Shared services is a centralised management of services previously held by a company in separate departments, areas or locations. These include services that can be shared between different divisions; for example, the recruitment of an entire retail chain could be managed from a central office.
Shared services may also apply to partnerships between separate companies, in which case telecommunications and maintenance services could be shared between tenants of an office building.
Companies that implement shared services can benefit from significant cost savings by standardising procedures and achieving economies of scale.
The practice is designed to reduce costs while improving the quality of services provided jointly. The concept of shared services was first introduced in the 1980s but was restricted to technology, now it has been proven, it is possible to share all Head Office services.
A typical Head Office has departments where a director or manager is responsible for the quality control and management of their team. A smallish business may not need all these directors. Directors are an expensive resource.
A small business may have good middle managers, but may not need the actual workers that do the work, all the expensive staff and team could be shared. This reduction in headcount could propel a business from loss-making or treading water to becoming profitable.