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BPO vs. Shared Services: What Is the Difference?

Business Process Outsourcing (BPO) vs. shared services has always been a long debate when it comes to identifying their differences and choosing the best option among them. 


Overall, both outsourcing and shared services are highly popular trends, allowing companies to make the most of their working procedures and maximize productivity. Most professional accounting firms and services in Malaysia offer both BPO and shared services. 


Therefore, the goal of this article is to differentiate between BPOs and share services in detail to help you choose the best option. 

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What is Business Process Outsourcing (BPO)?

BPO is often seen as more effective since it uses superior systems and procedures. Since it is typically headquartered overseas, labour costs and overheads may be far cheaper than if this service were provided domestically.


Due to the knowledge of the resources inside these companies, outsourcing is often executed more swiftly and efficiently. 

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What Are Shared Services?

If your demands are unique, shared services can be a better option. A shared services model could be the best option if you have particular needs and non-standard procedures since BPO is typically one-size-fits-all.


The deployment of a shared services function inside a company, however, may be laborious and slow. Most often, this is due to a lack of internal expertise in providing this, and the service will fail if the systems, procedures, and data are not clear and effective.


Employee engagement might suffer greatly if the service is unsuccessful, and if users aren’t motivated to utilize it, they’ll fall back into their previous routines, making the service worthless. 


Since thorough training is required to maximize the efficiency of the shared services, it is typically used by medium and large-scale companies. 

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Differences between BPO and Shared Services

BPO entails hiring an outside provider with the necessary resources and abilities to do the task you need to be done on their behalf. 


Conversely, shared services relate to the establishment of a single, independent business unit to provide services concurrently needed by several divisions of an organization but which were previously provided “on-site” individually.


Since better systems, procedures, and technology often enable the outside vendor to execute the job more quickly and to a higher level, BPO is generally credited with delivering higher productivity. 


However, if you already have the necessary time, tools, and expertise in-house, switching to an outsourced model may not be cost-effective given the money you’ll save and the higher quality of work you’ll get.


While it’s true that outsourcing often happens more rapidly, if the vendor’s abilities, outlook, and behaviour don’t align with the goals of your organization, the outcomes might be subpar or even ineffective.


Keeping these factors in mind, in general, you should explore shared services if you need a customized solution that can be implemented gradually. 


On the other hand, BPO can be right for you if you need a general solution to fulfil your general requirements without paying significant attention to the internal working procedures of an organization. 


In Summary

If your requirements entail standard processes that do not involve the internal factors of an organization, then BPO could be the perfect solution for you. On the other hand, if you want to consider unique requirements and allocate time and resources accordingly, then you should consider shared services.   


Whether you want to implement BPO or shared services, you should consider factors like the end goal of an organization, the overall management engagement and support, and internal processes to arrive at the best option. 


You can also consult professional accounting services in Malaysia to get help in exploring these differences in more detail and implementing BPO and shared services according to your specific requirements and business processes. 

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