Auxis CEO, Raul Vega chaired the 10th Annual Shared Services and Outsourcing Week Latin America from August 22nd to August 24th in Coconut Grove, FL.
The participation at this year’s conference was an interesting mix of over 25 organizations that ranged from global multinationals such as General Motors, Medtronic, Cargill and Dell, to Latin American organizations such as Avianca, Grupo Mexico and Grupo Romero. In addition, government investment agencies from different countries in the region were also present to promote their locations as potential destinations for Shared Services in Latin America.
As our attempt to share the key insights and takeaways from the conference with all those executives who could not attend, as well as with all the participants, we prepared the following recap that we hope you find valuable and actionable as part of your shared services endeavors.
LatAm Shared Services Overview
- Large size doesn’t matter
- Average LatAm Shared Services Center (SSC) employs 150 people and supports 7 countries.
- 45% of the centers are below 100.
- Single function SSC’s are not common. Most LatAm SSC’s handle multiple functions.
- 58% of centers in the region speak more than one language.
- LatAm SSC’s are not just about routine, transaction processing, and commonly handle higher value process requiring judgement and more specialized skills.
- Customer-facing activities have been successfully proven to work under an SSC model (e.g. Grainger, Dell).
- Cost reduction continues to be an important driver to implement shared services, but other factors such as productivity efficiencies, standardization, better controls and scalability are also key.
- High levels of productivity improvements are common. Organizations are realizing significant cost reductions through productivity improvements and process standardization.
- LatAm SSC organizations are increasingly providing support to operations outside of Latin America, predominantly North America (e.g. Grainger, Aero Mexico, Altisource).
Shared Services Operations
- Customer Service is critical and maintaining high level of satisfaction is an ongoing challenge.
- Great customer service is a constant balancing act between quality, cost and employee retention.
- Very important to define, measure and review clear performance metrics. Having a baseline for key indicators prior to migration is critical to measure the real success and progress of the SSC.
- Work to identify leading versus lagging indicators. Leading indicators will have a predictive value on performance and allow you to react in a more proactive manner.
- Single ERP is not a requirement, but a great base for long term performance.
- Implementation of new technologies and automation tools will be at the core of the strategic efforts of many SSCs looking to drive ongoing optimization and efficiencies.
- RPA adoption is still very limited, but it’s definitely starting to be a topic of discussion and consideration for many centers in the region (e.g. Discovery, OSRAM, Bridgestone).
- Outsourcing is becoming more common and expected to increase in the coming years.
- Millennials and the criticality of employee engagement was a key topic of discussion. Discovery Communications, General Motors, Ingersoll Rand and Western Union all shared their perspectives.
- Importance of Building a Winning Culture
- Items identified as being important to Millenials:
- Having meaning in their work
- Self –Expression
- Work/Life Balance
- Suggestions on how to keep Millennials:
- Create relationships with them
- Provide feedback more often
- Take interest in their careers
- Understand them
- Manage accordingly
- Greater focus on having a personal development plan
- Increase opportunity for job rotation
- Boss/Manager relationship is key
Shared Services Strategy and Implementation
- Executive alignment and commitment is critical to a successful SSC initiative. You need a clear vision, rationale and business case to drive a successful shared services program
- Understand your baseline operations before moving forward. Understanding your processes is critical.
- There is no right or wrong implementation timeline. Every organization is different and its specific processes and complexities will determine the appropriate timeline and effort involved for implementation.
- Location Analysis and Site Selection is very important, but be careful not to over emphasize and fall into “Analysis Paralysis”. Company specific factors are often the tipping point.
- Withholding taxes and tributary considerations can also have a significant impact on the business case. Make sure this is part of your location selection criteria and get the appropriate advice from tax experts.
- At no cost, you can leverage government agencies in each country as part of your location selection process (e.g. ProColombia in Colombia, Uruguay Siglo XXI in Uruguay, CINDE in Costa Rica, Proinvex in Panama, etc.)
- Do not forget the retained organization and interaction with the SSC as part of your organizational design efforts
- Do not underestimate the importance of a well-defined change management strategy and execution. Many reasons for failure have been attributed to lack of adequate focus on change management.
Thank you to all the companies and executives who participated and shared their perspectives and experiences. Implementing and operating a Shared Services operation is a complex endeavor, but when done right, can unlock tremendous value.
If you are interested in learning more about what is really happening in the Latin America Shared Services market, please download our recently published study: A Deeper Exploration of Shared Services in Latin America. This study surveyed over 30 Shared Services in the region to get a better insight into the type of services being provided, geographic scope, key challenges and results.