How can companies with several subsidiaries in Europe minimise administrative
costs?
The solution is: setting up a so-called "shared service center,"
a unit of the company where financial, administrative and customer
support services are centralised. Such a unit can be set up within
a European headquarters, but it is also possible to have it as a separate
unit, for example when the company's European structure is not yet
ready for central management control. In the latter case, one often
speaks about a "back-office," because it is not necessary
to have such a representative "store-front" as in the case
of a European Headquarters.
Shared service centers have been made feasible by the growing harmonisation
of regulations in the European market. The introduction of the Euro
adds to the strategy of centralising administrative and financial
functions. Many international companies in Europe are using the opportunity
of changing their administration from local currencies to the Euro
as a good time to set up a shared service center as well.
Shared service centers can consist of various types:
 |
corporate treasury offices; |
|
financial service centers; |
|
data processing centers; |
|
training centers. |
Shared service centers also offer the advantages of centralisation
of expertise and resources which allows companies to focus on new
markets. By gaining economies of scale they can deliver more expedient
service, reduce costs and improve efficiency.
Conditions for setting up a successful shared service center are:
|
language proficiency (for financial service centers, data
processing centers and training centers |
|
central location and good international airport (for training
centers and financial service centers) |
|
quality of labour (for data processing centers and financial
service centers). |
|
