Strategic Business Leader · Enabling success: organising

Process Organisation, Shared Services and Outsourcing in SBL

Updated 11 October 2026 · Fact-checked

Process organisation arranges work around end-to-end business processes, not functions. Sourcing options then decide who performs them: in-house, a shared service centre (SSC), an outsourced supplier, or offshored to another country. In SBL, you weigh benefits against risks, then recommend an option that fits the scenario.

Understand Process Organisation, Shared Services and Outsourcing

Most organisations start with a functional structure: finance, sales, operations and so on. The problem is that a customer order passes through several functions. Each function optimises its own work. Delays, hand-offs and errors build up between them.

Process organisation fixes this by looking at the end-to-end process, such as order-to-cash or procure-to-pay. A process owner is responsible for the whole flow. The aim is faster, cheaper and more customer-focused work. Business process re-engineering (BPR) is the radical version: you redesign the process from scratch rather than tweak it.

Once a process is defined, you choose who performs it. There are four main options:

In-house: the business keeps control, but carries all the cost and management effort.
Shared service centre (SSC): the group pulls a routine activity (for example payroll or accounts payable) from many business units into one internal unit. It serves them like an internal supplier, often with service level agreements (SLAs) and sometimes recharges.
Outsourcing: an external supplier performs the activity under a contract. The supplier may be in the same country or abroad.
Offshoring: work moves to another country. It can be done through your own subsidiary (captive offshoring) or through an outsourced supplier. Offshoring and outsourcing are different things. One is about location, the other about ownership.

The key difference between an SSC and outsourcing is control versus flexibility. An SSC keeps knowledge and data inside the group. Outsourcing transfers the activity to a specialist and turns fixed costs into contract fees. Outsourcing is usually best for non-core, standardised activities. Core competences that give competitive advantage should normally stay in-house.

Risks are what the exam rewards you for spotting. These include loss of control, poor service quality, hidden costs, data security, supplier dependence, staff morale and redundancies, cultural and language gaps, and reputational damage if a supplier behaves badly. Always link each point to the scenario facts.

Key rules to remember

Outsource or keep in-house test: Outsource if: non-core activity AND standardised AND capable supplier AND risks manageable; A judgement rule, not a calculation. Core competences and activities with sensitive data or strategic value usually stay in-house.
Basic cost comparison: Annual saving = in-house annual cost − (annual contract fee + retained management cost + one-off costs spread over the period); Include transition, redundancy and contract monitoring costs. Do not compare the fee alone with in-house cost.
Main sourcing options: In-house | SSC | Outsource | Offshore (captive or via supplier); Outsource/in-house is about ownership. Onshore/offshore is about location. State both.
Evaluation of any option: Suitability, Acceptability, Feasibility; A useful structure to judge whether the sourcing choice fits strategy, stakeholders and resources.

How to solve Process Organisation, Shared Services and Outsourcing questions

Use this approach for any question on organising processes or choosing a sourcing option. It keeps your answer structured and tied to the scenario.

1Read the requirement. Note the verb (evaluate, advise, discuss, recommend) and who the audience is.
2Identify the process or activity in the scenario. Is it core or non-core? Standardised or complex? Does it hold sensitive data?
3Define the options briefly: in-house, SSC, outsource, offshore. Use one line each, so you show knowledge without padding.
4Give benefits, each linked to a scenario fact (for example cost pressure, rapid growth, duplicated systems).
5Give risks and limits, each linked to a scenario fact (for example data held, culture, supplier location, staff reaction).
6Consider stakeholders: employees, customers, regulators, shareholders, suppliers. Note ethical points such as redundancies.
7Make a clear recommendation with conditions, such as SLAs, exit clauses, phased transition and monitoring.
8Check professional skills: a tailored, balanced, commercially aware and well-communicated answer in the format asked for.

Quickest way: Benefit-risk-recommend in three blocks

When to use it: Use this when you have limited time, or when the task is a short advisory item within the case study.

Block 1: one line on the activity and why the question arises (cost, growth, quality).
Block 2: three scenario-linked benefits and three scenario-linked risks, side by side.
Block 3: a firm recommendation (SSC, outsource, offshore or keep) with two safeguards, such as SLAs and a review point.
Add one stakeholder or ethical point, for example staff redundancies.

Common mistakes in Process Organisation, Shared Services and Outsourcing

Treating outsourcing and offshoring as the same thing.
They often occur together, so students use the terms loosely.
Fix: Say outsourcing is a supplier doing the work, and offshoring is moving work abroad. Work can be offshored through your own subsidiary.
Listing generic benefits and risks with no link to the case.
Students memorise lists and write them out to save thinking time.
Fix: Attach every point to a scenario fact, such as the company's customer data, growth plans or existing cost levels.
Recommending outsourcing of a core competence.
The cost saving looks attractive and the strategic cost is missed.
Fix: Check whether the activity gives competitive advantage. If yes, keep it in-house or use an SSC that retains control.
Ignoring hidden costs in a cost comparison.
Students compare only the supplier fee with current cost.
Fix: Add transition costs, redundancy costs, contract management and monitoring, and the risk of exit costs.
Describing an SSC as a form of outsourcing.
Both move work away from business units.
Fix: Explain that an SSC is internal and owned by the group. Outsourcing uses an external supplier under a contract.
Giving no recommendation, or ignoring stakeholders.
Students fear being wrong and stop at a balanced discussion.
Fix: Always conclude with a clear choice and conditions. Mention staff, customers and regulators briefly.

Worked examples

Example 1

A multinational has 12 subsidiaries, each running its own finance team and accounting system. The board wants lower costs and consistent reporting but fears losing control of sensitive financial data. Advise whether to create a shared service centre or outsource finance transaction processing.

Show the solution

Identify the activity: finance transaction processing (payables, receivables, payroll) is routine, high-volume and standardised, but holds sensitive data.
SSC benefits: it removes duplicated teams and systems, achieves economies of scale, standardises processes and gives consistent reporting. Data stays within the group.
SSC risks: it needs upfront investment in systems and transition, can be inflexible, and subsidiaries may resist losing control. Staff may be made redundant or relocated.
Outsourcing benefits: a specialist may offer lower unit costs, up-to-date technology and the ability to scale with volume, and fixed costs become contract fees.
Outsourcing risks: loss of control, data security concerns, dependence on one supplier, hidden contract costs and difficulty reversing the decision.
Compare against the scenario: the board's stated concern is data control and consistent reporting. This points toward an SSC.
Recommend an SSC, phased by region, with SLAs and performance measures. Review later whether parts of it, such as payroll, could be outsourced.

Answer: Recommend a shared service centre. It meets the cost and consistency aims while keeping sensitive data inside the group. Phase it, set SLAs, and revisit outsourcing of low-risk elements later.

Example 2

A UK retailer plans to move its customer call centre to a supplier in another country to cut costs. Customers value friendly service. Evaluate the offshoring proposal.

Show the solution

Define the proposal: it is both outsourcing (external supplier) and offshoring (another country).
Benefits: lower labour costs, possible extended opening hours across time zones, and management can focus on core retail activities.
Risks: lower service quality and cultural or language gaps, which matter because customers value friendly service.
Further risks: loss of control over customer data and brand image, supplier dependence, and reputational damage if staff are poorly treated.
Stakeholders: UK call centre staff would face redundancy, which raises ethical and morale issues. Customers may complain or leave.
Consider alternatives: keep the call centre in-house, use an onshore supplier, or outsource only out-of-hours calls or simple queries.
Recommend a conditional approach: pilot with simple queries, set quality KPIs in an SLA, include exit clauses, and keep complex or complaint calls in-house.

Answer: The cost benefit is real, but the risk to service quality, which customers value, is high. Recommend a piloted, partial move with strict SLAs and exit rights, not a full transfer at once.

Exam tips

Always tie benefits and risks to named facts in the pre-seen and exam scenario. Generic lists score poorly on application.
Name the sourcing option clearly and then recommend one. Examiners want a decision with reasons and conditions.
Link sourcing decisions to core competences, risk, governance and ethics. This is how SBL integrates topics.
Show professional skills: if the task asks for a briefing or report, use the format, tone and audience the requirement sets.
Do not invent figures. If you do a cost comparison, use only data in the scenario and state your assumptions.

Practice questions from Enabling success: organising

Process Organisation, Shared Services and Outsourcing: frequently asked questions

What is the difference between outsourcing and a shared service centre?

An SSC is an internal unit that serves several parts of the same group. Outsourcing hands the activity to an external supplier under a contract. The SSC keeps control and data in the group. Outsourcing offers specialist skills and flexible costs but less control.

What are the main advantages and disadvantages of offshoring?

Advantages include lower labour costs, access to skills and longer working hours across time zones. Disadvantages include cultural and language gaps, data and security risks, less control, and reputational and ethical issues such as local job losses. Always link points to the scenario.

How do I organise around business processes?

Map the end-to-end process, such as order-to-cash, and appoint an owner for the whole flow. Remove hand-offs and duplication between functions. Measure the process by outcomes such as speed, cost and customer satisfaction, not by functional targets.

Should core activities ever be outsourced?

Usually not. Core competences give competitive advantage, so outsourcing risks losing knowledge and control. Non-core, standardised activities are better candidates. Support your view with the scenario facts.