BPO vs. Shared Service Centers: What’s the Difference?
Imagine this: your team is overwhelmed with repetitive tasks. Payroll is late, customer complaints are piling up, and your IT systems can't keep up. You need a better way to handle these processes, but what's the best solution? Should you outsource the tasks to an external company (BPO) or create your in-house team through a Shared Service Center (SSC)? Let's explain the difference in simple terms.
BPO: Outsourcing Tasks to Experts
BPO, or Business Process Outsourcing, means hiring an outside company to take over specific tasks like payroll, IT support, or customer service. It's like asking an expert to handle something for you so you can focus on other priorities.
Why Use BPO? It's fast and flexible. You can access experienced professionals and advanced tools without building your systems. This is perfect for businesses growing quickly or needing immediate help. However, since the work is handled externally, you may have less control over how it's done, which can sometimes lead to communication issues.
How It Works: Imagine a startup that needs IT support but doesn't have the time or budget to build an in-house team. They hire a company like SD Solutions to provide 24/7 IT services. This way, they save time, avoid hiring headaches, and can focus on building their product. So, it’s outsourcing but not for a project - for the whole business process.
SSC: Building Your In-House Team
A Shared Service Center (SSC) is typically used by large enterprises to centralize and streamline key business functions across multiple locations. It involves creating an in-house team responsible for handling essential services such as HR, payroll, IT, and other operational support tasks for all divisions and locations, ensuring efficiency and consistency across the organization.
Why Use SSC?. This approach is excellent for companies with long-term plans and the resources to invest in building their own systems. But it takes time, effort, and money, so it's not a quick fix.
How It Works: A large company sets up an SSC to handle payroll for all its offices worldwide. This ensures everyone follows the same processes and the company keeps control of sensitive information. While it's a big investment upfront, it pays off by creating consistency and efficiency over time.
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Summary: BPO vs. SSC
BPO (Business Process Outsourcing) means hiring outside companies to complex processes like recruiting, customer service, or IT infrastructure. This lets businesses focus on what they do best while saving money and working more efficiently. For example, Tipalti, a fintech company, partnered with SD Solutions to set up offices in Tbilisi with a focus on the European market and in Colombia for American office needs. Tipalti grew its team and quickly established a strong presence in both regions. This partnership brings 100 employees in just 1.5 years who cover multiple processes, including a Marketing & SDR center.??
Like the previous model, an SSC (Shared Services Center) brings a business function, like HR, for instance into one place. But in this case, the company does it within its own capabilities. This helps improve efficiency, lower costs, and keep service quality high. For example, Procter & Gamble (P&G) set up an SSC to manage services like finance, accounting, HR, IT, and logistics across the world. By centralizing these functions, P&G reduced costs and made things more efficient. The SSC allowed P&G to standardize its processes and provide better service at a lower cost.?
In simple words, choose BPO for efficient and quick expansion and SSC for long-term optimization and unification. BPO stands for hiring a service company, and SSC means creating a new unit within the company. Which one works best for your business—BPO or SSC? Share your thoughts in the comments!
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Head of Marketing at SD Solutions
3 周Simple and clear explanation of 2 abbreviations that sometimes are confusing; thanks!