Demand increasing for shared services models: KPMG

The slowdown in the global economy seems to have prompted companies worldwide operating in verticals such as IT, banking and insurance to adopt shared service models, says KPMG.

In the challenging economic scenario, the pressure to reduce costs and improve processes remains intense on companies, so in this regard, outsourcing may not be an option because of culture, available resources, criticality, lack of cost justification or competing business priorities.

In this case, companies look for shared services models and even try to make an improvement in internal processes.

According to the survey conducted among KPMG's own field advisors as well as more than 20 leading global business and IT service providers, 59% of respondents anticipate greater demand from clients for shared services delivery models, while 51% saw more demand for internal process improvement.

"The value proposition and success metrics for shared services operations are evolving. Leading organisations today receive measureable business value from shared services - above and beyond driving costs. This involves driving and improving overall business performance as well as competing for internal business on level ground with external service providers," KPMG Research Director (Shared Services and Outsourcing Advisory Group) Stan Lepeak said.

The study, titled, 'KPMG 2Q11 Sourcing Advisory Pulse Survey', said that 63% of the respondents, who primarily support global deals, were more likely to cite demand growth for shared services, while 61% of those who support clients in the EMEA (Europe, Middle East and Africa) region were more likely to cite increased demand for internal process improvement efforts.

Financial services companies had the greatest demand for shared services/outsourcing services, as indicated by 82% of service providers. Among the other sectors that showed higher demand for shared services are energy, utilities, oil and gas and manufacturing industries.

Meanwhile, outsourcing demand remained flat, including both business process outsourcing (BPO) and IT outsourcing (ITO), according to the KPMG report.