What is the difference between a shared services center and outsourcing?

A shared services center uses the company's own employees to deliver services internally, while outsourcing transfers those same services to an external third-party vendor. The SSC keeps institutional knowledge, data, and management inside the organization; a BPO relationship means the vendor's staff, infrastructure, and processes deliver the work, with the buyer overseeing outcomes through contracts and SLAs rather than direct employment.

When should a company choose a BPO instead of building an SSC?

A BPO is the better choice when volume is too low to justify a dedicated internal center, the process is not yet fully documented, internal management bandwidth is limited, or a fast setup is needed. Indicatively, organizations with fewer than 20 to 30 FTEs of equivalent shared work will usually find a BPO cheaper and faster than standing up their own center, because they avoid real estate, setup costs, and ongoing HR management.

What functions are most commonly run through a shared services center?

Finance and accounting (accounts payable, accounts receivable, general ledger, payroll, reporting) is the most common SSC function, followed by HR operations, IT helpdesk and infrastructure, and procurement processing. These functions share a common trait: they are transactional, repeatable, standardized, and do not require deep local or client-specific context to execute accurately.

Can a company run both an SSC and a BPO at the same time?

Yes, and many large organizations do exactly this. A common model is an SSC handling core, high-volume transactional work that the company wants to own and control, with a BPO handling overflow, specialized language coverage, or processes that are not worth building internal capacity for. The two models are not mutually exclusive; the choice is made process by process, not as a single all-or-nothing decision.

What are the biggest mistakes companies make when setting up a shared services center?

The most common mistake is consolidating processes before standardizing them, which means the SSC inherits fragmented, inconsistent workflows from multiple business units and is then blamed for the inconsistency. Other frequent errors include underestimating attrition in competitive labor markets, setting up the center without a clear internal SLA or charge-back model, and failing to define measurable output metrics before go-live. The underlying principle is the same as outsourcing: document first, then delegate or consolidate.

What Is a Shared Services Center (SSC)?

Shared Services Center (SSC): A Shared Services Center is an internal organizational unit that consolidates standardized, repeatable business functions, such as finance, HR, IT, or procurement, into a single delivery structure that serves multiple business units, regions, or entities within the same organization. Unlike outsourcing, where a third party delivers the service, an SSC keeps the work inside the organization but removes it from individual business units and centralizes it for efficiency, consistency, and control.

How an SSC Actually Works in Practice

Think of an SSC as an internal shared vendor. The parent company or holding group creates a dedicated center, usually in a lower-cost location, staffed by its own employees. Individual business units then “consume” services from that center, typically under an internal Service Level Agreement (SLA) or a charge-back model where costs are allocated back to the consuming unit.

The classic SSC scope covers:

Finance and accounting: accounts payable, accounts receivable, general ledger, intercompany reconciliations, financial reporting, payroll
HR operations: employee data management, benefits administration, onboarding, payroll processing
IT support: helpdesk, infrastructure management, application support
Procurement: purchase order processing, vendor master data, invoice matching

The SSC model is popular among large multinationals and mid-size organizations that have grown through acquisition or geographic expansion and end up with duplicated administrative functions running in parallel across different units.

SSC vs. BPO vs. COE: What Is the Actual Difference?

Buyers often confuse these three terms. The table below separates them clearly.

Model	Who Does the Work	Ownership	Typical Driver
Shared Services Center (SSC)	Internal employees	Company-owned	Consolidation, control, cost
Business Process Outsourcing (BPO)	External vendor’s employees	Third-party owned	Cost, flexibility, no headcount
Center of Excellence (COE)	Internal specialists	Company-owned	Quality, standards, capability-building

An SSC retains institutional knowledge and data inside the company. A BPO hands that work to an outside vendor. A COE sets standards and best practices but does not necessarily do the transactional work. Many large organizations run all three simultaneously: an SSC for transactional finance, a BPO for overflow or specialized work, and a COE for process governance.

Why Does the SSC Model Matter to a Buyer Evaluating Vendors?

If you are evaluating BPO providers, understanding SSCs matters for one specific reason: you need to know whether your organization is better served by building an SSC, outsourcing to a BPO, or doing a hybrid of both.

I tell buyers this directly: if your volume is large enough and your processes are stable enough, an SSC can deliver lower unit costs over time than a BPO, because you eliminate vendor margin. The tradeoff is that you absorb setup cost, management overhead, attrition risk, and real estate. A BPO is faster to stand up and easier to exit.

Indicative thresholds, from operating experience, not hard rules:

SSC makes sense when the organization has enough transaction volume across multiple units to justify a dedicated center, typically 50 or more FTEs of equivalent work, with stable, documented processes and a long time horizon.
BPO makes more sense when volume is variable, the timeline is short, the internal management bandwidth is limited, or the process is not yet clean enough to own.

For mid-market buyers with fewer than 20 to 30 FTEs of shared work, a BPO is almost always the more pragmatic path. See /finance-accounting-outsourcing/ and /call-center-outsourcing/ for how BPO providers approach these same service lines.

Common SSC Locations and Why They Get Chosen

SSCs follow the same labor arbitrage logic as BPOs: lower-cost locations with sufficient talent pools, stable infrastructure, and language capability. Common destinations include:

India (/india/) for finance, IT, and HR operations, deep English-language talent, large graduate supply
Philippines (/philippines/) for finance, HR, and customer-facing roles, strong English, cultural alignment with Western businesses
Poland, Czech Republic, Romania for European multinationals needing multilingual European coverage
Mexico, Colombia for US companies needing Spanish capability and nearshore timezone alignment

The difference between an SSC in Manila and a BPO in Manila is not geography. It is ownership, governance, and employment structure.

What Can Go Wrong with an SSC

The SSC model sounds clean on paper. In practice, the failure modes are predictable:

Processes were not standardized before consolidation. Each business unit had a slightly different process; the SSC inherits all the variation and is blamed for inconsistency it did not create.
The charge-back model creates internal conflict. Business units resist being “charged” for services they used to control directly.
Attrition is underestimated. An SSC in a competitive BPO market, like Bengaluru or Manila, competes with vendors for the same talent. Without a strong employer brand and clear career paths, turnover is a persistent drag.
Governance is weak. No internal SLA means no accountability. The SSC becomes a cost center with no output visibility.

My rule applies here too: do not outsource chaos, and do not consolidate chaos either. Document first, then consolidate or delegate.

How SSC Performance Is Typically Measured

A well-run SSC is measured like a BPO, because the discipline is the same. Common metrics:

Cost per transaction (e.g., cost per invoice processed, cost per payroll run)
Turnaround time (TAT) per process
Error rate / accuracy rate per function
SLA compliance rate per consuming business unit
Employee utilization and productivity per FTE
Customer satisfaction from internal stakeholders (internal CSAT)

If an SSC cannot report on these metrics clearly, it is not being run with enough discipline. The sales deck always shows capacity. It rarely shows operating discipline, and this is as true for internal shared services as it is for external vendors.

If your organization is evaluating whether to build an SSC, outsource to a BPO, or run a hybrid model, a structured vendor comparison is a useful starting point. Get quotes from vetted BPO providers at /get-quotes/ to understand what external delivery would actually cost before committing to a build.