Will Brexit impact the UK’s shared services industry?
Posted by firstname.lastname@example.org on August 28, 2017
There is a lot of uncertainty in the market at the moment with regards to the fallout from the UK’s decision to leave the European Union. Opinions range from “not much change” to “the UK will be dead as a potential SSC location”. While there is still not much certainty, data doesn’t lie. SSON Analytics has crunched internal data on UK-based shared services centres (SSCs) and compared it to externally sourced data to give you some additional insights into the potential impact of the UK’s Brexit on shared services. Read the visual report.
Last week, SSON columnist Fatmir Hyseni wrote about the "big push" towards automation of services as a result of Brexit. One of the significant side effects, he says, would be the enormous additional demand for IT services to tackle changing regulations around data protection and security issues. With the UK the world's second-largest outsourcer, its economy is dependent on the kind of flexible sourcing practices that outsourcing provides.
British companies will, of course, still want to avail themselves of the outsourcing option especially if, as is foreseen, the traditional flood of skilled IT professionals to the UK from Europe slows down. Britain's loss, of course, may well be Europe’s gain.
SSON Analytics recently evaluated the potential impact of Brexit on the UK’s 328 shared services centres. Only 9% of these SSCs have an EU-based headquarter whose corporate taxes are currently paid to the UK. Post Brexit, these entities can choose to pay tax to the UK or their EU government. Overall, the impact of Brexit on UK-based shared services, in terms of tax revenue, may not be as significant as thought given double taxation treaties.
One of the big concerns, of course, is availability of talent. The UK has for many years attracted a significant brain drain from across Europe, of individuals seeking challenging and rewarding positions. Brexit may well make the transfer of this workforce more difficult. For now, the majority of individuals working within shared services are indeed from the UK (91%) although in the greater London region, 1 out of 8 shared services professionals is from Europe.
One of the fallouts of Brexit, however, may be changes to terms and conditions of employment. Based on our evaluation, corporations may stand to benefit at the cost of employees once the UK is no longer beholden to EU directives. For example, currently, the TUPE [Transfer of Undertaking Regulations] acts as a UK implementation of the EU Business Transfers Directives and preserves employees’ terms and conditions when a business is transferred to a new employer. After Brexit this protection no longer applies.
From a macro perspective, 44% of UK exports currently go to other EU countries, and 53% of UK imports come other EU countries. The top 10 industries leading both import and exports represents a third of the most popular shared services industries across the UK. From a goods trading perspectives, there should be significant fallout post Brexit, which shared services will feel first-hand.
The big challenge for our members is how the shared services landscape might shift once the UK opts out of the European Union. The UK holds the leading position across Europe, as the most popular location for shared services, with Poland a close second.
There has been very little clarity, and no clear changes of strategy, for UK-based shared services to date. The biggest concern may well be a staffing issue if that arises. With many shared services operating as a pure provider and not profit center, the concern around potential impacts of tax are probably moot. Nevertheless, we are all keeping an anxious eye on developments.
Read the full analytics report: BREXIT: What are the Potential Impacts on the EU Shared Services Landscape?
- How Philippine Delivery Centers are Deploying Success Levers in the Year Ahead
- ESTABLISHING A CENTER OF EXCELLENCE (COE) IN AUTOMATION – 4 Critical Ingredients
- Dummy Blog
- Dummy Blog
- Data readiness – a precursor to realising the true potential of automation
- 3 Trends Confirmed at SSON’s European Flagship Event
- Top 3 Trends in European Shared Services in 2019: How are scope, outsourcing and automation strategies adapting – and why?
- Higher Education Institutions must look beyond implementation challenges of Shared Services
- What’s driving successful Business Transformation in the Nordics right now?
- What does good really look like? Benchmark your SSO against 2 different benchmarking datasets
- Business Continuity Plan alert: Q3 2018 Earthquakes now at a record high
- Shared Services in Deutschland: Fokus auf Produktivität und Working Capital
- German Shared Services Focused on Productivity and Working Capital
- Open for Business: Consistent figures for 2018 US Shared Services jobs market
- How to succeed with Intelligent Automation: what our surveys tell us
- Is "gender" impacting shared services careers?
- Chief of Payroll, UNICEF Global Shared Services Centre
- Is a profitable business necessarily a prosperous one?
- Accounts Payable: the case for automation and offshoring
"Despite having the highest risk of windstorm and flood as well as a high earthquake threat, Manila has the largest SSC concentration in APAC"
Data from 'Evaluating Risk in Asia Pacific Shared Services Hotspots' - Analytics Workbook - SSON Analytics
"We have found the Enterprise Dashboard and the SSC Metric Checker particularly insightful, as both are developed on factual analysis based on quantitative measures such as cost, cycle time, FTE effort, use of shared services, and application complexity."
Paul Bartley - Director, Global Shared Services - BD
"By utilizing SSON Analytics’ data tools/analytics reports BD has been able to benchmark and assess how the company is positioned against world-class performers. Knowing that what we are reading has been provided by practitioners makes it a very trustworthy source of information."
Paul Bartley - Director, Global Shared Services - BD
"SSON Analytics have been a really useful resource in providing Market Intelligence and insight into the shared services industry, giving me new perspectives into the strategic positioning within cities, countries and beyond. I am also encouraged to see incremental improvement to its offerings over time, and the engagements with the analysts and management have been more than pleasant! Excellent overall!"
SSON Analytics subscriber - Research Manager - leading chemical company
"As we measure our operations, we are tapping into the comprehensive metrics in SSONA’s City Cube to benchmark what our peers in the same region and industry are able to achieve. This helps us to identify opportunities to drive continuous improvements."
Thomas Hung - Vice President, Group Finance Shared Services - Shangri-La Group