Shared Services Is Estimated To Witness High Growth Owing To Opportunity In Cost Reduction

 

Shared Services Market

Shared services refers to the consolidation of common business functions across an organization. Shared services help optimize business processes and provide economies of scale that benefit the whole organization. By centralizing common activities such as finance, human resources, procurement, and information technology, shared services reduce redundancy and improve consistency. Common examples of shared services include accounts payable processing, employee onboarding and benefits administration, supply chain management, and IT helpdesk support. The globalization of business and need to streamline internal processes has driven many companies to adopt shared services models.

The global Shared Services Market is estimated to be valued at US$ 162.48 Mn in 2023 and is expected to exhibit a CAGR of 14% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

One of the key opportunities for the shared services market is cost reduction. Shared services allow companies to reduce expenditures through process standardization, centralization of activities, and elimination of duplication of efforts. By consolidating common functions into centralized operations, companies can achieve scale efficiencies and optimize resource utilization. For example, shared services models help cut down non-value adding activities, improve productivity, and lower the costs of maintaining separate business units or departments. As businesses continue to seek more cost-effective ways to support internal operations, the potential for cost savings remains a major driver for the adoption of shared services globally over the forecast period.

Porter's Analysis

Threat of new entrants: The shared services market requires large initial investments and long-term commitments limiting threats from new entrants. There is also economies of scale associated with the market favouring existing large players.

Bargaining power of buyers: The bargaining power of buyers is moderate as the industry has enough large players providing standardized services that can be easily substituted. However, switching costs associated with technology integration and vendor lock-ins provide some buyers power.

Bargaining power of suppliers: Specialized service providers and diagnostic equipment manufacturers have moderate bargaining power due to their differentiated capabilities. However, the overall supplier base for shared services is large reducing individual supplier power.

Threat of new substitutes: Threat from substitutes is low as shared services provide cost benefits that are difficult to replicate. However, in-house capabilities could emerge as potential substitutes over the long run.

Competitive rivalry: The shared services market has high rivalry among key global and regional players differentiating based on service quality, reliability, expertise and geographic coverage.

SWOT Analysis

Strengths: Economies of scale, experience curves, technological capabilities, geographic diversity, and focus on cost efficiencies provide key strengths.

Weaknesses: High fixed costs, vendor lock-ins, changing regulatory frameworks pose operational challenges. Rising talent acquisition and retention costs could also impact margins.

Opportunities: Growing outsourcing trend across industries, increasing complex testing needs with rare/undiagnosed diseases, and regional market expansions present opportunities.

Threats: Economic downturns, pricing pressures, disruptions from new technologies are threats along with protectionist policies limiting cross-border data flows.

Key Takeaways

The Global Shared Services Market Analysis is expected to witness high growth over the forecast period supported by increasing outsourcing of non-core functions across industries and geographies. The market size is projected to grow from US$ 162.48 billion in 2023 to US$ 314.32 billion by 2030, registering a CAGR of 14%.

North America dominates currently due to early technology adoption, presence of leading vendors, and growing diagnostic testing needs. However, Asia Pacific is likely to be the fastest growing market led by China, India, and other Association of Southeast Asian Nations (ASEAN) countries adopting shared services models to improve efficiencies.

Key players operating in the shared services market are INOVIQ, Bio-Rad Laboratories, Inc., Abbott, Becton, Dickinson and Company, Merck KgaA, QIAGEN, Thermo Fisher Scientific Inc., CENTOGENE N.V., PerkinElmer Inc., and Siemens Healthcare Private Limited. These players are focusing on expanding their service portfolios and geographical footprint through partnerships and acquisitions. Consolidation activities are expected to intensify in the coming years.

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