For decades, the primary driver of shared services location strategy was a relentless pursuit of the lowest possible labor cost. This led many organizations to distant offshore destinations, but the global business landscape has undergone a seismic shift. Today, a successful strategy requires a far more nuanced and holistic evaluation.
Modern shared services centers (SSCs) are no longer just transactional cost centers. They are evolving into strategic hubs for talent, innovation, and digital transformation, often operating as part of broader global business services models. As a result, leaders must look beyond simple cost arbitrage and consider a broader range of factors, from geopolitical stability to the availability of specialized digital skills.
Choosing the right location is one of the most critical decisions for any shared services organization. A well-informed location selection process can unlock immense value, while decisions based on outdated assumptions can lead to significant operational challenges and undermine the entire business case.
5 factors for a modern shared services location strategy
Modern shared services isn’t just about offshoring for cheap labor—they’re about real transformation. According to BCG, shared services implementations can deliver significant cost savings of 25–60% in support functions, depending on where you start. That’s why choosing a location isn’t just a cost decision—it’s a strategic one.
Leaders must now balance cost with a range of strategic factors to build a resilient and high-performing shared services operation. Below are the five most critical considerations for today’s environment.
State of the GBS and Outsourcing Industry in Latin America
1. Talent availability and quality
The single most important factor in a modern location strategy is the quality and scalability of the talent pool. While basic transactional skills were once sufficient, today’s SSCs require professionals with expertise in data analytics, intelligent automation, process improvement, and core disciplines such as business administration.
A thorough analysis must go beyond general labor statistics to assess the availability of these high-demand, specialized skills. This includes evaluating the local university ecosystem, the presence of other multinational companies, and the overall maturity of the labor market for the specific functions you plan to support. Locations with robust technology ecosystems are also seeing increased investment in Generative AI and intelligent automation, making them better positioned to support advanced shared services capabilities.
A location with a deep, sustainable talent pipeline is essential for scaling operations and supporting multiple business units, enabling the shared services center to move up the value chain from simple transaction processing to complex, knowledge-based services.
2. Geographic proximity and time zone alignment
In a globalized business environment, the ability to collaborate in real-time has become a significant strategic asset. Selecting a location that aligns with your corporate time zone facilitates “same-day” communication, allowing teams to resolve issues and make decisions instantaneously. This synchronous workflow is particularly valuable for agile operations and complex problem-solving, where delays in feedback can impact project timelines and service delivery.
Beyond daily communication, geographic proximity offers the advantage of travel efficiency. Shorter flight times allow leadership to maintain more frequent, face-to-face engagement with the shared services center, fostering a more integrated company culture. This ease of access is vital for driving long-term transformation initiatives and building the strong, trust-based relationships necessary for a high-performing global team.
3. Cost structure beyond labor
While labor arbitrage is often the initial driver for a shared services location, high-performing organizations evaluate the total cost of operations to ensure long-term financial sustainability. A competitive cost structure extends beyond salaries to include the quality of local infrastructure, utility reliability, and the overall ease of doing business. Analyzing these factors helps organizations avoid hidden operational costs that can erode the projected savings of a lower-cost market.
Economic and political stability also play a critical role in protecting your investment. Locations with favorable tax incentives, stable currencies, and robust legal frameworks provide a more predictable environment for scaling a captive vs. outsourcing model. By prioritizing markets that offer a balance of competitive operating costs and economic maturity, organizations can build a more resilient shared services center that delivers consistent ROI and supports the enterprise’s broader financial objectives.
4. Geopolitical and economic stability
The risk profile of a potential location has become a top-tier concern for business leaders. Geopolitical instability, economic volatility, and an unreliable regulatory environment can introduce significant disruptions and uncertainty into your global operations.
A comprehensive risk assessment should evaluate a country’s political stability, its economic outlook, its legal framework for foreign investment, and its data privacy and security laws. A stable and business-friendly environment is paramount for protecting your investment and ensuring operational continuity.
Choosing a location with a proven track record of stability and a strong, bilateral relationship with your home country significantly de-risks the entire shared services initiative.
5. Cultural affinity and language proficiency
The success of a shared services center is often determined by the quality of the interactions between the center and the business units it serves. High-performing locations offer more than just basic language skills; they provide a deep cultural affinity that allows for seamless communication and shared professional values. This alignment is critical for ensuring that services are delivered with the right context, tone, and understanding of the corporate culture, reducing the need for constant clarification and course correction.
Beyond cultural fit, language proficiency must be evaluated through the lens of technical and professional fluency. In an environment where shared services teams take on increasingly complex responsibilities—such as financial analysis or IT architecture—the ability to communicate nuance is essential. Locations with bilingual talent pools that are deeply immersed in U.S. business practices enable a higher level of empathy and collaboration. This synergy creates a more unified “one team” feel, ensuring that the shared services center acts as a natural extension of the organization rather than a detached service provider.
Why choose Auxis for your shared services location strategy?
Choosing the right location is a complex decision, and getting it right is critical to your success. For over two decades, Auxis has been a pioneer in the nearshore model, leveraging our deep operational experience to help companies design and implement high-performing shared services solutions.
We go beyond simple outsourcing by providing the strategic guidance, process expertise, and intelligent automation capabilities required to build a truly transformational back-office operation within a scalable shared service model. Let our experience be your advantage in building a shared services function that is not only cost-effective but also a powerful engine for your business’s growth.
Explore our learning center for strategic perspectives on shared services, or connect with our team to discuss how to design a location strategy that supports long-term growth.
Frequently Asked Questions
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