This article was first published in the February 2011 Ireland edition of Accounting and Business magazine.
Sustaining High Performance in Shared Services: An Irish perspective is the first ever dedicated research report on Ireland’s shared services sector. It reveals that over 50% of organisations surveyed plan to expand operations in Ireland in the future, meaning the industry can be held up as a shining light in challenging economic times. All in all, this is an industry where general optimism prevails, with 52% of the senior executives surveyed indicating their intention to expand operations – and employment – in 2011.
Over 100 shared services centres (SSCs) currently operate across Ireland, employing 35,000 people. The sector has the potential to build on this successful track record to win further significant investment from leading global companies into the future.
Authored by Accenture Ireland, in partnership with the IDA and UCD Michael Smurfit Graduate Business School, the report also affirms the attractiveness of Ireland as a location for shared services and highlights areas of competitive advantage. One of the keynote findings of the research is that Ireland possesses a far higher proportion of SSCs operating at ‘mastery’ level – 25% of Irish SSCs are deemed to have world-class operating characteristics compared with just 8% globally – meaning they outperform their international peers in terms of profitability, longevity, consistency and growth.
An obvious challenge to Ireland being a location of choice for future shared service investment is cost competitiveness. However, the Accenture research found that Ireland’s attractiveness in this regard, while challenged by the advantageous position of lower-cost economies, has not been significantly eroded and that, as a result of industry determination to innovate through new technology development and implementation, there has been a sustained focus on delivering higher value work out of Ireland. By not trying to compete on price and cost alone, the industry has been able to deliver and retain higher value work, with the focus on quality of service, delivery excellence and ease of communication allowing the shared services industry in Ireland to flourish and making it highly regarded internationally as a destination for the delivery of high-end shared services.
The Accenture shared services centre at Grand Canal Plaza in Dublin is one such example of a centre which has evolved since its inception in 1999 to its current global role delivering high-value processes to both Accenture offices and client organisations around the world.
The degree of mastery that exists in the industry here has also led to a ‘cluster effect’ taking hold in certain regions, notably Munster and, more specifically, Cork, where a large number of shared service centres are situated. The continuing growth of the shared services sector is reflected in the recent decisions of multinationals such as Merck, Eli Lilly and Telefonica O2 to locate world-class operations in Ireland, opening new shared service centres in various locations across the country. Such investment from leading global companies positions Ireland well on an international stage and assists in the collective industry aspiration for job creation and economic growth.
Of course, there will always be organisations whose sole objective is cost reduction, and they will, ultimately, choose to locate shared service centres based on this factor alone. However, the more considered view is to take advantage of lower-cost locations for some services, while delivering higher-value activities from Ireland, leveraging favourable factors not available in other markets such as an educated English-speaking workforce, an attractive corporate tax rate and deep industry expertise.
Interestingly, the report notes that, while Ireland’s shared services industry has evolved and matured over the last decade, its appeal as a career path of choice has, unfortunately, not kept pace. Crucial to sustained growth in the shared services industry will be access to a highly skilled and educated talent pool, particularly graduates with finance and accounting skills. Almost 70% of Irish shared service centres host finance and accounting activities, currently making it the most common function undertaken by shared services centres in Ireland, ahead of other areas such as IT, HR, customer service and order management.
Personal experience has shown us both that the shared services industry provides significant career opportunities. Julie, for example, started with Accenture when the Service Centre originally opened in 1999 and now heads up Business Services across EMEA and is Accenture’s finance director in Ireland. She believes her ACCA background served as the technical spring board to further develop her skills in programme management, technology implementation, change management and leadership – areas that are not always possible in traditional accountancy roles. Accenture continues to develop its services in Dublin and key to this will be attracting high calibre candidates looking to grow their careers in this industry.
Recent statistics published by the OECD Programme for International Student Assessment, which showed a decline in Ireland’s rankings in mathematics and reading levels, provide the starkest signal yet that our talent pool should not be taken for granted. Government, academia and business must work together to ensure the skills required to develop the industry are available and that graduates come to view roles in this sector as viable and appealing, offering competitive compensation packages, career progression, and the opportunity to work both internationally and locally.
Location of choice
It is important that Ireland continues to gain international recognition as a location of choice for shared services investment, cross-border integrated business services and internationally recognised centres of excellence, which can provide deeper levels of integrated and insight-based services. Individual SSCs, with the support of government agencies such as the IDA, will collectively play a key part in shaping Ireland’s shared services sector in the years ahead. The industry has a bright future and, with the collaboration of all stakeholders, will continue to grow and prosper, and ultimately contribute to Ireland’s economic recovery.
Hugh McCallum is head of Accenture Business Services in Ireland. Julie Spillane is director of the Accenture Global Shared Services organisation, EMEA.