The shared services sector of the economy is at a critical stage, and its growth may either soar or be stunted, according to a new report. Targeted by IDA Ireland in recent years, the sector now employs more than 1,000 people in the Republic and has the potential to employ 10,000 within five years, the document says.
The report, by KPMG consultants, says shared services - where a back-office support centre functions for a number of units in a company - is gaining popularity as a business model. This is due to new technology that makes geographic location less relevant, a trend towards focusing business units on their core competencies, and other factors.
The Republic has been successful so far in attracting many shared services operations, with 27 centres already in operation and a further six in development, the report says, and the experience of these will determine the growth of the sector.
"The foundations have been laid for Ireland to remain a preferred location for European finance shared services centres," the report adds. "It is our view that due to the level of activity in recruitment, new systems implementation and process standardisation, the sector is now entering a critical phase in its development."
There are several significant challenges, the report says, including:
Competition for suitably-qualified staff will intensify over the next 12 months, particularly in the Dublin area.
Continuing upward pressure on labour and property costs could weaken the business cases for these projects.
Successful completion of complex systems implementation projects are critical to achieving the levels of performance expected of these centres.
To deal with these, the report suggests, new strategies and initiatives should be devised.
"These will need to address the people, process and systems- related issues in order to increase the capacity of the economy to support a growing number of finance shared services centres," the document adds. "The development of these strategies will come about from the establishment of closer working relationships between the direct participants in the industry, Government agencies, educational establishments and professional services providers," KPMG says.
Surveys carried out by KPMG for the report reveal that the availability of labour and telecommunications were major factors for companies that chose to locate back offices in the Republic.
