Shared Services Centers in Emerging Markets: Growth Potential

Introduction: Shared Services Centers (SSCs) have become increasingly popular in recent years as a way for companies to streamline their operations and reduce costs. These centers are typically located in emerging markets, where labor costs are lower and there is a large pool of skilled workers. In this article, we will explore the growth potential of SSCs in emerging markets and the key players in this industry.

Overview:

Shared Services Centers are centralized units that provide support services to various business units within an organization. These services can include finance and accounting, human resources, IT, and procurement. The goal of SSCs is to reduce costs, improve efficiency, and standardize processes across the organization.

Emerging markets such as India, China, and the Philippines have become popular locations for SSCs due to their large pool of skilled workers and lower labor costs. According to a report by Grand View Research, the global shared services market size was valued at USD 82.6 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 15.4% from 2020 to 2027.

Key Players in the Shared Services Centers in Emerging Markets: Growth Potential:

Some of the key players in the SSC industry in emerging markets include Accenture, IBM, Infosys, Wipro, and TCS. These companies have a strong presence in countries such as India and the Philippines, where they have set up large SSCs to serve clients across the globe.

Other players in this industry include local companies such as Genpact in India and Convergys in the Philippines. These companies have also established themselves as major players in the SSC industry and have been able to compete with global players due to their local knowledge and expertise.

Market Challenges:

Despite the growth potential of SSCs in emerging markets, there are several challenges that companies face when setting up these centers. One of the biggest challenges is finding the right talent. While there is a large pool of skilled workers in these countries, there is also a lot of competition for talent, particularly in the IT and finance sectors.

Another challenge is the lack of infrastructure in some of these countries. This can make it difficult for companies to set up and operate SSCs, particularly in remote areas. Companies also need to ensure that they comply with local regulations and laws, which can be complex and time-consuming.

Market Opportunities:

Despite these challenges, there are several opportunities for companies that are looking to set up SSCs in emerging markets. One of the biggest opportunities is the cost savings that can be achieved by setting up these centers. Labor costs in countries such as India and the Philippines are significantly lower than in developed countries, which can result in substantial cost savings for companies.

Another opportunity is the availability of skilled workers. Many emerging markets have a large pool of skilled workers who are well-educated and fluent in English. This makes it easier for companies to find the talent they need to operate their SSCs.

Future of Shared Services Centers in Emerging Markets:

The future of SSCs in emerging markets looks bright. As companies continue to look for ways to reduce costs and improve efficiency, SSCs will become an increasingly popular option. The growth of the digital economy is also likely to drive demand for SSCs, particularly in areas such as IT and digital marketing.

However, companies will need to be prepared to navigate the challenges that come with setting up SSCs in emerging markets. This will require careful planning and a deep understanding of local regulations and laws.

Conclusion:

Shared Services Centers in emerging markets offer a compelling value proposition for companies that are looking to reduce costs and improve efficiency. While there are challenges that need to be overcome, the growth potential of this industry is significant. Companies that are able to navigate the challenges and establish successful SSCs in emerging markets are likely to reap the benefits for years to come.