The Shared Services market is estimated to be valued at US$ 41.37 Bn or billion in 2022 and is expected to exhibit a CAGR of 23.1% over the forecast period 2023-2030, as highlighted in a new report published by Coherent Market Insights.
Market Overview:
Shared services refers to centralizing common business processes and consolidating redundant activities across operating units within an organization. This is done to achieve economies of scale and cost savings. Shared services enable organizations to cut costs, streamline processes and focus resources on strategic business areas. Popular shared services functions include Finance & Accounting, Human Resources, Procurement and IT services.
Market key trends:
The growing focus towards centralized business models and need for cost optimization are some key factors expected to drive demand for shared services over the forecast period. Adoption of shared services helps reduce operational costs through resource consolidation and standardization of processes. It is estimated that organizations adopting shared services witness 15-35% reduction in operational costs. Additionally, shared services improve efficiency through automation, as common processes are handled centrally by SMEs (subject matter experts). This enables organizations to redeploy resources to strategic initiatives for growth. Shared services also enhance data security through centralized management and monitoring of IT infrastructure. The market is witnessing growing adoption of cloud-based shared services solutions for their scalability and pay-per-use pricing.
Porter’s Analysis
Threat of new entrants: The threat of new entrants in the shared service market is moderate as substantial capital is required to enter and attain economies of scale, also established players enjoy strong brand value and customer loyalty.
Bargaining power of buyers: Bargaining power of buyers is moderate since large enterprises have in-house capabilities and can switch between service providers. However, switching costs are less for SMEs.
Bargaining power of suppliers: Bargaining power of suppliers is low as the shared service market has many established players providing similar services at competitive prices globally.
Threat of new substitutes: Threat of substitutes is low as no close substitute currently exists for shared services.
Competitive rivalry: High as market comprises both global and regional players catering to evolving needs of enterprises.
SWOT Analysis
Strength: Automation and digital capabilities enable higher operational efficiency and productivity. Resource skill-sets on demand provide cost advantages.
Weakness: Transition and change management complexities. Dependency on third party providers for technology infrastructure.
Opportunity: Growth in adoption of SaaS and cloud based solutions globally. Increasing outsourcing of non-core operations from enterprises.
Threats: Economic uncertainties impacting client spending. Regulations around data localization pose compliance challenges.
Key Takeaways
The global Shared Services Market Segmentation is expected to witness high growth, exhibiting CAGR of 23.1% over the forecast period, due to increasing need to optimize costs and focus on core competencies among enterprises.
North America is expected to continue dominance in the market during the forecast period, owing to presence of majority global shared service providers. Asia Pacific is expected to witness fastest growth, supported by ongoing digital transformation initiatives among Chinese and Indian enterprises.
Key players operating in the shared services market are Infosys Limited, SAP, HCL, EXL, Atos SE, Accenture, Genpact, IBM Corporation, Oracle Corporation, Cognizant, Capgemini SE, and Tata Consultancy Services Limited and Others.
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