, believes that high levels of education in Romania coupled with lower employment costs and a stable political environment make that country an attractive location for both shared-service and outsourcing solutions.
For the office products company, a new shared-services facility would be built from the ground up, with PwC providing a wide spectrum of assistance that included:
- Site selection
- Contract negotiation guidance for the builder to install the required infrastructure
- Process evaluation to designate which processes could move and which had to remain local due to regulatory requirements
- Recruiting and training key staff
The impact of the switch to shared services has been felt—the company’s Central European SSC is delivering the expected 35-40% in cost savings. Moreover, company management will gain greater visibility into finance and accounting functions across Europe.
But PwC's involvement did not end there. Even as the European SSC was being developed, the company had decided to launch a separate outsourcing effort—electing to offshore its US-based accounts receivable operation until a new North American SSC could absorb the work.
That effort had not gone well, and PwC was asked to come in to help right the situation. Troubles had arisen, Aird observed, because business processes had been inadequately documented. The selected offshore outsourcing company had tried to improvise a solution, Aird said, but had lacked the in-house knowledge. PwC was able to identify gaps and recommend new processes and controls for the client to consider. We later helped execute the plan, including documenting business processes, preparing scripts for customer service personnel, and implementing the controls management had decided upon. Subsequently, instead of having to withdraw from the contract, the client will now be able to see it through until the North American SSC is operating.
PwC's ability to help clients unravel complex problems goes beyond its multidisciplinary team of professionals. Understanding the dynamics of global operations and having people on the ground with knowledge of local laws and regulations, tax implications, and labor issues is fundamental to PwC’s advisory practice.
"We’re finding," said Aird, "that the better organizations are constantly in movement. They’re looking for the next place, or the next, next place. That’s where we can help, because we’re always out there in the local environment."
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