Introduction

Designing shared services is a strategic initiative that helps organizations improve efficiency, reduce costs, and standardize operations. However, simply centralizing functions is not enough. A well-designed shared services model requires the right structure, processes, technology, and governance.

In this guide, we explain how to design shared services effectively to support scalable and high-performing business operations.

What Does Designing Shared Services Mean?

Designing shared services involves creating a centralized model that delivers common business functions across the organization. This includes defining how services are structured, delivered, and managed.

The objective is to build a model that is efficient, scalable, and aligned with business goals.

Step-by-Step Approach to Designing Shared Services

1. Define Scope and Objectives

Start by identifying:

• Which functions will be included (HR, finance, IT, procurement)

• Business goals (cost reduction, efficiency, scalability)

A clear scope ensures alignment from the beginning.

2. Select the Right Operating Model

Choose a model based on your organization’s needs:

• Centralized model

• Hybrid model

• Global Business Services (GBS) model

Each model offers different levels of control and flexibility.

3. Standardize and Optimize Processes

Process design is critical.

Focus on:

• Eliminating duplication

• Creating standardized workflows

• Improving efficiency

Well-defined processes ensure consistency across the organization.

4. Leverage Technology and Automation

Technology enables scalability.

Key tools include:

• ERP systems (SAP, Oracle)

• Robotic Process Automation (RPA)

• Workflow automation tools

These tools reduce manual effort and improve accuracy.

5. Define Governance and Control

Strong governance ensures accountability and performance.

Include:

• Service level agreements (SLAs)

• Performance metrics (KPIs)

• Clear roles and responsibilities

6. Build the Right Talent Model

People are at the core of shared services.

Focus on:

• Hiring skilled professionals

• Training and upskilling

• Creating a service-oriented culture

7. Establish Location Strategy

Decide where your shared services center will be located.

Consider:

• Cost advantages

• Talent availability

• Time zone alignment

India is a popular choice due to its strong talent pool and cost efficiency.

8. Implement Continuous Improvement

Shared services should evolve over time.

Adopt:

• Process improvement methodologies (Lean, Six Sigma)

• Regular performance reviews

• Feedback mechanisms

Common Challenges in Designing Shared Services

Organizations may face challenges such as:

• Resistance to change

• Lack of alignment across teams

• Legacy systems

• Poor process standardization

These challenges can be addressed through strong planning and change management.

Benefits of a Well-Designed Shared Services Model

• Improved efficiency and cost savings

• Standardized processes

• Better control and governance

• Scalability for growth

• Enhanced service quality

Conclusion

Designing shared services is not just about centralization. It requires a structured approach that integrates people, processes, and technology.

Organizations that invest in designing the right shared services model can achieve long-term efficiency, agility, and operational excellence.

For additional insights on shared services transformation and operating models, you can explore perspectives from McKinsey & Company: