A shared services center – a center for shared services in an organization – is the entity responsible for the execution and the handling of specific operational tasks, such as accounting, human resources, payroll, IT, legal, compliance, purchasing, security. The shared services center is often a spin-off of the corporate services to separate all operational types of tasks from the corporate headquarters, which has to focus on a leadership and corporate governance type of role. As shared services centers are often cost centers, they are quite cost-sensitive also in terms of their headcount, labour costs and location selection criteria. Overview A shared service is an accountable entity within a multi-unit organization tasked with supplying the business unit, respective divisions and departments with specialized services (finance, HR transactions, IT services, facilities, logistics, sales transactions) on the basis of a service level agreement (SLA) with a costs charge out on basis of some type and system of transfer price. Shared service centers are deployed for a variety of reasons: to reduce costs of decentralization, to increase the quality and professionalism of support processes for the business, to increase cost flexibility for supporting services, to create a higher degree of strategic flexibility. Reported cost reductions of costs of services organized in shared service center are as high as 70% of the original costs, but average about 50%. Shared service centers are not to be confused with corporate staff departments. Different from staff departments, shared service centers have measurable outputs (by quantity and quality), with costs per unit of service provided. Tasks not organized in shared service centers include corporate control, corporate legal, management development policy, IT-governance and other support typical for the statutory duties of the executive board. Shared services training: Many organizations in private and public sectors use a competency-based training course to identify and fill skill gaps. Critical issue Specific requirements To reap the benefits a multiple shared service centers sets specific requirements to the resource allocation process in the internal organization of the firm. A critical issue is that the manager of a business unit and the manager of a shared service center will prepare a service level agreement (SLA), but the approval of the SLA is a reserved power of the executive board. This is to balance the overall budget of the firm as well as to avoid budget gaming between the managers of the business unit and the