What are the challenges of shared service centers?

What are shared services centers at their core?

Shared Services Centers (SSC) are an internal delivery model where an organization consolidates core business functions such as finance, human resources, IT, procurement, etc., into one centralized unit that supports multiple business units or geographies. In an SSC, the SSC is fully integrated into the organization, unlike outsourcing. Internally, it operates on a service-provider model with SLAs, not contracts.

SSCs have emerged as a cornerstone of shared services management as global enterprises expand across borders. In the last decade, adoption has skyrocketed across North America, Europe, and Asia-Pacific, driven by the need for cost control and process standardization. However, shared service center challenges continue to be a quiet operational reality that many enterprises underestimate at the point of setup.  

GBS is widely regarded as the evolved, next-generation form of the SSC model, broader in mandate, more technology-enabled, and more deeply aligned with enterprise strategy. For businesses at a crossroads between the two, the choice isn’t just structural; it reflects the organization’s maturity and long-term ambitions in Global Business Services (GBS). Understanding where an SSC ends and where GBS begins is key to making the right operational investment.

On paper, a shared services center is a lean, logical response to organizational sprawl. In practice, however, the gap between the promise and the performance can be significant. Common SSC challenges don’t always announce themselves at launch; they surface gradually through missed SLAs, rising stakeholder frustration, and operational inefficiencies that compound quietly over time. What follows are five pressure points that SSC leaders across industries consistently grapple with, often without a clear playbook to navigate them.

• Planning & Operational Errors: The most expensive mistakes in an SSC’s lifecycle are made before it ever goes live. Poor upfront scoping, vague service catalogs, misaligned SLAs, and optimistic transition timelines create operational drag that’s difficult to unwind once embedded. According to KPMG’s Global Shared Services Survey, a significant proportion of SSC underperformance can be traced back to inadequate transition planning rather than operational failure post-launch.

Many SSCs are stood up without a rigorous change management framework, which means processes get migrated rather than redesigned, resulting in duplication, not consolidation. The irony is sharp: a model built to eliminate redundancy often creates new layers of it when the groundwork is rushed. Getting the architecture right before go-live is not a best practice; it is the practice.

• Failure to Meet Goals: There is a recurring pattern in shared services management: KPIs are set aspirationally rather than operationally. An SSC might be measured against cost reduction targets that were modeled on theoretical efficiencies rather than ground-level process data. The result is a performance framework that looks rigorous on a dashboard but fails to reflect actual service delivery quality.

Compounding this is the misalignment that frequently develops between the SSC and its parent organization, where leadership expects transformation outcomes from a model that was funded and staffed for transactional delivery. Goals drift, goalposts shift, and accountability becomes diffuse. The honest industry diagnosis here isn’t that SSCs fail to perform; it’s that they’re often set up to be measured against targets they were never resourced to meet.

• Tough Competition: SSCs don’t operate in a vacuum. Internally, they compete against the persistent appeal of outsourcing vendors who promise the same outcomes at lower cost with greater flexibility. Externally, the rise of the GBS model has raised the bar, making traditional SSC setups look narrowly scoped by comparison.

But perhaps the most immediate competitive pressure is talent. SSCs in emerging markets—India, Poland, the Philippines, and Romania—are finding it increasingly difficult to retain skilled professionals in finance, analytics, and IT when GCCs and multinational corporations offer steeper salary bands, broader career trajectories, and higher-visibility work. This talent attrition quietly erodes the SSC’s capability base, making shared services optimization not just a process challenge but a people strategy challenge. SSC leaders are increasingly required to make the case for the model’s relevance, not just to leadership but also to the workforce itself.

• Unfulfilment of Deliverables: When an SSC misses a deliverable, the instinct is to look at execution. The real answer is usually structural. Service-level commitments break down at the seams, where systems don’t integrate cleanly, where data sits in silos across business units, and where processes were handed over without sufficient documentation or institutional knowledge transfer.

The transition phase is where most delivery failures are born, even if they only become visible months later. Business units hand off processes with the expectation that the SSC will simply absorb and run them; SSC teams receive them without the context needed to run them well. Standardized workflows, robust technology integration, and disciplined knowledge transfer protocols are not optional add-ons — they are load-bearing elements of a delivery model that consistently meets its commitments.

• Poor Customer Experience: In the SSC model, the customer is internal: the business units and functional teams that rely on the center for everyday service delivery. And internal customers are often the harshest critics, precisely because they have no choice of provider. Slow ticket resolution, absence of self-service portals, and communication gaps between SSC teams and business unit stakeholders are among the most frequently cited pain points in shared services reviews.

What’s increasingly evident is that experience design is no longer a peripheral concern in SSC operations; it’s a core competency. Organizations that treat their internal customers with the same intentionality as external ones, investing in UX-led service portals, SLA transparency, and proactive communication, are consistently outperforming those that view internal satisfaction as a soft metric.