Engine for growth on ‘Geordie Shore’

Shared services can bring greater efficiencies, lower costs and higher quality, which is why so many of the region’s leading businesses have adopted and are developing its centres

With its strengths in the digital and communications sectors, the North East of England is also developing a thriving shared services sector employing more than 20,000 people.

Shared services is an operational business strategy whereby certain administrative functions of a company that were formerly performed in separate divisions or locations are centralised. It was introduced in the 1980s, when a number of large companies with multiple business units began looking for ways to reduce their administrative costs.

The kinds of services that can be shared in this way include finance, purchasing, inventory, payroll, hiring, IT and customer support fundtions. As an extension of this, shared services can also apply to partnerships formed between separate businesses. At a basic level, tenants of an office building might share a telecommunications or maintenance service and this is usually the case with business incubator or start-up units.

Businesses that use shared services enjoy significant cost savings with less investment in technology and office space, as well as up to 30% fewer employees and it has been estimated that this strategy has been adopted by half of all Fortune 500 companies.

It is not however, only a matter of reducing overheads through centralising back office functions. A shared service model has also been widely adopted in the field of customer services and customer support, where it can not only prove cost effective but where a concentration of training and support can lead to a better quality service.

The North East has proved to be something of a hotspot for shared services through its strengths in IT, which are key to shared services and in having become home to so many call centres in the 1990s.

Shared Service Centres represent a considerable development of the original call centre model and call for a much higher level of skills and this is something the sector – which includes businesses such as Sage, BT, Accenture, EY and Ubisoft – is keen to emphasise.

Dynamo North East’s Anne Macdonald says: “Shared services is a huge career pathway for people and in a lot of cases it’s about developing new products and services.

“There are apprenticeships available with first class training and development. It includes a whole range of roles and career paths, such as HR, team leaders and management development and technical expertise. Look at firms Engie, P&G or SkyTv BT regional partnership director Simon Roberson agrees.

“These days contact centres handle a whole range of different media for dealing with customers, in particular looking at those where there are likely to be more complex interactions with the customer and hence higher skills are required.

It’s also a matter of getting that message through to policymakers and local government that this is an important industry sector for the North East and should therefore be supported and encouraged, so that when people are looking at skills policy and training these can be seen as high-value jobs that make a big contribution to the economy and provide rewarding and fulfilling careers.

He points out that developments in digital technology, such as Artificial Intelligence are likely to have a big impact on shared services and this will raise the standard of skills required even higher.

To serve this growing industry, Dynamo North East is forming a new workstream in 2018 to promote the sector and provide for its skills needs.

Macdonald adds: “We want to raise awareness of the career pathways and opportunities, growing opportunities for apprenticeships in shared services and to develop a more joined up approach with schools and education engagement, to improve communications and share best practice so businesses in the sector can look at how they can support each other on talent and recruitment.’’

Case study -BT & EE

Mobile network operator and internet service provider EE is now part of the BT group, although they operate under a separate brand and there is still an EE operated service centres in the region in Darlington and North Tyneside. Between them, BT and EE employ thousands of people in shared services roles in the region, which service customers for the two organisations around the UK.

BT regional partnership director Simon Roberson says: “We have about 4,000 people in Sunderland, Darlington and North Tyneside working in service centres and there are probably at least another thousand people in BT who do the same, mostly in North Tyneside and some in Sunderland and South Tyneside. They run customer service operations for our direct customers and we also run a service centre for some of our public sector customers in the region where we are currently providing back-office services for those public sector contracts.